When will property be cheap in Buenos Aires?

[Fiscal]

Prices in Rosario are ridiculous. 500k gets you a three bedroom condo in a dilapidated building in this third tier city.

 

[Joglide]

Property prices are going down as there is a huge amount of offer and very little demand . Argentina and the Argentinian people live with speculation of their mind and do not face realities . The real estate market has collapsed since its peak in 2017 due to the bubble effect of cheap credit and the blanqueo of non declared funds .

I predicted more than 7 months ago a protacted property crash and imho this will be much worse than most will imagine and could last for many years more before improvement . There is a huge backlog of properties for sale and some barrios like Recoleta have close to 5,000 properties for sale a huge increase from previous years .

In the month of January 2019 the amount of escrituras signed was less than 55% signed in January 2018 . This is a shocking figure and I believe that this has never happened before in Argentinian history not even with the last financial crash ( due to properties in dollars being very cheap)

Still people insist that their properties are worth a lot and base their valuations on other speculated properties that they see advertised for sale .

https://www.cronica.com.ar/info-general/Se-desplomo-la-venta-de-inmuebles-20190225-0041.html

Reading between your lines, you seem to be saying that prices are slipping down but not dramatically and that vendors are not recognising the reality of the market place, so prices are in fact remaining higher than demand indicates they should? I have always assumed that one feature of a property market where many vendors are selling not an investment but a home and that they are selling and buying in the same market, that such vendors resist price signals when these are pointing downwards and this helps to slow the market further, as buyers are not willing to pay prices based on other factors than strict market signals. Where I guess movement will be seen is most obviously where developers need to offload recently-constructed housing quickly, to reduce overhead costs of capital investment (unless they have unlimited liquidity and a crystal ball). Next will be those speculative investors who see the chance not only of selling but of bargaining down other vendors' prices once they can offload their own property? Do you have any handle on what realtors / agents expect to happen where the market is jammed and sellers are reluctant to bid down their prices?

 

[perry]

Prices in Rosario are ridiculous. 500k gets you a three bedroom condo in a dilapidated building in this third tier city.

Rosario is known as the city of money laundering for this reason these especulative prices . It is a pleasant city but not worthy of these prices absolutely .

 

[citygirl]

Yikes - Just looked at prices for a nice 2 BR in Canitas. Still seems pretty expensive to me relative to everything going on there.

 

[rickulivi]

Let’s do some math. Assume I own a 133 meter2 in prime location in Recoleta. Assume it was worth last year $700000 dollars and now, because I want to sell it, take off 20% as si many of you are implying. That’s a haircut of $140,0000. What does it cost if i continue to own? Abl taxes, utilities, hoa fees, etc are around $500 per month or $6,000 per year. Round up to $10,000 per year. I can wait for 14 years for the price to go up again to recover my loss if I can continue to hold. Surely in that time price will be higher than today.

Assume I did sell. What do I do with the money? Play it safe and buy USA gov bonds for ten years. They pay about 2.7 % per year

Question. What do you think will be worth more in ten years? The apartment or the $600,000 I put in bonds at 2.7%?

Don’t forget that if I keep the apartment I can either enjoy living in it or generate rental income similar to what I can earn in the USA bonds

Ok?


Nevertheless, if anyone is willing and able to sell their prime located apartment at a 20% discount, please send me a message. I can act quickly

How many takers do I have?

 

[rickulivi]

I forgot. If you sell at a 20% discount, you’ll still have to pay another 10% to 15% in swellings fees, taxes, etc. So, you sell your apartment that you think ow worth for 20% less, and another 10% in selling fees and you end up with $540,000. Wow.

 

[Joglide]

Let’s do some math. Assume I own a 133 meter2 in prime location in Recoleta. Assume it was worth last year $700000 dollars and now, because I want to sell it, take off 20% as si many of you are implying. That’s a haircut of $140,0000. What does it cost if i continue to own? Abl taxes, utilities, hoa fees, etc are around $500 per month or $6,000 per year. Round up to $10,000 per year. I can wait for 14 years for the price to go up again to recover my loss if I can continue to hold. Surely in that time price will be higher than today.

Assume I did sell. What do I do with the money? Play it safe and buy USA gov bonds for ten years. They pay about 2.7 % per year

Question. What do you think will be worth more in ten years? The apartment or the $600,000 I put in bonds at 2.7%?

Don’t forget that if I keep the apartment I can either enjoy living in it or generate rental income similar to what I can earn in the USA bonds

Ok?


Nevertheless, if anyone is willing and able to sell their prime located apartment at a 20% discount, please send me a message. I can act quickly

How many takers do I have?

------------------------------

All this makes perfect sense assuming you own the property outright (ie no mortgage or loan), that you can maintain it so it needs little or no repair work, that you would have to take a hefty haircut if you sell now or soon, that you don't need to release equity/capital because you are cash rich as well as asset rich, and you don't see an opportunity cost in something better than US bonds (eg buying a condo in Miami with an expectation of better demand conditions or starting up a business selling ice cream to a crazed public). Assuming all these conditions and that you remain in good physical and emotional health through these stressful poker-playing times then your conclusions are incontestably sound.

 

[Ries]

The huge majority of Argentines do, indeed own their property outright. I have met, over the years, a couple of hundred argentines who do, and none had a loan.
I have also known a lot of renters who tell me, your are correct- landlords seldom do repair work. And owners seldom do as well, on their own properties.
And most argentines cannot easily buy condos in Miami- many people I know cant even afford a US visa fee. A very few of the most wealthy do, indeed, own overseas real estate. But most potential sellers do not.

I have known a lot of argentines who hang onto apartments for decades. And if they cant afford the consorico fees, or taxes, they just dont pay em. And, 20 years down the road, when they finally sell, those back taxes are taken out at closing. When we bought our apartment, in 2007, a sizeable percentage of the sale price never made it across the table to the sellers- it was paid out in back taxes, and other unpaid expenses.

The bottom line is- there is no incentive for sellers here to lower prices drastically, UNLESS, as during the corallito, the entire economy crashes. Real estate prices have fallen, and may fall more- but many properties will just not go down that much, because hanging on and waiting has very low costs here, unlike in the US or other nations.

 

[elhombresinnombre]

Just to add to what Ries has already said: in other societies more focused on the individual, one person or maybe a couple will own a property and that will be that. In Argentina, one way or an other all the family are involved. It seems very common that when things need to change within the family - births, marriages, deaths divorces etc - different family members who own odd percentages of sometimes very odd properties will rationalise the ownerships within the family - with or without cash money adjustments - rather than sell up

 

[Joglide]

The huge majority of Argentines do, indeed own their property outright. I have met, over the years, a couple of hundred argentines who do, and none had a loan.
I have also known a lot of renters who tell me, your are correct- landlords seldom do repair work. And owners seldom do as well, on their own properties.
And most argentines cannot easily buy condos in Miami- many people I know cant even afford a US visa fee. A very few of the most wealthy do, indeed, own overseas real estate. But most potential sellers do not.

I have known a lot of argentines who hang onto apartments for decades. And if they cant afford the consorico fees, or taxes, they just dont pay em. And, 20 years down the road, when they finally sell, those back taxes are taken out at closing. When we bought our apartment, in 2007, a sizeable percentage of the sale price never made it across the table to the sellers- it was paid out in back taxes, and other unpaid expenses.

The bottom line is- there is no incentive for sellers here to lower prices drastically, UNLESS, as during the corallito, the entire economy crashes. Real estate prices have fallen, and may fall more- but many properties will just not go down that much, because hanging on and waiting has very low costs here, unlike in the US or other nations.

Yes you underline the point I have made Ries: that the is a kind of necessary floor on price falls because housing for residence is not like other goods - you can't simply sell (as you might a car or a small business) unless you have an alternative option of somewhere else to live. My points about Miami took up the point about housing as investment (not for use) by speculative people who have the cash to make decisions about properties here or in other countries - Perry has shared his expertise and made it clear that some people can decide to buy or sell as a calculation - and lots of contributions have talked about other countries as alternative investments in estate. As we have all said, when we come to the long-term residents and esp Argentinian people who have only their house and limited income, then it is a very different situation from affluent people and ex-pats who can make discretionary choices. They live in very different worlds.