Who are buying houses?

[NoVegetables]

So I'm looking on zonaprop at houses, something with 3 bedrooms and a little backyard space where we can raise two boys. The prices of the listings are the same if not more than homes listed in Miami. Is that right? And if so, who are buying these houses?

From what I gather, very few people here in CABA are making above 200 to 300k pesos a month, so how does one buy a US$300-400k house? I'm having trouble doing the math.

Are the prices listed in dollars but then you actually pay in pesos at the official rate with a 0 percent mortgage? I don't understand how the average family buys a house in or around the city.

Or maybe zonaprop is not representative of the real market?

 

[steveinbsas]

Are the prices listed in dollars but then you actually pay in pesos at the official rate with a 0 percent mortgage?

Most sellers want to receive dollars, not pesos at the boleto and the escritura.

Mortgages are pratically impossible at any percentage rate and none would be offered at zero...or anywhere close to it.

There are some "nice" houses for sale in my area for $100K, but they are in Punta Alta, not Capital Federal.

And the sellers want dollars.

 

[NoVegetables]

So then I don't understand the math. Unless I am mistaken about wages in buenos aires.

I admit I am very ignorant to the economics of Argentina, but people just don't seem to make enough money to buy anything listed.
and if that's the case who are buying these houses?

 

[BeraRane]

My wife and I decided to buy a plot of land in the province and build a house rather than buy an already built house, the prices even in certain parts of the province are not connected with reality and what our budget could afford wasn't what we were looking for.


From the Argentinian people I know that have bought houses they have either sold an inherited house in order to purchase an apartment or house for themselves, or they saved USD like mad during the years of a far better exchange rate.

Some older people I know were able to buy during the Menem years of a 1 : 1 exchange rate before the wheels came off that train.

I would say it's a huge source of frustration for young Argentinians now however as owning their own home or apartment here without an inherited house or cash rich parents to fall back on is nothing but a pipe dream given that putting away 100 or 200 dollars a month is almost a dream itself..

 

[Ries]

The economics of the argentine real estate market are not comparable to the USA.

A few major points of difference-
The Argentine economy has been, historically, much more fragile, going back to the Baring Bank Crisis of the 1890s.
In all that time, the ONE reliable shelter for assets and value has always been real estate.
Argentines inherently trust real estate, and put their money in it.
Many Argentine friends of mine live in apartments that their grandparents bought.

There are no mortgages to speak of in Argentina- all transactions are in cash. Which makes it very difficult for many people, but also means, no foreclosures. Doesnt happen. So, again, its a very safe place to invest in that respect. I have heard of cases where zero taxes were paid for 30 years, but the government cannot seize it. Again, safe place for money.

And, in the eyes of most Argentines over 40, they have seen enormous appreciation in value. Even with current market downturns, if you bought you place in the 80s for 30 grand, and it just dropped from 300k to 240k, thats still, net a really good investment. (all prices in dollars).

Argentine real estate being priced in dollars, unlike any other investment easily available to the average argentine, makes it much safer- they have seen currencies come and go, inflation you would not believe. Despite the bellyaching of my fellow US citizens, the dollar has proven to be a pretty reliable and safe currency. Most Argentines cant or wont invest in dollar denominated stocks, or e currency- in many cases its illegal, in all cases, its complicated. So the safe dollar denominated haven is real estate.

Plus Argentines just feel secure owning a home, even if its a shack they built themselves in a Villa. (which, incidentally, can be sold, and almost always at a profit)

 

[toongeorges]

So I'm looking on zonaprop at houses, something with 3 bedrooms and a little backyard space where we can raise two boys. The prices of the listings are the same if not more than homes listed in Miami. Is that right? And if so, who are buying these houses?

From what I gather, very few people here in CABA are making above 200 to 300k pesos a month, so how does one buy a US$300-400k house? I'm having trouble doing the math.

Are the prices listed in dollars but then you actually pay in pesos at the official rate with a 0 percent mortgage? I don't understand how the average family buys a house in or around the city.

Or maybe zonaprop is not representative of the real market?

What I heard from a local real estate agent in the family of my girlfriend is that since Covid-19 the house sale market is basically dead. They rent out a lot of houses, but aren't selling. People who have houses do not want to lower the sale price, so you will still see prices as if Argentina would be doing well. At the same time, over the last couple of years Argentines have become much poorer and cannot afford to buy houses anymore. So prices stay high, but no one buys.

And no, people do not have mortgages here. A joke of the same real estate agent is that Argentina is the only country in the world where people buy cars in quotas and houses in cash.

 

[antipodean]

There is no exact logic on how people afford it but many can and do find a way. Just looking at a statistic like average salaries in a country like Argentina tells you very little.

Firstly you need to remember that until a few decades ago, probably when the houses you are looking at were built in the first place, Argentina was a rich country with a real and broad middle class so a lot of this capital "wealth" still exists in some form. As as the generations who hold that wealth die off, their children and grandchildren inherit what is left and since it is difficult/ expensive to take it out of the country, they usually prefer to put it back into property instead. It's also worth remembering it is an unstable economy with ups and downs.

For example, a couple with two professional incomes, 10-15 years of saving dollars between them, perhaps some of that time living with mum and dad, working abroad for a year or two, living for free in grandma's old apartment before selling it, plus a bit of help/ loan from their families, and buying a $300k house in cash is more achievable to the "professional" class Argentine than it may look from the outside. There are also plenty of business owners out there who enjoy(ed) a few good years and park the cash they earned in property as soon as they can before their business risks going ass over heals or the money evaporates - for the unfortunate ones, they often end up being the neighbor in a fancy building who can't keep up with their expensas while everyone wonders how on earth they can afford to live where they live.

Also financing for plots of land directly with developers does exist - some you can even pay in pesos over a few years and then build in pesos (it gets even more attractive when there is a big brecha between blue and official since Argentines who save in dollars change into pesos to do such things and no one is going to ask how they "doubled their money" for such a project.) After some years when the barrio is more established and in demand you sell in dollars. I know a few with very modest professional jobs and modest savings who have done just that. This explains the boom of "countries" all around AMBA, and of course in time it creates new buyers with capital in USD to spend. Some new build apartments are also financed like this too. Mortgages do exist in pesos but attractiveness comes and goes and they are not for amounts or properties that would be of interest to most. They also exist in dollars but unless you (or your friends and family) have multi-million dollar fortunes invested in Argentina to serve as collateral, it is not an option apart from the very top segment of local buyers.

When looking at prices listed it is important to remember that supply far exceeds demand and there is no logic to many listing prices. Zero.

The building next to mine has quite a few apartments listed for sale starting at $1mm ...most of them are ugly AF inside and seem not to have been touched since the 70s or 80s (one actually has an original kitchen from the 1930-40s - as well as a newish hospital bed in the bedroom - you can smell the decay just looking at the pictures) as their "millionaire" owners must have run out cash to do them up long before dying... unsurprisingly most of these apartments have remained unsold and unoccupied with multi-million dollar price tags for at least 4 years now (They can't even find tenants to rent them, insisting on price tags of US$8000+ billete like the crown prince of fantasylandia is just going to show up and start renting, and while they are at it refurbish the whole thing?) Meanwhile, just two blocks away you can spend the same amount, or slightly less, on brand new semi-customised apartments of similar size that are truly something to look at and jam packed with amenities, views etc and selling like hot cakes.

Moral of the story, just because people put a high price tag on something does not mean it’s worth that much and it pays to shop around. If in doubt look at how long it's been listed for. Especially in today's economy. For that reason when sales do happen they are often well below the asking price (-20-30%) or they go super fast for properties with a good value to price proposition. It is ultimately driven by a sellers motivation to sell. When they don’t happen more often than not it’s the owner’s ego of "but I'm supposed to be rich" or hope that “one day” Argentina will get better - leave those ones for the crown prince and move on.

 

[Ries]

Sellers can sit on homes pretty much indefinitely because, again, no 30 year mortgages. If you own the property free and clear, then its just utilities and taxes. And, comparatively speaking, the overhead cost of a $300,000 apartment here is a tiny fraction of the carrying costs of a similar apartment in the USA or Europe.
I know a couple of people (argentines) who have bought real estate during the pandemic. There are plenty of places that are pretty cheap, like well below 300k. Depends on where, how big, and how picky you are. In all of CABA, probably the majority of apartments are under 200k, many are under 100k, its just they arent in Belgrano or Recoleta. I know many argentines who live in Barracas, Monserrat, La Paternal, Parque Patricio, Flores, and similar neighborhoods in apartments that would sell for $75k to $100k right now. Yes, they are smaller, and less fancy, but for many argentines, a 1 bedroom they own is far preferable to a 2 bedroom they rent.

 

[perry]

I have worked in real estate many years in Buenos Aires now retired from that but can say clearly that the listing price of properties are just guides . Even in great markets the selling prices were much less than the listing price . I believe now you can get up to 50% off the asking price for some properties depending on need for selling etc etc . In regards to the listing prices they are and have been all over the place with no rhyme of reason . Valuations are not from a system but are based on sellers expectations which can be very delusionary . Some realtors are professional and will not take these listings but many are so deperate to take any listing that they take a very overpriced listing just to have something on their books . In regards to houses and their prices there are so many factors to determine a real price but one has to study the market for years to price this investment correctly . Apartments as well have many factors to determine their real market value . Nowadays having a balcony and a useable open terrace is very desirable and these metres can be the same price as a covered metre something unthinkable just 3 years ago before the pandemic . I live in San Carlos de Bariloche and houses are dearer in all aspects than Buenos Aires in premium areas . At least here many have stunning lake views and extremely high rental returns to justify their high prices but I cannot wrap my head around the prices of the Province of Buenos Aires where rentals in dollars are very low and no views to be had . Saying that my advice to people is if the property is overpriced in its listing value do not feel ashamed to offer 50% less and see. If you do this many times you will be successful sooner or later . 25% is common and 50% is achievable now especially in Buenos Aires province, Cordoba , and Mendoza Provinces !

Sometimes some properties are listed at a steal price from the outset due to legal problems or very urgent needs . If you see something like this and suits your needs no need to discount . My advice above is for the speculative market which is 90% of all listings online .

 

[perry]

So I'm looking on zonaprop at houses, something with 3 bedrooms and a little backyard space where we can raise two boys. The prices of the listings are the same if not more than homes listed in Miami. Is that right? And if so, who are buying these houses?

From what I gather, very few people here in CABA are making above 200 to 300k pesos a month, so how does one buy a US$300-400k house? I'm having trouble doing the math.

Are the prices listed in dollars but then you actually pay in pesos at the official rate with a 0 percent mortgage? I don't understand how the average family buys a house in or around the city.

Or maybe zonaprop is not representative of the real market?

Hi there this is a question that fascinates many foreigners to Argentina as they cannot understand how people can buy houses in high values and in cash . The reality is that for that 10% of the upper class who can they are very cash rich something rare in many societies today . Argentina is to the surprise of many the holder of some estimates from 300 to 400 billion US dollars which per capita is second highest on the planet just behind USA itself . This was taken by a washington post article of july 31 2014

The number of U.S. dollars hidden beneath Argentine beds, floorboards, and foreign bank accounts is mind-boggling. By some estimates it hovers near $50 billion; by others, it's much more than that; and by virtually every measure, it's a significant chunk of the total dollar-denominated cash floating around the globe. Argentines are believed to hold somewhere upwards of one in every 15 cash dollars circulating around the world. Only China and Russia hold more, a source who asked not to be named so they could speak freely said in an interview.

The problem is not that there is no dollars to buy properties in Argentina the problem is the lack of confidence in the real estate market with the lowest rental returns ever recorded in its history except for a few bubble markets in select provinces . Argentinians are the largest buyers from Latin America in the Miami and Punta del Este real estate markets beating much larger Brazil with over 4 times its population . Financial crises have greatly benefited the very rich in Argentina as it gives them time to buy very cheap and hold . They are very smart investors in their own country rarely will pay over the price . This goes out the window in Miami though that has that image to it of safety and luxury .

Real estate has been a great investment for nearly everyone in the last 20 years in Argentina . Those who brought in Palermo Soho or Hollywood in 2003 now have a asset that is worth nearly three times as much in dollars . This was repeated in many other barrios but of course there are exceptions . I believe that now 2022 is a good time to buy as prices have come down 30% from their peak in 2018 and also as stated before you can be agressive with your proposal as there are so many apartments and houses for sale its a buyers market in Buenos Aires . It is not the same in the centre of San Carlos de Bariloche where apartments are selling very fast and there is little offer . Prices are determined by supply and demand and your determination to get a good deal . I wish you the best of luck