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mia
Memberhy everybody I discover your web page quite recently, I think it's quite impressive analysis especially from Steve 80 and other people as well. Despite the accurate analysis and various informations concerning the real estate in R, I am quite confused. I'm move out of Romania since 1992, but I would like to buy a one room flat in sectorul 1 or 2. Everytime I am checking the prices are aproximately 2500euro per sqm. Pretty scary for a land with so many problems -WHAT GOING ON ? Poate cineva sa ma ajute , cit ar trebuie sa astept sa pot cumpara o locuinta cu 1000euro pr.m? Multumesc anticipat.Posted 1 year ago # -
steve80
MemberTimes when real estate investors had only to get out of bed to make money have passed. If in the past the question was "Where can I buy something?"; now the question is "Where do we get money to buy?". What we see now in Romania and other Eastern European Countries looks much worse than Asia in 1997 when external imbalances and funding shock (stop of funding) have determined a sharp depreciation of the currency or strong macroeconomic adjustments which determined a collapse of the domestic demand. Credit default swap have risen sharply for Romania and other Eastern Countries which indicates that investors see a higher risk of sovereign default. Romania is also vulnerable due to large external deficit and large foreign exchange borrowings for both commercial and retail sectors. The real estate bubble is now deflating with a vengeance mainly because of the following forces: - decrease of buyers' confidence in their jobs and income levels - low housing affordability in relation to household income - no more mortgage financing with low interest rates - depreciation of the local currency - sharp increase of the taxes on properties. - high inventories and many potential sellers on the sidelines. In market downturns, homebuilders are typically the first to cut prices, as unsold home inventories tie up companies' working capital and reduce their return on investment. - overdue loans started to increase as many borrowers are finding them underwater. There's likely a lot more pain ahead for real estate, both residential and commercial. What you see now in Romania is part of the vicious cycle. As unemployment goes up, consumers spend less, retail sales fall some more, more shops/ small businesses close down and walk away from their leases, and overleveraged mall owners collect less revenue eventually defaulting on their loans and forcing the banks to take/ sell the assets. Throughout it all, unemployment rises even more from the retail stores closing up, manufacturers cutting production because the retail outlets buy less from them, banks cut back staff, and start the cycle all over again. Don't be like the latest class of Romanian real estate "investors" fueled by greed and armed with three hours of training who are bound to get crushed now as they can't avoid reality. We are not far by a full-blown panic and we should be prepared for it. My advice is to stay liquid, keep plenty of cash on hand, buy only if you find a great opportunity, and just wait out the storm.Posted 1 year ago # -
irinas
MemberHello Steve, your analysis is impressive and I would have some questions for you : 1. How long and until when will this decrease in prices on the rezidential market take? I am interested in buying an apartment and don't know how much longer to wait considering that the developers have already lowered considerably the prices. 2. You advised buying a property in case you find an opportunity? What would you call now an opportunity? 3. At what level will the prices per sqm stabilise in the north of Bucharest? 4. Should we change our savings in Ron to Euro now? Will the exchange rate go up further? What exchange rate do you estimate for december 2009? Thank you, IrinaPosted 1 year ago # -
AristotelCostel
Member@irinas 1. [url=http://indeximobiliar.blogspot.com/2009/03/balonul-imobiliar-bucurestean-imaginea.html]Lectura placuta[/url]! 600 Euro/mp construit la pret de bula pe toate segmentele... materiale, forta de munca. Peste 600 poti plati bula speculativa pe segmentul terenuri + profituri "romanesti" de 100-1000%. Dezvoltatorii au renuntat la 10-30% la fiecare 2-3 luni fara sa "intalneasca" cererea. Tu i-ai putea ajuta sa iasa din rahat, sacrificandu-te in locul... lor. 2. Ipoteci executate...licitate. :lol: 3. In general putin sub 2 venituri medii lunare, iar in nordul Bucurestiului poti consulta un specialist imobiliar care te va ajuta sa ti-o iei drastic. In cativa ani se va ajunge la stabilizare. Acum, la doar cateva luni de la inregistrarea maximelor nu se poate vorbi de stabilizare. Smecheria si prostia determina cresterea ... volatilitatii.:lol: Probabil vom atinge un minim al preturilor abia in 2011, insa grosul prabusirii nu s-a produs nici macar in mica parte. 4. Creditacii din Romania se sufoca in masa la cursuri Leu-Euro de peste 4.2. Practic, la peste 4,3 economia Romaniei e sub-prime. Acordul FMI tocmai incheiat ne-a scapat de la colaps si vom continua sa facem ce stim noi, romanii, mai bine... "merge si asa". Pana cand? Cateva luni, un an-doi (garantat de FMI)... mai merge. :lol: P.S. Raspunsurile mele sunt simple ineptii. Repet, toti specialistii economici care prognozau stagnarea preturilor la nivelul maxim al bulei, toti specialistii economici care vedeau crestere economica in Romania anului 2009 si somaj sub 5% sunt in masura sa te sfatuiasca temeinic. Eu n-am facut decat sa vorbesc de recesiune cand INS-ul raporta crestere economica de 9% pe TIII-2008, de somaj 10% cand Geoana oferea 25000 de euro romanilor intorsi acasa, de scaderea venitului mediu lunar cand Vosganian si Tariceanu avea de gand sa ocupe locul 7 in UE la PIB, de prabusirea pietei imobiliare cand fazanii faceau coada la desene in AutoCAD. :lol: P.P.S. Steve deja a scris cearsafuri de argumente, nu ramane decat sa cauti raspunsurile "printre randuri".Posted 1 year ago # -
steve80
MemberDespite the fact that many real estate agents use to blindly assume that home prices can not go down anymore, the end of the decline in home prices will come only when there are no economic forces driving them down. When will that be? I would like to say it is just around the corner, but everything I see tells me that, despite the declines already recorded, a sharp plunge in home values is still ahead. Because of significant expensive debt, the pressure to abandon or sell homes will far greater than anytime in the modern Romania history. For many people the next years will bring many opportunities to buy the home they have dreamed on, as sharply reduced price for the average home is the only fundamental for making homes more affordable and restoring solvable demand — especially if we consider that the days of easy credit are gone. What was during the last 5 years can be seen as the biggest speculative manias of all time for the Romania real estate. There is no precedent; no historical roadmap to guide you, no proven pathway to follow and no one can tell you with precision how far the home prices will decline, when they will hit bottom, how many homeowners will lose their homes. Debt is the fuel of speculation and without it, speculative bubbles cannot emerge. With easy credit the prices have been inflated beyond any imagination but now we will see the reverse part. Romanian will be under tremendous pressure to sell their homes due to very expensive mortgages, depreciation of the local currency and by layoffs from employers equally affected by expensive debt, local currency depreciation and global recession. At the peak of the housing bubble, the average price of existing home reached nearly 25 times the total yearly income of its owners (I have considered an average price of EUR 150k for 75 sqm apartment and an average salary of EUR 500/ month), the highest in history. If you considered that in USA the average price reached 5 times the totally yearly income of its owners at the peak of the bubble you can imagine what will be next comparing with what has happened in USA. At the same time, the affordability of each home plunged to its lowest level in history. I think that never before in Romania’s history have you witnessed home price declines of this magnitude and the fact alone does not make them implausible, in current global turbulences let alone impossible. In my opinion never before in history Romanians had so much debt, speculation, manipulation and consumer abuse been heaped onto housing market. And if there is one thing that history teaches us, it is that unprecedented causes lead to unprecedented consequences. Considering current market conditions and what it is probable to come I think that you do not have to look back, forget what your property was worth at its peak and try to forget what you paid for it as well, instead look at what's happening today — in the headlines, in your neighborhood, at companies in your area. One year ago I have advised many people that it was the right time to sell their property and the ones who have done it I think are very happy to have cash in these days while the ones who believed that the sky was the limit for the price of their property have many regrets because they did not sell. Don't underestimate the potential depth, speed and duration of the decline of the real estate. As the debt becomes more and more expensive, the economy looks like a sinking boat and the deceptions are uncovered, home prices will continue to decrease much further. In the next 2-4 months we will see a slight appreciation of the local currency but this trend won’t continue too long, hence will be a good time to convert your savings in EURO. Depending on how much “effort” will put in the NBR to keep the exchange rate low I think the exchange rate will be between 4.40 – 4.55 as of the end of the year. If you are able and willing to sell your properties, do so now, do not wait anymore and if you want to buy one would be better to be patient and wait another 6-12 months as the prices will go below 800 EUR/ sqm. In my opinion in Romania a normal price per sqm (correlated with the salaries) is EUR 500-700.Posted 1 year ago # -
irinas
MemberThank you Aristotel & Steve for your advices! I am really interested in housing market because I woull like to buy a place to live. That's why I started to read as much a possible about it. Could you give me some other specialised web pages to read? And I would have some more questions: 1. I've read all the links you gave us and I've also seen the graphik on the Indeximobiliar. Will the prices go down on 2006 levels?(pretty high anyway) 2. As far as I can see now, there is a stagnation on this market. Prices have begun to drop but most of the owners still ask for the 2008 prices. When do you consider that the sellers will actually realise that there is no turning back and you will be able to negociate in real terms? 3. The lower the prices go the more difficult will be to acces a motgage loan, isn't it? If I would like to acces a credit in Euro is not advisable because the exchange rate will go up, right? But a credit in RON has a bigger interest rate and the amount you may receive now is getting considerable lower. Please tell me if I am mistaking, I am really interested to buy something in the near future (6-12 months) and I really need to now all the implications.Posted 1 year ago # -
Anonymous
UnregisteredSteve & Costel: Ati putea sa mai postati cate un update review al situatiei in toamna 2009? Cred ca ar fi foarte interesant sa subliniati si in ce masura vi s-au implinit previziunile anterioare... Multumesc.Posted 10 months ago #
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