Crisis Hit Latin American Real Estate?
Latin America Real Estate
Foreclosures, defaults, fire sales…
We all know the story of the housing market north of the border, but has the crisis had the same affect on real estate in Latin America?
An important question, indeed, for anyone staring out their frosty window with a sore throat dreaming of their big leap south.
After investigating the housing market in several Latin countries, the best answer I can give you is “it depends.”
I know what you’re thinking. “It depends.” What a nice, safe cop out.
But it’s true. Let me explain. It is a little more complicated down here.
First and foremost, the Latin market has not had across the board drops in prices as seen in the US and Europe.
In Latin America, it has depended on the country, your location within the country, and the type of property you own.
For example, for a rather undiscovered, under-priced country like Ecuador, the crisis has actually increased demand in some areas by as much as 20-30%.
According to one owner of a prominent real estate website in Ecuador wishing not to be revealed, said that traffic arriving from Google nearly doubled as the crisis intensified in the last quarter of 2008 and the first quarter of 2009.
His theory is that with the crisis up North, more and more people have begun to look for cheaper places to reside, and with new technologies like the internet and Skype, many people can continue to work from remote locations.
Whereas in the Dominican Republic, a country that has already experienced a recent market boom, the consensus from local agents seems to be that prices have taken a noticeable drop in the touristy, foreigner-dependent areas like Punta Cana, but in less touristy places like Santo Domingo, the prices have remained relatively stagnant through the crisis.
Although, even in the touristy places, prices have not fallen as much as they have in the US.
Which brings me to my next point: your actual location is also important. As Dr. Christoph Sieger, a real estate attorney in the Dominican Republic with the firm Guzman Ariza pointed out, one of the main factors people look for when moving to Latin America is security.
This may be the reason why prices for properties in gated communities and posh condo buildings have not felt the effects of the low market as much compared to similar properties located outside guarded areas.
Another important observation is that in both countries, Ecuador and the Dominican Republic, prices of beachfront property have not gone down. For beachfront, they never do.
One possible reason for the softer impact of the crisis on the housing market of Latin America is that, let’s face it, the traditional investors in Latin America have been the world’s rich, and the rich have not been nearly as affected by the world economic crisis as the middle class.
Another important observation is that credit has always been expensive in Latin America, so people, foreign and local, normally buy in cash, minimizing the affect of the credit crunch as well.
With that understood, with a little due diligence, there is no better time than now to start taking a gander south of the border.
About the author:
Domenick Buonamici teaches expats how to find the hidden beachfront property bargains of Ecuador through his e-Book “The Insiders Guide to Ecuador Real Estate” available for immediate download at www.EcuadorRealEstate.org
As an American who has been living for 3 1/2 years in the popular expat area of Lake Chapala, just outside Guadalajara, Mexico, I have watched real estate sales drop in our area. A couple of reasons for this are[1] that people NOB (north of the border) are waiting for their homes up there to sell before they can buy here, and [2] that the Mexican drug cartels have gotten huge publicity NOB.
But like you say, here too prices do not seem to have fallen as much as they have up north. And homes in the more moderate price range are getting a lot more attention.
The real state market in Latin America its different, in most Latin Countries when people buy a house they have to put down 25%-35%, so in Latin America there are not toxic assets only real assets, so the variations in price are minimum,like in any other country the price depents on location, location and location
but you can still buy an apartment from 75.000 to 125.000 the same apartment that in Florida it will cost
you 350K-400K……..In other workds the equity down there is real not like in the USA that is a mirage….
Just bought a two bedroom two bath condo in Las Vegas, NV for $30 K in an upscale area of town. Brother Dave can’t move the condo he bought several years ago in Costa Rica. He says there are no buyers. The Costa Rican property is gated, and beachfront. Beware rosy sales talk by RE agents.
It depends? Yes, it depends…it depends if you have a clue as to what you’re talking about.
The value of expat residential real estate is directly reflective of the net worth of the expats, and we know the current story there. And the growth in the expat markets was a direct expansion of their markets back home. And now the fantasy that real estate is a great investment, in and of itself, has been exposed for what it is, and most Americans and Europeans are back to viewing res. real estate primarily as shelter. And then we have the funding which is MIA.
!!!!!!!Which is why residential real estate of interest to most readers of EFAM has taken a serious pounding around the globe as new buyers have disappeared!!!!!
Ask any expat dependent developer.
In lake Atitlan, the real state market have not been yet affected as in other places… Prices of the property for sale have not come down as most of the times people who are selling are not in need of money. But the demand is right now more toward houses under $ 100k or land to be acquired for the future betting that the market will pick up. Also here most of the transactions are cash on hand. Still a great value for what you get