Real estate decline 2020

Troller

Woodpecker
The Basel Committee, which sets rules for the world's banking system, stated banks held extra capital for two purposes — ensuring they could withstand losses and supporting economies through downturns.

"Using capital resources to support the real economy and absorb losses should take priority at present," the committee said, adding that supervisors would provide banks with "sufficient time" to rebuild buffers "taking account of economic and market conditions and individual bank circumstances".

Banks should use their capital to "support the real economy and absorb losses" rather than hoarding it.
 

NoMoreTO

Pelican
The Basel Committee, which sets rules for the world's banking system, stated banks held extra capital for two purposes — ensuring they could withstand losses and supporting economies through downturns.

"Using capital resources to support the real economy and absorb losses should take priority at present," the committee said, adding that supervisors would provide banks with "sufficient time" to rebuild buffers "taking account of economic and market conditions and individual bank circumstances".

Banks should use their capital to "support the real economy and absorb losses" rather than hoarding it.
It's a fair point, but once the capital is held by a bank they will loan the money based on the risk profile. Everything I am hearing is that if real estate prices fall in an environment of low rates, the reason will be that banks are unwilling to loan to questionable borrowers. There will be less financially secure borrowers, and at the same time, they will tighten up as they will look at their borrowers, who perhaps have had a job for a year and understand that if they lose their job they might not as easily find another one. Home Equity Line of Credits (HELOCS) have largely been cut, which would be something that would drive renovations and consumer spending.

Its a question of trying to get an individual bank, to do what is good for society and not their own institution / shareholders.

Another part of the issue is that the banks don't really even hold their own mortgages, they sell them as Mortgage backed securities, which are not as marketable at present. The market is falling out and the fed is trying to hold it up.
 

Pointer

Woodpecker
Could never figure out the Canadian RE market: huge country, low population, plenty of land to build. The houses are utilitarian, anything older than 20-30 years starts to fall apart. Prices in the 7 figures don't make sense to me.
In the European (Socialist) Union I don't expect major drops anytime soon. Governments have introduced moratoriums on mortgage payments, tenants cannot be kicked out for at least 6 months (and then it takes another 6 to go through the legal system), the unemployed are on social security or working part-time with a percentage of their salary subsidized by the government. I know a dozen people who are still sharing flats in their 30s, out of a job since Q2 sitting on government money or working part time. They have no savings yet the payments are more than enough to pay their rent over the next 12 months. One guy bought himself a gaming PC and is playing all day while I still work my ass off. In a free market these guys would be moving out, either to their home country or back with their parents, the flats would go on sale thus creating some opportunities for those who saved up. What we have instead is a RE market that will stay mostly flat while savings depreciate.
 
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Jaydublin

Pelican
Thoughts on property in Latin America?

My personal thoughts are that these countries are really struggling. I have family in Peru and not much is going on there, they actually got stuck and couldn't get out of the country. Most international travel(for these countries) won't resume until 2021 at the earliest. Keep in mind that tourism makes up a large portion of GDP in these countries.

So I am thinking that many countries in LA will have fire sales on their already overpriced real estate within 1-3 years. Especially for cash buyers.

One concern I have is that a few of these countries will be in such bad financial shape that they will have Hugo Chavez types riding in to save them. Hopefully that doesn't play out.

Thoughts?

EDIT: To add to this. Many currencies from LA seem to be really struggling.
 

NoMoreTO

Pelican
When I looked into Colombia, you had to basically buy with Cash. So its a pretty heavy investment. I couldn't get a mortgage/loan.

I looked at condos in a nice neighbourhood in a 2nd tier city. For that approach you go there for the lifestyle and kind of hope for the best. You have your citizenship elsewhere if things get hairy. The upper class will fight to protect their neighbourhoods there,

I do think you make a point that there could be airbnb type units going back to owners and long term tenants.

Have you lived in L America or Peru for an extended period of time? How's your spanish? I thought mine was good but it gets a little trickier when you're going over large bank transfers and working out details. In the end I pulled back. I needed more time or a serious gf down there to really give me the push to invest.
 

Jaydublin

Pelican
I have solid time living/working/traveling SA. 3-4 years in total. 5-6 months total in Lima. Decent Spanish but certainly not business level. Wife is Peruvian and we have always planned to return so I'm going to keep my eye out for something. We always keep Chile in mind as well.

Seeing her family struggle now. Doesn't seem like there are many ways for them to make money, at all. This is what has me thinking a lot of apartments will be going up for sale at some point. That and many foreigners who have bought them will possibly look to sell if things don't pick up or is SA gets dicey.

Def would have to be cash deals. Probably need to be in person to find the good deals. That or have a trusted agent which is not easy to find.

Bigger concern is them beginning to protest and possibly riot after all this is over. There will be a lot of frustrated people who are looking for answers. SA was kinda on edge even before Covid.
 

!!!???!!!

Sparrow
Things are dipping in Toronto, I know a few real estate agents that are mentioning that. There is a huge effort to move to virtual commutes permanently which is going to crush major cities in the commercial real estate department, and then in residential afterwards (due to not having to be close by to work, and an erosion in the local tax base and ensuing collapse of social services)

Smaller cities are doing well. You can buy a massive mansion 1.5 hours outside of Toronto for less than the price of a small detached home.
 

Troller

Woodpecker
REDMOND, Wash. — June 26, 2020 — Microsoft Corp. (NASDAQ: MSFT) (“Microsoft”) today announced a strategic change in its retail operations, including closing Microsoft Store physical locations.

 

ball dont lie

Kingfisher
Gold Member
In a small town in the USA. Prices are way down.

Brother looking to buy a small house. He works close to town so I told him, buy a house, sell your car, get a scooter. For a year just make money and pay off the house, then you are free.

So we're looking and a few places that I saw, already had 3-4 price drops. On sale in January, then down 5k in February, April, May, June. So some down 20k since a opening in late 2019 or early 2020.

Maybe it picks up now with the warm weather and people happier that the hoax-19 is over?

I told him to wait a bit more for the right place and right price, but still in town so he can even walk to work.
 

username

Ostrich
Gold Member
Colorado is strong, homes selling in 1 day at asking price
Same here in Arizona, suburban areas.

..

Just found out a relative of mine is leaving California and moving to Idaho while another relative also from California is planning an escape.
 
I do marketing for commercial real estate syndicators in Georgia and Florida.

No discounts; basically full collections during covid and riots.

Quote from one of my clients when I expressed concern (and he is also a friend, so he is always honest with me): "You need to stop listening to the news. Everything is fine. We don't hold property in the inner city."

B class properties. Lots of hispanic residents.
 
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