"Property can’t leave, so seize it."

Illinois flirts with the Caracas solution, a/k/a the Cuban (etc.) solution.

Speaking of Caracas, what amazes me if that buyers are still making cash offers on real estate, and even more, that sellers are still holding out for a better price.  Let's hope they get one before cholera and cannibalism set in.

1 comment:

Gringo said...

From Caracas Chronicles, May 3:Once the Safest Bet Against Hyperinflation, Real Estate Loses Value.

So you thought owning real estate in Caracas was a good way to defend your savings against hyperinflation? Buddy, you’re hyper-wrong: the value of apartments in Venezuela has dropped so low now, that only boli-capitals and a sweet spot in Chacao or the hills of Baruta can save your investment with some revenues. What’s sadder is the Metropolitan area middle-class is stuck with not an asset, but a liability, because they couldn’t foresee the future.

See, middle-class families in Caracas’ metropolitan area defended themselves against “tolerable” inflation by renting their apartments, or selling them at a high price. At the time, they thought they were making fine deals, as many in that position did, but we took a look at some data from the Cámara Metropolitana Inmobiliaria and guess what? Since September 2016, apartments lost 68% of their year-to-year value, and people sold over 40% more apartments. This brought a vicious cycle of oversupply, with property brutally depreciating as more people left the country seeking to earn a little pocket change to afford their new, better life. The brutal market laws in action.

Focusing on those facts alone is enough for serious concern. In any “normal” country, a 68% loss of value in the real estate market is impossible. During the 2008 housing crisis, CNN was surprised with an 18% drop in just one year, but in 2018’s Venezuela it seems like nobody cares; personal finances only focus on getting the maximum amount of credit possible, or savings in foreign currency, but the loss of value of the middle class’ main asset (their houses) goes under the table.

Only boli-capitals and a sweet spot in Chacao or the hills of Baruta can save your investment with some revenues.

What we’re talking about here is that the equities of many Venezuelan families are practically worthless now, and with little room to improve. The two options are dead simple: 1) they can sell their assets at a massive loss and migrate, or 2) they can stay here, try to maintain the property as best as possible and wait for things to change...

More at the link.