Top 5 behaviors of 2009: When the residential market collapsed, the owners were under a constant shock… (Prices fell by 40 – 70% during the first year of crisis)

They were used to a different way of life. As all owners of all kinds of properties, they were spoiled at maximum, being pampered by an army of real estate agents, begging them to collaborate. If there were two markets which collapsed for good during 2009, these were the residential rentals and the office leases. But let us stay on the residential market today…

An expected revival which never came

I don't blame them. They are probably the only ones who had no reason to become serious, watching around them so many people getting rich by being completely unserious. If someone whose properties value some millions of euro

doesn't care to learn about business and Real Estate, why should they care? In the end of the day, they just wanted to rent one apartment (or more) and collect a rent which would definitely improve their life. Most of them had suffered too much so as to finally obtain this property, or to maintain it through the rough times of the 90's. They followed the trend, asking for more in a market where so many were willing to pay more.

In the beginning they were told that there is no problem at all. Then they heard that the problems would be solved before the elections for the Parliament, back in 2008. Right after they were sure that the new Government would bring back the values they got used to. Easter was the next moment of the expected revival, "if not, until summer for sure". "Before summer" became "after summer". "During the presidential elections" was the next bet, followed by the one of "after the presidential elections". 2009 ended with the prices declining non stop. Sometimes slowly, sometimes fast, but always painfully for the owners. It started with a 2 – 3% each month but it soon fell by 5 – 10%. At year end the difference was between 40 – 70%, depending on the location and the characteristics of the property.

So, what happened when the tricks of the past didn't work anymore?

Changing roles… "masters became slaves" and vice versa…

The stories about bad behavior of owners to tenants are millions, but there are plenty of complains from the other side too. In my 6 years in Romania I rented 4 different locations so far. Even if I was lucky and I was treated good, I tend to believe that this is just one side of the reality. When many people realized that the old apartment which they received by their grand father could increase their standards of life, they took advantage of the opportunity. Some of them in a healthy way, some others by treating bad the tenants, offering almost nothing (if possible). They refused to connect price with quality of offered services. Many became extremely arrogant and felt important by trying to humiliate the one who wanted to rent their apartment, their CLIENT, Romanian or foreigner.

But that was before the crisis (or the landing back to reality). So, imagine the surprise of all these people who were used to feel like "masters", treating people like "slaves", when they stopped receiving calls by agents or clients directly. In the beginning they continued asking a lot. But after Easter 2009, not only they lowered the prices but they were shocked to see the tenants raising their voice, asking to establish their rules, their version of deal. Even some agents demanded commissions! After October the change was completed, so almost every tenant could find good offers and polite manners. If the owner was ruse, then the tenant simply left.

Ah, where are these moments of glory? When people were telling you "if you don't accept my terms in the next 30 minutes, I will give this apartment to someone else" and when you were calling back in 15 minutes to confirm that you… surrendered, you were listening to the owner informing you "I rented the place to someone else. You should be faster next time"..

Better to lower the rent, than to leave it empty?

If you see Megan Fox not dating any man for some years, being reported always "by herself, staying away of all kinds of fun", wont you find it weird? In the end, wont you consider that she must have some kind of problem, so as a woman looking like her to end up alone for so much time. This assumption has common points with the home rentals as well…

Most of the owners made some steps back and met the new expectations of the tenants. The others still wait for the miracle to happen, the economy to boost again and everything to return at its "2008" standards. Meanwhile, they will have to pay property taxes, costs of utilities and many other minor expenses, which will remind them that a rented property with lower rent is always better than a sometimes rented one with higher income (in papers).

The party is over – Rents will reflect to the tenants' financial potential

Now with the crisis people will realize that they should finally start charging rents according to the tenants' financial potential. The first ones who discovered this basic business theory saw their pocket full of 10 – 12 months rent. It was lower than the past, but continuous, with serious possibilities to be extended during 2010 too. The "dreamers" (especially plenty ones having properties suitable only for very rich expats, a breed under extinction) spent more time cleaning the empty place and showing it to visitors, than negotiating with serious tenants.

The party is over. Unfortunately? Fortunately? I do not know. What I know is that the dj collected his equipment and left. The ones who will continue dancing without music will soon look weird. What do you think?