Real prices are NOT the asked prices. Can you finally get it?

It looks like my yesterday's post created some anger out there. Lots of you got upset because I presented the situation as it is (and when some people don't have arguments, the easy way to reply is to attack me about Greece! So sweet…). Many others consider that the bottom is not reached yet, as there are too many owners out there asking for crazy prices. Finally, plenty of owners cursed me because I did not announce that the prices will explode again.

Let's read couple of emails which describe exactly this kind of "feelings"…

So, someone with the name "Marian" wrote to me yesterday:

"Greece, right? (Greece reached rock bottom, not real estate prices in Romania)"

Marian, Greece is a whole different story comparing to the prices of Romanian Real Estate market nowadays. I like this kind of approach. It reminds me of someone in my city, who was famous for not having a shower, stinking like Hell. In the beginning people were telling him about this, asking him to discover the advantages of soap, but his replies were quite vulgar: "Who says this? You? Whose wife slept with this and that guy?" or"How dare you? You still didn't collect enough money to buy the Mercedes you keep dreaming of, stupid peasant". So, the problem was not his situation but to identify who dared to speak in front of him about this issue.

Speaking about the reality does not change our patriotism for our country. Tomorrow I will explain to you the situation of Greece. A situation that I know since many years now, this is why I decided to move to Romania already since 2004.

Another gentleman is upset for a completely different reason…

Someone with the nickname "A disgruntled fan" analyzed the things from his point of view":

"Ilia, 50k euro for ultraperipheral flats in Bucharest and Cluj and 45 in Timisoara is "rock bottom"?

I've been reading you with great respect for your opinions, but if this is rock bottom then I'm taking the next plane to a country that doesn't make me unable to live in at a small (albeit a bit over the French unemployment payment) income more than 1.000 euros per month. Like Nicaragua. Or Columbia. Or the Centrafrican Republic.

I do not see anything else than B or C class office space having potential in Romania, sorry. You can stay here and play with Romanian and Greek real-estate that is worth something only to people who have sustained severe blows to the head as infants".

The real prices are NOT the asked ones. Can you finally get it?

Last week I was telling you that "Prima Casa" pumped the prices in several semicentral areas. From 30.000 – 35.000 euro they rose artificially to 60.000 euro, creating a risk for the buyers of those old homes, at these high prices. (Check the post here).

Today the old peripheral 2 rooms flats of Timisoara or Cluj don't cost more than 20.000 – 30.000 euro. For Bucharest the real price should be 25.000 – 35.000. Ofcourse an owner can ask any price he likes, but if you bring a serious evaluator and an investor, they will tell you that this is the price range, not 45.000 euro as you mentioned. (This is why the banks don't give loans for these apartments without "Prima Casa", for them the real prices are MUCH lower…)

We don't study the prices focusing only on the asked ones. These are for informative use. (For example, we prepare a major market report for the end of the month. We have the asked prices per area, but we mention that the negotiations always take place). We focus on the real prices, the ones which are finally accepted by both sides and reach the notary's office, for the transaction to occur. Depending on the category of property, these prices are 15 – 35% lower than the asked prices today.

So, taking into consideration the REAL prices, I insist, we have reached rock bottom. Today we see deals for old apartments with big surfaces at Dorobanti area at the level of 1.000 – 1.500 euro / sq.m. Officially many owners ask even for 2.000 euro / sq.m. and many agencies increase this number much more. I keep in mind only the price of transaction and I don't think that this price can go down for another 30 – 50%. More or less, this is the bottom.

The… "anti – Romania talkers"

Except the "patriots" who blame Romania for all possible reasons, but they don't like the foreigners to mention the same reasons too, we also see several "anti – Romania talkers". These are Romanians who are so frustrated with their own country, that they don't lose any chance to exaggerate and compare it with others, really poor ones.

I will not enter in the discussion about Nicaragua etc. Romania has several drawbacks, but this country has also a great potential for the future. If we just find the same "language" so as to communicate together, we might discover that all of us finally agree on two things. Yes, all of us, the "patriots", the "anti – Romania talkers", the foreigners who are here…

• We care about this country.
• We want to see our life improved while living in this country, ideally through the improvement of the country and the society too

Returning to my main topic, please let us all stop confusing the asked prices and the final ones. This story with "the neighbor who wants this price, so I want that one too" became too boring and noone wants to continue with it anymore. The few remaining foreigners target opportunities only. Except the "Prima Casa" buyers, I hear most of the Romanians (I know) offering MUCH lower prices than the ("bad") foreigners, searching for "fire sales", not even distress or "foreclosures".

So, we are close to the REAL price of the properties. Not the announced ones I repeat…

PS. This does not mean that any owner should sell his property with low price. As I keep stating several times, if one does not need the money now, he should keep his property for some years, until the market will go up again.

Tomorrow:

Poor Greece – Rich Greeks

and Romania follows…