8 Real Estate facts that I confirmed this summer

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“Aaaaah, those summers… back in 2004 – 2007… they used to be a very busy time, with the prices changing from the moment you left for vacation till the time you got back. So many memories and experiences…”

Actually this is one of the most important problems we have nowadays. Too many people remember the past and constantly attempt to return there, refusing to accept the reality of today. This procedure continued in 2011 as well, but there were more interesting facts that I confirmed this summer. Let us review them together:

1. We continue living in multiple, parallel “realities”

It is very interesting and true. We have so many different, parallel “realities” that we are living in. This was always the case, but now it is even clearer. As the economy has not picked up, thousands of people search for an investor to sell their property with big discounts. But at the same time we see so many property owners trying to raise the prices, despite the obvious lack of clients. Most of the banks continue searching for solutions to deal with loan problems, while a minority of them started lending again. The market continued to be very difficult, but there are too many contradictions (I will tell you more about these contradictions during the following weeks).

2. Five times (or more) higher price for lands suitable for “green” energy projects

As “green” energy projects dominate the market, with hundreds of people expressing their initial interest, I noticed that in many cases property owners have multiplied their price. We usually refer to agricultural lands (whose initial price is 0,2 – 0,3 Euro / sq.m.) which “can be used for “green” energy as well. Most of them are not really useful for this kind of projects, but who can convince their owner about this fact? He will continue dreaming for a while, until he will return to reality. This summer was full of people searching for this kind of properties (with specifics like being close to electricity etc). Too many owners rose their prices, very few of them actually sold 1 (one) sq.m. with a price close to the expected one.

3. The requested price continues approaching the offered one

Many people think that the prices keep on falling. In reality just the asked ones fall, while the offered (and the ones of transaction) remain more or less the same. During this summer we saw the asked prices coming even closer to the offered ones, creating an impact in the market. This trend will continue during the very difficult winter.

4. “Prima Casa” started to be less important, as more banks offer loans

“Prima Casa” is the most important factor that determines the residential market in this country, especially for old apartments. But lately and especially this summer we saw some banks offering loans with terms “similar to the “Prima Casa” ones”. If this trend continues and becomes more important, then the market will enter a new phase during 2012.

5. Income properties: Still very attractive, still not too many

I have tens of inquiries by clients who want to purchase income properties, but (as always) I can not finalize not even 20% of the requests. These properties remained attractive during the summer as well, but the market does not show any sign of change. It remains shallow, with few good offers and too much (overpriced) bad ones.

6. Executions with high price = no transaction, just discussions

Thousands of properties are offered through foreclosures and executions. How many of them were sold? Very few. This summer we saw the same situation again: A bank asking more than the market pays, a liquidator trying to find investors at the requested levels… in 90% of the cases the result was negative. Is it time to change something in this strategy? Or is it convenient?

7. Innovations and new ideas are rare to find, this is why they are very important for our market. Bravo Mr. Popp

I was happily surprised to read about Mr. Dan Ioan Popp’s new project, the independent home, which has utilities no matter what utilities its area has (usually none). This new idea is the best one I have heard in some time now and I am happy to see a Romanian entrepreneur making it reality. Bravo Mr. Popp.

(No, the prices for extravillan lands have risen, people still need time to be convinced)

8. Banks: The protagonist who will define the market’s future

We have entered a turbulent autumn, living through historical times. What will happen during the following period? No one can say for sure. But this summer we made it clear: This market will be driven by the banks’ behavior and approach. They are (and they will be even more) the protagonist of the game. If they remain negative towards Real Estate, following the orders they receive by their headquarters, then the market here will remain in “silent” mode. And as things deteriorate every single day, this summer gave us clear signs for what the autumn and the winter will bring us.

What is your opinion?

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