Smart to buy apt or house in Col?

six20five says on Dec 27, 2005, 19:06:

Are you sure? You sure you want to give up living in the states to move to Colombia? Don't get me wrong, I love my country but after having lived there for more than a decade, and living another decade here, I don't think I'd be able to give up the freedom I have here in the states.
Colombia would be an awesome place to live if it wasn't for how insecure it is. You have to be on the lookout pretty much 24/7. Another thing is the unemployment rate; it has declined lately but it's still pretty high. The women and food though make it all worth it though. So it's a tough call you have to make.

rapi2000 says on Dec 27, 2005, 21:29:

Go for it! Colombiaboy,
Colombian laws are very similar to the USA laws related to divorce and property. You can buy a house in Colombia with your wife and if there is a divorce in the future, you can get your goods shared equally. You CAN sell the house if it is on your name, if it is on both names then you both have to agree to it and share the money. The best way to go is to contact a good lawyer to advice you on how to proceed on this. BTW you cannot beat the prices of Colombia's real estate.
There are many gringos that retire in Latin America in general. I don't know the statistics for Colombia, but for Costa Rica it is 85,000 (year 2000). I know for a fact, that there are many foreigners buying property in Colombia in order to have a place to retire in a place with nice weather, a maid, low monthly bills to pay, excellent food, decent medical services, and MANY more advantages. You can live with your retirement money easily in Colombia or other places of Latin America. I have already bought some property in Colombia for the future and as soon as my wife and I retire, we are on the way to Barranquilla or Cartagena for good. IF we divorce, then we go separate ways and we split what we have, simple.
I disagree with six20five, tell me: Would you go out to bars and run around everynight when you are 65 or more? Probably six20five wants to live here in the USA when he is 65 or more and live on US$900 a month paying sky-high electricity and gas bills to heat up the apartment and drag his ass on the snow to go to the supermarket to buy groceries in the winter, that is a personal choice.
I go to Colombia twice a year on vacation, and believe me, there is no other place like it. FYI I have traveled a lot to many other countries in Latin America and the seven seas. I live and work in the USA, but as soon as I have vacations, Colombia is my place to go when I really want to relax and have the best time.
Happy holidays!
RAFA

rapi2000@yahoo.com

colombiaboy says on Dec 28, 2005, 06:55:

Thanks .... Can U help some more??? Thank you for the advice on if I buy a house in Colombia.. My wife who is Colombian seems to tell me we can get a NEW or nice Apartment in the Plaza de las Americas sector for maybe around 25k to 35K American?? Does that sound correct?? what about the safety factor there?? any suggestions of sectors in this price range?? Maybe en the north or Chia area??
She also has a small child- what are your opinions on raising a child in Colombia Vs. the USA.or the education system?? Personally I am disappointed our education system here these day?? They have no family here and I belive raising him close to his family is the best choice. I would have about 1k a month to live after we purchased a house and furnished it- is that adequate for a family?? She would seek work in her old profession earning maybe around a million pesos. I would like to seek something teaching English- I know that is the typical Gringo response in what they do for work????
I WOULD APPRECIATE ANY COMMENTS IDEAS AS TO MY PLANS?? are they reasonable?? crazy?? please any comments or suggestions are appreciated??? thanks..

Wastelandlive says on Dec 28, 2005, 07:05:

Colombiaboy - Ya, that's correct With that kind of money, you can buy a NICE house down there. And I love the place - it's down South, you're hanging with the 'gente, and the night life is UNBELIEVABLE.

It's a nice break from 93 and LZR.

But what kind of lifestyle do you envision? Do you pass for Colombian? How do you dress? How's the Spanish.

Colombian's don't feel particularly safe in Caravahal. Oh, there are worse neighborhoods, to be sure. But if I were a guy with a plasma tv, a computer, and a stereo, I wouldn't even think of it... if, on the other hand, you're broke yourself and/or like to live simply, it might work out.

But read some of the threads here about muggings, taxis, dirty cops, etc. If you want to hang out down there, keep your wits about you. And frankly, if you choose to LIVE there... the law of averages just might catch up with you, however streetwise you may be. You might want to find out what you can get for $60K a little farther up... Chapinero, Alhambra, or Santa Barbara.

Wasteland

Wasteland

Wastelandlive says on Dec 28, 2005, 07:12:

PS - $1K is plenty ... for your average Colombian, and if that's your family income WITHOUT a rent or mortgage, you'll do just fine.

But are you planning to make that as an English teacher? That might not work out.

Lastly, public schools in Colombia suck. But then they suck in the US, too. If you care about the kid, turn him over to some mean Catholic nuns; He'll probably be psychologically scarred, but at least he'll do well in college.

Wasteland

Wasteland

colombiaboy says on Dec 28, 2005, 07:23:

Thanks....for the repsonses!!! We certainly are not rich- but yes would want a place to have nice things... ie.. TV.. stero.. computer... I am in mid 40's- so the purpose of retiring now would be to live a SIMPLER- LESS STRESS life... I am familiar with Chapiner area- what about more north?? doesnt it start to get more economical after a certain point in the north-- like Chia area or somewehere close??? AS FAR AS PASSING FOR COLOMBIAN... I probably cant.. tall .. brwn hair.. I do speak good spanish.. on the telephone most cant depict where I am from.. as far as the dress.. I would want to blend in... ALL WE WANT IS TO LIVE A SIMPLER LIFE... WITHOUT THE HASSLES OF the HECTIC PRESSURE OF THE corporate lifestyle here.. yes we do enjoy and want nice things- but to buy them and have them paid for... I didnt realize that the probability of robbery in houses or apartments was so high-- even though I lived there for about a year..I realized the danger of kidnapping for gringos that are there,, but thought Bogota or other bigger cities are somewhat safer???
I love the climate, food, and women...and the culture... IS THIS A CRZY ADVENTURE???THANKS...

Wastelandlive says on Dec 28, 2005, 07:31:

OK... Well,

I have to say, my friend, living down my Plaza de Las Americas is not my idea of a peaceful, stress free life. Authentic, fun, bustling... but "stress free?"

Na.

Do things get more economical north of Chapinero? Well... I think Santa Barbara is probably the most expensive part of town, and yes, things get a little less expensive as you go north of there. But I can't offer you much useful advise... I don't know those neighborhoods well. They are very residencial, and somewhat boring. That might be what you are seeking.

I understand that you're focused on Bogotá for family reasons. That's great - narrow choices are easier to make. But Caravahal? Plaza de Las Americas?

Na. You need to be in a high rise condo farther north where you're not worried daily about somebody jacking your goods.

Wasteland

Wasteland

colombiaboy says on Dec 28, 2005, 08:09:

In Comparison... In comparing the zones you are talking about... when I lived there before I lived near the new mall.. Atlantis... I forget the zone..near all the computer stores on 15....this area must have been a fairly high estrata because I thought my apartment( which I rented) was high in utilities for the size.. would these areas you mention be more or less safer than the santa rosa area I lived near..????
THANKS...

thur says on Dec 28, 2005, 09:30:

Visiting perspective... Well, ofcourse I don't have the inside info like the above posters, but what the heck...
While we walked this summer I liked the 'La Castellana' neighbourhood, it looked like 'El Batan' many years ago before the high buildings which are there now.
They've told me it's better to live within a gate and security (conjunto). My family used to live in a house in a conjunto in 'La Floresta' which was nice, with little convenient stores nearby and Cafam Floresta within walking distance. Later they rented a house directly on the street in 'La Floresta' which gave several safety concerns. Now they rent a house in a conjunto near Cra52 and Calle129 (estrata 3,4,5), which is nice. Stores and c.c. Bulevar within walking distance and cheap groceries (fruits, vegs, meat) in 'Ciudad Jardin' (not a place to live though). We walked several times along Cra52 and Calle 134 to c.c. San Rafael or along Calle 127 towards Transmilenio (rather long walk), which was nice. But then again, I don't live there.
Greetings,

- www.pbase.com/thur

GringoinBucaramanga says on Dec 28, 2005, 09:58:

Check it out jj_jp at msn.com

Depend on where you want to live.
I retired with about $3k a month.
I looked in Bogota and Cali for a condo.
Then we looked in Bucaramanga.
We purchased a new 3 bed room 3 bath condo 99m
for about $52K. It would have cost $75-85 in the other city.
We went from average in the US to rich ass
strata 6 in Bucaramanga.
Just depend on what u want.
And about the split we got a pre. nup. from an attorney for $25. US

jj_jp@msn.com

haji says on Dec 28, 2005, 11:42:

gringo bogota is right To be a tourist ,you can get by with no problems normaly and Colombia looks great but when you live here awhile all kinds of things happen
my wife and I have lost almost everything except our home.anyway come and rent for awhile before you buy at least a year then make up your mind.heck I might even rent you our home since we are going back to the states in january-it on calle 127a
best regards
haji

colombiaboy says on Dec 28, 2005, 12:21:

Maybe you are right... Even though I lived in Bogota for about a year.. and having spent several trips of several weeks there,.... renting would be the safest bet .. to start anyway..I just wanted to make the best of what little savings I had by purchasing and cutting down the cost of living in colombia to practically nothing without a rent payment. I am being pressured by the Colombian wife.. who wants to buy there.. undoubtfully so??? She just wants a stable life.. which here economically is alot more difficult.. so we thought Bogota would be the answer..... thanks for the advice,,, any other thoughts of a Gringo living in Colombia will be greatly accepted

colombiaboy says on Dec 28, 2005, 13:08:

Yeah.. love is Blind they say But I am the one who has initiated all the talk over going back to Colombia to live... She says she wants to live her.. for her boy.. for her.. I believe she would prefer Colombia.. She has been here for 3.5 years.. hasnt learned to speak english yet- but has become a "professional english student" and has met a "social club" of Colombian women all married to gringos that seem to all be "better off" than us... who knows.. maybe she is right.. and I am just "tacano".. BUT THAT IS A FEAR OF BUYING A HOME THERE AND .. if we split up.. I have set her up for living there and left myself out in the cold.... ANYONE EVER HEARD OF AN POST NUPTUAL agreement in Colombia?? that would protect my investment in the HOME???

Wastelandlive says on Dec 28, 2005, 13:24:

Wow. Woahhh... CB,

Didn't you write that you are in your mid forties? Easy big fella. I want to be respectful of my elders, but there is WAY to much haste and caps locks keys being put into play here.

Firstly, there's always a temptation to buy right away. After all, you've got people on these boards predicting a tenfold explosion in the some property values in Colombia, and you don't want to miss out on that, do you? Better buy tomorrow, before the price doubles! Take whatever price he offers... it's going up as he speaks! :)

Relax.

Gringoinbogata's advice is excellent, and applies ANYWHERE in the world. It's always a good idea to rent for at least six months, and really get to know the city and its neighborhood. Buying is a big decision, property in LA is not as liquid as it is here in the US... and the only way you can know you're picking the right neighborhood, and then paying an honest price, is to take your time and educate yourself.

Use our advice to find a good rental location. Get your job. Make some friends, and get around the city a little. Make sure this idea is a winner for you and the family. Then buy! I promise you... real estate in Bogotá is not appreciating so fast that you'll regret having taken the time to inform yourself.

And why rush to marry? Colombian law - I am told - is fairly liberal: you keep what you brought, she keeps what she brought, and the rest is split down the middle. So if you're paying for the house... why not take your time shopping, buy it in your name, THEN marry the girl, AND get a post-nup? (Yes - they exist.)

I don't see the rush. Where's the pressure coming from?

Wasteland

colombiaboy says on Dec 28, 2005, 13:54:

We have been married for over 3 years.. and I keep promising that we will buy nice things.. but dont see the sense or need in buying them here... if we will be moving to Colombia when she gets her Citizenship next year....I probably am putting the pressure on myself...BUT ALL YOUR ADVICE from everyone here.. seems to be to wait....AND RENT FOR A TIME ...probably GOOD ADVICE...
Maybe the pressure is coming from her..( she has some colombian friends that are moving back and are buying everything fresh and new. IT SEEMS PRACTICAL TO do that... buying everything from furniture to decorations and appliances would be easier to buy once exactly for the house that you have picked out..BUT THE ADVICE ON WAITING certainly seems GOOD AND SOUND.... THANKS

Wastelandlive says on Dec 28, 2005, 14:02:

Ah - so you're already married. Roger that. Get a pre-nup. Good luck friend!

Wasteland

Wasteland

viewpoint says on Dec 28, 2005, 14:15:

WOW You guys better listen to some of GIB comments as he is the only one making sense in many of these posts. First of all I don't think many of you may understand all of the risk that you incurr when investing in Colombia.

The value of homes in Colombia could increase and you would still lose money as you are buying the homes with foreign currency. Your costs are in foreign currency so you not only face the risk of declining home or real estate values but the risk of the Colombian currency declining against the foreign currency you used to buy the home or other real estate so you are not just managing one risk but rather two both of which you have no control or influence over.

When I bought my first home I negoiated the purchase of the home in US dollars when the peso was about 1500 peso to the US dollar and the peso began declining immediately and over time reached 3000 pesos to the US dollar at which point I was down (lost) 40% Igiving some credit to a little appreciation) of my investment in US dollar terms, then the peso began to get stonger and the house began appreciating and now 6.5 years later I am at a litttle better than break even. When I bought my second home the peso was at 2900 to the US dollar and I have done very good with that investment because of the strength of the peso and some further appreciation in value. Probably more lucky than smart.

Second problem ColombiaBoy has is that his wife will not be able to appear as an owner of the home because her ownership could trigger an income tax on her portion of the property valuation. Ask AZTEC about that as he knows the law.

The $25 prenep you might get at the notaria is worth just that $25. Separating assets is one thing but you want to separate a lot more than that most importantly you need to separate the incomes as your separate properties if there is a great differiential in your incomes. If you own properties in common, have joint checking accounts, file joint tax returns a pre-nep is worthless. First and most importantly a pre-nep under USA law in most states is not efforcable until (and UNLESS) a judge when entering a divorce decree determines it's fair and equitable. Up till the divorce decree is entered it's just a peice of paper and if the judge feels (in his sole descretion) it's unfair then yes it was just a peice of paper.

Trust me I been down that road more than once. Also the document if drafted in the USA must be in both parties native language. My ex-wife fully fluent in english having lived in the USA for 25 years used the argument she didn't understand what she was signing because it was in english.

Anytime you go through a divorce you are going to suffer a major financial loss so all you can hope for is to use your skills to mitigate the loss (husband or wife).

colombiaboy says on Dec 28, 2005, 14:57:

A little confused I understand I would have to talk to a lawyer in Colombia.. but from my experience with them.. there are so many dishonest ones who can U trust... We had a 3-4 year court battle in Colombia and have learned that the legal system is very sad and needs an overhaul... BUT MY QUESTION.. that confuses me is WOULD I GET THE PRE-NUPT contract in Colombia??? if so..USA court or judges wouldnt have any jurisdiction over a prenup made in colombia would they???
and the same goes if I got a pre nup after the fact here that I am married-- but that would not be enforceable in Colombia either correct??? any answers????

colombiaboy says on Dec 28, 2005, 15:01:

excuse me.. oops sorry made a mistake..new here... jajaja

six20five says on Dec 28, 2005, 16:13:

Snowy USA Rapi2000 ...at least when I'm 'dragging my ass out on the snow' on the way to the supermarket, I'll be doing it knowing the possibilities of a thug willing to stab me for a few pesos dragging his ass out on the snow right behind me are slim.
Don't get me wrong, I love Chibchombia but we're talking about a guy who wants to give up his life in the states (where he's probably lived most of his life) to move to Colombia. It's not going to be easy.
By the way rapi2000, electricity and gas are not too bad where I live... and no, I don't live in section 8.

colombiaboy says on Dec 28, 2005, 16:43:

U R RIGHT.... Except for the year I lived in Colombia.. and time spent visiting there as well as trips to central America.. I have lived here all my life... BUT The time I lived in Colombia was the most peaceful.. most fulfilling time of my life.. I guess I am tired of the ratrace of America.. mortgage.. car payments... work.. stressed to make ends meet.. after 20 more years of this.. I want to end that ratrace now... take my investments.. buy a home.... invest the rest.. to live on a monthly income... subsidize that by us both working in Colombia.. because we WANT TO... NOT HAVE TO.. or worry so much like the majority of the people in Colombia.. worked like slaves ( less than 300-400k pesos or even under a million pesos a month to just make ends meet--- TO ME... I HAVE REEVALUATED LIFE HERE... and want to choose a simpler life style-- THE MAJOR PROBLEM-- is the security issure in Colombia-- My family says we should choose somewhere else in Central America like Panama or Honduras??? for me that would be fine-- but she is Colombian

tomtom33 says on Dec 28, 2005, 16:50:

Life in Colombia is not simpler. Everything that I want to do here seems to be a major hassle. My Spanish is poor, and I don't know how things work.

In general, if you are looking to reduce stress, stay where you are and work on other ways to do that. The grass is always greener other places.

I live in Colombia for the climate and culture. Things are more complex and more stressful for me here. But I love Colombia.

Gator says on Dec 28, 2005, 20:13:

I Own Now.... in an upscale Bogotá neighborhood BUT I/we were lucky on the timing and got in before the prices started to really, make that REALLY, go sky-high. Buying while the dollar was strong did not hurt either. I also tend to agree with GIB. Now is not the time to buy. To much will be riding on the next election.

"Brevior Sltare Cum Deformibus Mulieribus Est Vita!" .

Rubiazo says on Dec 28, 2005, 22:03:

What makes everybody think that buying a house in the USA is so much more secure, or that OUR currency won't take a nose-dive. The administration certainly seems to be hellbent for leather on plunging the USD right into the toilet! Not to mention, for all we know we could be right around the corner from an event that makes 9/11 look like nothing! So don't feel too fucking secure up here, guys!

I would say around Plaza de Americas is fine, but NORTH of 1 de mayo. I personally think that the areas of Bogota to avoid (especially for buying) would be anywhere downtown or near downtown south of the graveyard. Just look at a map. Also Modelia, Normandia, and Salitre (where GIB lives now!) are worth looking at but they are a little pricey. $25k USD CAN get you a nice (but small) apt in an estrato 4 conjunto, but it wont get you a closet in estrato 5.

ElPadrino1 says on Dec 28, 2005, 23:03:

I would proceed with caution on buying a house with this Woman.I notice you mention she throws out those Arrows that her friends who are married to Gringos are doing much better, buying this, buying that. I would never let myself be pressured under duress into buying some Property just because my Wife's friends were buying in a certain strata, neighborhood ect ect. If you are signing the check, its YOUR call Where you buy and How Much you will spend on a House. And When and If you buy at all. I would rent first also, as others have mentioned. You should check the Foreclosure Depts. of the Major Banks in Bogota as they always have a fresh list of new foreclosures. Big Business in Bogota !! Foreclosures are listed as "estan en daciones"-in metrocuadrado.com. Like you said, you want to be real sure of what you are getting into before you sign and its too late. Thats a valid viewpoint about not setting her up in case of a Divorce. How many times has one heard that drill! Good Luck!!

Hunter says on Dec 29, 2005, 07:51:

gringoinbogota The dollar may have increased last year against the yen, Euro and Pound, but that doesn't mean it will in the coming years.

There is only one way for the dollar against other major curriencies and that is South, the markets can buck the fundamentals for a while, but they won't for ever.

Also why do you insist on comparing the Colombian pesos to MAJOR curriencies, as I have pointed out many times, the Colombian pesos should be compared with other commodity exporting Countries.

Actual numbers as of the 28th of December with a few trading days to the end of the year:

The dollar has gained 12.2% against the Euro.
The dollar has gained 14.4% against the Yen.
The dollar has gained 9.8% against the Pound.

Wastelandlive says on Dec 29, 2005, 08:00:

Real Estate Everywhere... Has simply gone nuts. Smart people are calling it a bubble, and it's hard for me to imagine that it isn't.

I feel neutral about the whole thing because I own a house here in gringolandia: that means that I've effectively earned nothing, and lost nothing. Real estate investors everywhere have scored, and renters are ruing the day.

Until tomorrow. The worm always turns. And that goes for currency markets as well as anything else.

Wasteland

utopiacowboy says on Dec 29, 2005, 08:54:

Boy if I had a dollar for every guy who comes here saying that he is going to leave the rat race in the US or Canada for tranquility in Colombia. Where do they even get these ideas? Life in Colombia is damm difficult even for Colombians let alone transplanted gringo dreamers. My oldest stepson here wants some spending money so he easily goes out and gets a job that in Colombia would be a job supporting a family. Here it's just a menial job for teenagers to make some extra dough. Jobs like that are a dime a dozen here. Not so in Colombia. Any kind of work is hard to come by. You ask my stepkids and wife where life is easier and they'll tell you straight up.

Disclaimer: any comment I make is inane and is not to be taken seriously, and is so patently ridiculous that no one should take it seriously, even as an insult.

colombiaboy says on Dec 29, 2005, 09:03:

YES,, U R RIGHT..... If I or we were moving to Colombia to seek employment or to have to work for a living.. I agree we would be way better off in the USA... as there are tons of medium paying jobs.. 9-15 Hr.. Those could not be found in Colombia... I lived in Colombia.. and saw the unemployment.. people on the street... offering to guard your car for you while you were in a store... is sad... and NO.. I have worked hard in my life.. tried to save.. and would like a better chance at a second marriage with my wife and new step-son... we would have enough money I believe on income from investments here to live comfortably there.. My wife wants to re-enter her profession that she did for nearly 15 years there,,, because she wants to.. I would like to teach english.. as I have an interest in that.. and hopefully be able to "enjoy" life more of the life and culture and food and climate in colombia....NO MOVING TO COLOMIBA SEEKING GOLD.... that pot is still t the end of the rainbow.....

Hunter says on Dec 29, 2005, 09:27:

gringoinbogota & Wastelandlive gringoinbogota

I don't really care what one bank says, because you can easily find another saying the opposite. The UK going into recession, thats a joke, I don't know where you are getting that information from, I don't see that in any present or forward looking indicators, the GDP growth has slowed down slightly in the UK due to the interest rate rises previously, but will pick up again soon, in fact already is. Europe as a whole is plodding along as you say.

The problem is that is the ONLY real thing the USA has going for it currency wise is its growth, there isn't anythiny else, their interest rates have nearly peaked, while Japan and Europe (and others) are expected to raise theirs, markets are forward looking so this will start to feed into the market soon, the current account defict and federal defict is still increasing, the fedearl deficit can be adjusted easier, but how are they going to stop the trade deficit from growing?

Any slight selling on the US bond markets, could cause a rout at any time, seeing as a large part of the US bonds is owned by foreigners (this being the postion that many developing Countries like Colombia are advised against), which will have large implications to the US currency and the housing market and therefore the US growth, seeing as a lot of it is paid for via the increase in US house prices.

Several things have kept the dollar higher this year, private buying of US liquid assets, a lot via Middle East petro dollars, also the the Homeland Investment Act, a year-long tax break, which runs out soon.

There will be crunch time soon, when exactly, I have no idea, but I have US$500 in a paypal account, no more, I wouldn't dream of keeping any other assets in US dollars, there are plenty of ways of spreading your assets around to reduce any single currency risk.

Wastelandlive

It is not true to say that there is a worldwide bubble in real estate, there are certainly several developed Countries that are in a bubble, but the majority are not, there are certainly some developing Countries that are in a bubble, but the vast majority are not.

Wastelandlive says on Dec 29, 2005, 10:41:

??????????????? Well Hunter,

I see the wisdom of much of what you say... My biggest problem with your analysis is that for all the structural problems you see with the US economy... well, who's doing better? Like you, I get nervous when I look at debt figures or the Current Account.

But I should worry about the dollar slipping against the Euro because of that? How's Europe doing? How about Colombia?

I wish I had your confidence. But I'm not writing off the greenback until I see better. If it goes south... well, what are you holding? Swiss Franks? That might be smart. I REALLY need to go international.

You write that there are "several developed Countries that are in a bubble, but the majority are not."

That doesn't match my perception of reality. I get around... and EVERYWHERE I have been... from Colombia, to Panama, to Virginia, to Miami, to San Diego, to DC, to London, to NYC, to the freakin' Canary Islands ... all have seen uncharacteristic rises in property values.

What's your take on this survey from the Economist?:

"NEVER before have real house prices risen so fast, for so long, in so many countries. Property markets have been frothing from America, Britain and Australia to France, Spain and China. Rising property prices helped to prop up the world economy after the stockmarket bubble burst in 2000. What if the housing boom now turns to bust?

According to estimates by The Economist, the total value of residential property in developed economies rose by more than $30 trillion over the past five years, to over $70 trillion, an increase equivalent to 100% of those countries' combined GDPs. Not only does this dwarf any previous house-price boom, it is larger than the global stockmarket bubble in the late 1990s (an increase over five years of 80% of GDP) or America's stockmarket bubble in the late 1920s (55% of GDP). In other words, it looks like the biggest bubble in history."

http://www.economist.com/finance/displayStory.cfm?story_id=4079027&no_na_tran=1

I'd love to know what developed countries you think are NOT highly priced right now. And I'm not trying to be sarcastic... this is your bag, so I don't doubt that you have some insight. The MAJORITY are not in bubble? Goodness me, where? Japan, I guess... Germany. Looks like Australia is cooling off, but prices haven´t dropped. Well, check out the chart for yourself...

With all due respect -

Wasteland

Hunter says on Dec 29, 2005, 14:43:

Wastelandlive & gringoinbogota I wouldn't actually say property is my bag, I have a view on it that’s all, but views are like ass....., everybody has one.

I realise that some markets have gone up, but that is pretty normal, house prices tend to grow as quick as wage inflation or slightly better, but the economist is taking its calculations from 1997, I know that several of those Countries on the list had a property bubble burst in the late 80s and early 90s, the property in those Countries didn't recover and start heading up again for about 5-7 years depending on the Countries, so the writer/s are taking the lowest point that they can do get the highest increase in growth for their table. There are quite a few developed Countries missing of the list, even if you look at the real estate growth in a number of the Countries on the list it is not that great when taken from the low point of the last down turn, certainly not bubble like numbers. Although some certainly are.

There are many ratios that economists like to use, one of them being the one quoted in the economist, the only real ratio that I follow in developed markets (still keeping an eye on the others) where there are a lot of properties bought via mortgages is the percentage of the pay that is needed to service the mortgage, this being the only true indicator that I can see historically that follows the ups and downs of the real estate market.

As the article states the lowering of interest rates lead to a boom in many Countries, this was predicted by several people back in the early 90s, Roger Bootle for one, they also said that they expected a one off real estate adjustment in developed markets because of the low inflation scenario and therefore lower rates, as with any adjustments in any type of market they tend to overshoot.

One point to note (this article was written in June), they also said that UK house prices have stalled and are going down, in fact house prices in the UK have started going up again.

"The first is that, contrary to conventional wisdom, it does not require a trigger, such as a big rise in interest...British home prices started to fall in the summer of 2004 after the Bank of England raised rates by a modest one and a quarter percentage points."

I disagree with the above, there is nearly always a trigger to create a house price drop, for example the UK raised interest rates above by just over 30%, so the article there is very misleading, this had the effect in a short while of stalling the housing market there, but they didn't raise them enough to cause a crash, prices stopped rising, they have since started lowering rates again, so house prices have started to inch up.

I can find many other things I disagree with in the article, but honestly I am bored of writing about this, so will call it a day, maybe later, the part below I wrote first, also I have to go and sort a minor business problem out, so will be off line for a day or two.

Onto the US currency.

But although there are housing bubble and real estate increases in a number of developed Countries they do not also have the problems that I posted in the above post regarding the US.

If/when a problem occurs in the US, some to a lot of the liquid assets will be switched into other Countries, the Asian banks will try and stop their currency appreciating against the dollar, where other free or freer floating currencies will not or to a lot lesser degree, so the other major like the Swiss, Pound, Euro will go up by default.

Thanks for the link by the way.

GIB

I don’t discount growth of the US economy, but that is all you have to rely on to, it isn’t a lot.

The EU hardly fall apart if interest rates rise, just wishful US thinking, and that is coming from a Euro sceptic like me, we are talking about currencies not who’s economy is better than the next Country, three years ago the Euro was approx 0.85 to the dollar, it is now around 1.2, I haven’t seen the Euro economy over those three year performing better than the US, so the currency markets and most other markets do not just take into consideration who’s economy is performing better.

viewpoint says on Dec 29, 2005, 15:25:

Real Estate Vatuation Corrections Hunter couldn't be more correct. Real Estate ownership certainly comes with risk like anything else including currency. People have short memories like during the major real estate corrections I have experienced in the USA. In the late 60s and early 70s the Boeing slump caused massive layoffs in western Washington and the real estate prices plumeted putting all equities under water and properties weren't even worth their mortgages. The completion of the Alaska pipeline in the late 80s caused layoffs totaling almost 30,000 people in a state of only 425,000 people bring the Alaska economy to it's knees. I saw property values decline in some cases 85% for certain commercial properties and up to 75% for multiple residential proeprties and 50% for single family homes. Real estate collapsed in other oil-belt states like Colorado, Texas, Lousiana and even Arizona took a big hit.

Not everything goes up forever when unsupported by an income stream. The current prices for real estate in the USA are not supported by income but rather only the greater fool theory "that some greater fool than you will pay more for the property in the future than you did."

Wastelandlive says on Dec 30, 2005, 07:18:

Interesting stuff. All around.

VP, you write that "Hunter couldn't be more correct," but I'm not sure which topic you're agreeing on.

It sounds like you are of the opinion that real estate in the US is overpriced... and though your examples are largely exceptional (a small town going bust because a large company fails), I - obvously - completely agree with your opinion that prices are unrealistic given wages.

Hunter - I thought your choice of ratios was interesting; I can see how it would be an indicator - for example, it's definitely up when people are taking out these rediculous interest only mortgages, as they are today... but I wouldn't know where to find that information in most markets. For example, my impression is that there is little financing in Colombia - is that wrong? Can you tell us how to reference that kind of data there?

I'm surprised that you don't like the Economists theory on rental income vs. property value. That's the clincher for me.

Thanks for your thoughts-

Wasteland

Wastelandlive says on Dec 30, 2005, 10:29:

I don't know if you guys followed this link... http://www.economist.com/finance/displaystory.cfm?story_id=1057057&no_na_tran=1

But I found this article even more in depth and informative. Especially the graph illustrating booms and busts about half way down.

It would be awesome if we could find this kind of information on Colombia. Has anybody checked out the Banco Nacional site? I think I'm going to dig a little harder.

Frankly, the more of these conversations I have, the more I think its an excellent time to just plain rent.

Wasteland

Rubiazo says on Dec 30, 2005, 10:32:

Believe it or not One of the only places in the USA where small houses have never gone down in value was in NYC, even in the worst of the ghettoes, the 1-4 family houses held their value. Big building owners had serious problems however, as did commercial property holders.

But this is a new era, and NYC has a big target painted on it. So far even 9/11 did nothing to bring property values down except for in a few of the richest parts of the city. It actually drove the value of homes in the outer boroughs UP, believe it or not. But tomorrow is never promised.

I don't plan on selling here, but I also DO plan on hedging my bets by diversifying in other countries once i've got this house the way I want it here. The USD has done very well this year but I don't see that as being sustainable. I personally am not long on anywhere in the US Canada or Europe. I went long on a mutual fund that had heavy South American investments before and pulled out just before the Argentina mess. That's part of how I afforded a house in NYC to begin with.

GIB I am now actually considering the Salitre/Modelia area since the Transmilenio is going to go right by there shortly! I thought it was too tranquil for me but you've convinced me otherwise! Nightly parties till 4am, that's my style!!!

UC, why go off on a rant against these people? They clearly stated that they have their own income from investments and would be able to buy outright and not pay rent, so that doesnt exactly put them in the same boat as the average underpaid Colombian. And yes, for much of us, life would be more pleasant down there if for no other reason than one could live off of $1k a month just fine and not have to hustle for a living!

utopiacowboy says on Dec 30, 2005, 11:03:

I had to go back and see what my rant was. I guess for the independently wealthy or the retirees looking for some place to die it makes sense.

Disclaimer: any comment I make is inane and is not to be taken seriously, and is so patently ridiculous that no one should take it seriously, even as an insult.

Hunter says on Dec 31, 2005, 07:06:

Wastelandlive Colombia doesn't have a very large mortgage market (mortgages interest rates are way to expensive), so even if the economic indicator existed there, I wouldn't use it.

I wouldn't say that I don't like Economists theory on rental income vs. property value, it certainly is a indicator but to I feel that my main indicator is stronger, I only use this indicator for markets with a large mortgage market and financial information that is recorded and can be relied on to be accurate.

Where to find it, I have never seen a single place, I just see the figures and graphs as you from financial media sources like the Economist, FT, etc. Although I said I disagreed with some of the first Economist article, I have always liked their magazine.

I don't disagree that there are bubbles in some real estate markets, I just disagree that there is a worldwide real state bubble.

If you find some decent information on Colombia, post away, I for one will be interested, I am sure others would be as well, I have never seen Tinto post much on the subject, he sees a lot of useful information on Colombia, maybe he has some historical data links.

NewBoy says on Jan 2, 2006, 08:48:

The Deeds are not to be trusted in Colombia for statistical purposes, it is very rare to put the actual purchase/selling price down, so this is going to make most stats worthless.

It takes time and contacts to work out the history of prices in Colombia for a specific area, even the new builds rarely put the actual sales price on the deeds.

tomtom33 says on Jan 2, 2006, 14:26:

The dumb Gringo strikes again. I have the actual sale price on my deed.

NewBoy says on Jan 2, 2006, 15:32:

tomtom33 I have it on one of my properties as well, but the rest no, some no where near the price.

I am pretty easy, but Colombians want to avoid paying purchase tax on the properties, so most underestimate the price.

The only one I have the true price on the original owner purchased for 200 million pesos in 1989 (I think), I am the second owner and I purchased it for 82 million pesos, but he was definetly a person who wanted everything done correctly, a rarity in Colombia, especially in Ctg.

Wastelandlive says on Jan 3, 2006, 06:42:

Hey Tomtom... or anybody: I know of a small apartment I'm interested in buying. It's not actually for sale... I learned through a third party that the owner might want to sell.

That owner is in Bogotá somewhere. I'm reluctant to get the third party (who I don't trust) or an actual agent involved (why involve a commission in the transaction?). Is there some public record of the owner? Can I get his mailing address from the tax authorities?

Thanks

Wasteland

tomtom33 says on Jan 3, 2006, 08:42:

Was I would find an attorney, and let him/her find the owner.

Cartagena Hooker says on Jan 3, 2006, 17:40:

Real Estate Attorney in Cartagena I own four properties in Cartagena and would recomend Rodrigo Martinez. He is on the third floor of the Andean building in the Plaza Audauna. He types all the contracts estimates all the tax and registration costs and attends all the closings. He speaks english and his rate is .5% of the sale price. If you find a property on your own, he can handle all the negotiations nad you can save money.This is my blog where you can see three of the properties. http://spaces.msn.com/members/Cartagenahooker/

Wastelandlive says on Jan 6, 2006, 09:33:

Thanks Hooker Always good to get a reference to an attorney.

Open question on some recurring themes.

Transfer tax - what is it? Somebody elsewhere posted 25%, which seems impossible to believe, along with the recommendation to incorporate in order to avoid it. Thoughts?

Another member supports the incorporation strategy because he wants to avoid residency in Colombia, which means falling within Colombia's "tax net." I'm not sure that this is the best strategy for me (I want to do business there, after all...), but can somebody more knowledgeable than me explain this "tax net?" For example, if the issue is a property tax... would not the corporation be as liable as an individual?

R-



Wasteland

Wasteland