Booming local markets in a national bust

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This topic contains 19 replies, has 9 voices, and was last updated by Profile photo of DBMarcos99 DBMarcos99 3 years, 9 months ago.

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  • #57270
    Profile photo of Anonymous
    Anonymous
    Participant

    We all know that the US has been going through a traumatic housing bust. Some of you may know that Spain is too 😉

    But against a backdrop of a national bust, some local US real estate markets are hot. As always, it’s a story of local supply and demand.

    Check out Washington DC, where prices are up 10.7pc in a year:

    I guess my point is this illustrates how you can have both a housing bust at the national level, but hot markets at the local level. Not that it is happening yet in Spain, but it might come at some point……

  • #115217
    Profile photo of DBMarcos99
    DBMarcos99
    Participant

    It may be worth monitoring places close to Alcorcon, and any resort that finds favour with Scandinavians or Russians. I suspect Barcelona will turn the corner now too, with the Nissan expansion and the new fast rail links in operation..
    But you’ll still be able to find plenty of cheaper options for many years yet. Let the hotspots fizzle and burn out, the rest of the country is a different matter.

  • #115219
    Profile photo of angie
    angie
    Spectator

    Check this out, a really surprising stat., this article says Spain has between 700,000-1,000,000 unsold new homes whereas the US with 5 times the population has only 145,000 unsold new homes, staggering if true. This might explain the supply and demand theory of why local markets such as Washington are 10.7% higher 🙂

    The article is only a couple of months or so old:

    http://www.theatlanticcities.com/housing/2012/ … here/3959/

    Spain may well get a few hot spots as with all countries, in certain Cities, but probably needs to shift half it’s inventory of unsold homes first 🙄

  • #115221
    Profile photo of GarySFBCN
    GarySFBCN
    Participant

    It is the same in many parts of California, Mark. The San Francisco Bay Area is booming.

  • #115222
    Profile photo of angie
    angie
    Spectator

    Agree there Gary but surely a large part of this has to be the supply and demand as I mentioned before, I mean who would have thought those facts below could be possible? If there’s only 145,000 unsold new builds throughout the US, there’s probably very few in San Francisco or any US city, and what does that mean? It means more demand for re-sales, unlike in Spain 🙄

    Spain is and will be a different basket case until it shifts half or more of it’s unsold homes, however, there will inevitably be more demand for City homes even in Spain 😉

  • #115223
    Profile photo of Chopera
    Chopera
    Participant

    Alcorcon is a bog standard satellite town on the outskirts of Madrid, with pretty good public transport links to Madrid (including a direct metro connection). While vegas sands might bring employment to the area, that doesn’t mean people will necessarily decide to live there (would you move to East Croydon just because you worked there?). However I think it is worth paying attention to certain areas where demand is high and supply is low – while pretty much everywhere is falling in price, some prime areas will probably bounce back at some point.

  • #115224
    Profile photo of Chopera
    Chopera
    Participant

    @angie wrote:

    Agree there Gary but surely a large part of this has to be the supply and demand as I mentioned before, I mean who would have thought those facts below could be possible? If there’s only 145,000 unsold new builds throughout the US, there’s probably very few in San Francisco or any US city, and what does that mean? It means more demand for re-sales, unlike in Spain 🙄

    Spain is and will be a different basket case until it shifts half or more of it’s unsold homes, however, there will inevitably be more demand for City homes even in Spain 😉

    Angie, how do you think those million unsold homes are affecting prices in Mallorca for example?

  • #115225
    Profile photo of pizzacheaze
    pizzacheaze
    Participant

    I have been watching the orlando property market quite close for the last few years and property in the right location is now 20% more than what it was 12 months ago.

    All the best ones have gone.

  • #115226
    Profile photo of Anonymous
    Anonymous
    Participant

    Chopera Mallorca has been taking quite heavy hits too but overdevelopment was not that bad there. Not everyone is rich and the normal people that lived there with no rich relatives actually have it harder because of higher prices on the island than the mainland.

  • #115227
    Profile photo of GarySFBCN
    GarySFBCN
    Participant

    Good points, all. Digging deeper into the data reveals some interesting facts. First, those median home values in Washington DC look like a bargain to anyone living in San Francisco. In our worst years we could never find anything at those prices.

    The data I found for San Francisco is listed by number of bedrooms, the average price and the year sold. Here is the current one-year increase in values (average sales price) by number of bedrooms:

    1 bedroom +8.7%
    2 bedroom +26.3%
    3 bedroom +31.7%
    4 bedroom +43.5%

    Great news, no? Not really. Here is the number of bedrooms, with the percent increase/decrease, comparing the median price this year to the median price 5 years ago:

    1 bedroom -13.2%
    2 bedroom +4.8%
    3 bedroom +2.4%
    4 bedroom +10.4%

    To give a relative comparison, the median price for a 4 bedroom in San Francisco is $1.2 million.

    Angie is right. The number of unsold properties does affect prices. But I think what Chopera was getting at is that there can be regional hot-spots in an otherwise down market. Many of the unsold properties seem to be concentrated in specific areas. There are other parts of Spain where the percent of vacant properties is not that bad. Of course the prices are depressed everywhere, by the global economic crisis, the relentless stream of bad news coming out of Spain, and in areas where they have over-built, that adds additional, downward pressure. But if my dream was to live in San Sebastian or Barcelona, I’d be looking to buy now.

    As the banks are reluctant to provide mortgages, I do believe that Spain made a huge mistake by bailing-out the banks. Instead, they should have set-up the their own mortgage lending department and used that money to get people buying property. Yes, I know, the government can be pretty corrupt…but certainly not as corrupt as the banking industry.

    I always choose the lessor of two evils.

  • #115228
    Profile photo of Anonymous
    Anonymous
    Participant

    Spain, being fashionable with foreigners, has many areas where prices are more or less decided by the foreign market, and not so much affected by the over-building and over-pricing elsewhere.

    Germans flooded Denia, Calpe and Majorca, where the prices have kept up. Norwegians took over their own town, Alfaz del Pi, and even tiny Sweden has a strong presence on the outskirts of Torrevieja.

    The Dutch are influential in Benidorm, where prices (and apartments) are still sky high.

    The trend is bound to continue as Spain is throwing its doors wide open to more foreigners.

  • #115229
    Profile photo of DBMarcos99
    DBMarcos99
    Participant

    would you move to East Croydon just because you worked there?

    I would have had no problem living in Croydon – it’s not all New Addington, there are decent areas too and you can buy a property with garden for a very decent price, half that you’d pay in many other London boroughs. It’s only 15 minutes to the centre of London by train, and if you do need a posher address you can always move to Coulsden or Wimbledon next door.
    Point about Alcorcon is they are going to need a lot of rental space, initially for the construction workers, but later for the couriers/bar-staff/security people etc. It’s not so much that families are going to be buying places there (more likely they’ll be wanting to move out) but the buy-to-let people will be interested both there and in surrounding areas like Mostoles.

  • #115231
    Profile photo of Chopera
    Chopera
    Participant

    @dbmarcos99 wrote:

    would you move to East Croydon just because you worked there?

    I would have had no problem living in Croydon – it’s not all New Addington, there are decent areas too and you can buy a property with garden for a very decent price, half that you’d pay in many other London boroughs. It’s only 15 minutes to the centre of London by train, and if you do need a posher address you can always move to Coulsden or Wimbledon next door.
    Point about Alcorcon is they are going to need a lot of rental space, initially for the construction workers, but later for the couriers/bar-staff/security people etc. It’s not so much that families are going to be buying places there (more likely they’ll be wanting to move out) but the buy-to-let people will be interested both there and in surrounding areas like Mostoles.

    I wasn’t knocking East Croydon, it was the best analogy I could think of. There are decent areas in Alcorcon as well – it’s actually got quite a lot of open spaces and parks. During the boom I knew a few people who moved out there because it was perfectly ok to live there, and you got more house for your money. It’s just that the public transport is so good (line 10 will take you directly to Sol in maybe half an hour) that you really don’t need to live there in order to work there. Of course there will probably be some knock on effect from Euro Vegas, and indeed other attractions may well spring up in the surrounding areas if it takes off. But it may well not equate to an increase in house prices. You also have to remember the way the minds work in Spanish councils – they will see it as an opportunity to build lots of flats and there’s a good chance they will create an over supply. Nothing is guaranteed.

  • #115232
    Profile photo of Chopera
    Chopera
    Participant

    @Ardun wrote:

    Chopera Mallorca has been taking quite heavy hits too but overdevelopment was not that bad there. Not everyone is rich and the normal people that lived there with no rich relatives actually have it harder because of higher prices on the island than the mainland.

    My point is that prices have dropped in places like Mallorca for reasons other than the over supply of property. Same goes with the prime areas of Barcelona, Madrid, San Sebastian ,etc – a million empty homes on the costas are going to affect those markets as much as a million empty homes in Liverpool would affect house prices in central London. And I also think that at some point people will say to themselves hey I can afford a flat in the Eixample, or a villa in Mallorca, and they’ll go for it. At some point those places will bounce back much more than other areas simply because they are desirable places to live. I agree that locals in Mallorca probably suffer from high prices – it’s the same everywhere there is a demand for second homes. I’m not saying it’s a good thing, it’s just the way it is.

  • #115233
    Profile photo of angie
    angie
    Spectator

    Chopera, I’m not keen on East Croydon btw, nor Croydon generally.

    As for those million unsold homes, well, that’s reckoned to be only half of Spain’s unsold housing stock, I’d be surprised if you didn’t know that Majorca is a totally different case to the Spanish mainland, I mean, less build for starters, historically been a destination for Royalty and the elite, pretty beautiful in most parts, probably less blingy generally, great coves and beaches, bluer water etc , it’s almost like a different country and it’s housing market that I don’t know well probably holds up better. 😉

    I would think Majorca which I like, will always be pretty much a hot-spot 😛

  • #115234
    Profile photo of DBMarcos99
    DBMarcos99
    Participant

    @chopera wrote:

    @Ardun wrote:
    Chopera Mallorca has been taking quite heavy hits too but overdevelopment was not that bad there. Not everyone is rich and the normal people that lived there with no rich relatives actually have it harder because of higher prices on the island than the mainland.

    My point is that prices have dropped in places like Mallorca for reasons other than the over supply of property. Same goes with the prime areas of Barcelona, Madrid, San Sebastian ,etc – a million empty homes on the costas are going to affect those markets as much as a million empty homes in Liverpool would affect house prices in central London. And I also think that at some point people will say to themselves hey I can afford a flat in the Eixample, or a villa in Mallorca, and they’ll go for it. At some point those places will bounce back much more than other areas simply because they are desirable places to live. I agree that locals in Mallorca probably suffer from high prices – it’s the same everywhere there is a demand for second homes. I’m not saying it’s a good thing, it’s just the way it is.

    Yes, cheap houses in Madrid are not about to appear in MiraSierra or Somosaguas anytime soon, are they?

  • #115239
    Profile photo of Anonymous
    Anonymous
    Participant

    I agree, just because near to where we have a place (Almeria) there are lots of empty properties it doesn’t mean that a cousin who lives near Barcelona will experience the same.

    Well built properties close to busy cities where people can find work will start to move much quicker than the holiday homes on the costas.

    One day, one day…..

  • #115243
    Profile photo of Anonymous
    Anonymous
    Participant

    I agree about holiday homes on the Costas which have suffered 50% losses already and are bound to sink further.

    But sometimes the distinction between holiday homes and permanent ones becomes blurred. The city of Orihuela has employment opportunities and is growing, but the coastal area of Orihuela Costa is full of holiday homes. As those have become cheaper, Spanish people are moving in and commute to the city where their apartment properties have not fallen in value.

    As for the out-of-the-way, half-finished ghost urbanisations, I cannot see a future for them, whatever the prices fall to.

  • #115248
    Profile photo of Chopera
    Chopera
    Participant

    @dbmarcos99 wrote:

    @chopera wrote:
    @Ardun wrote:
    Chopera Mallorca has been taking quite heavy hits too but overdevelopment was not that bad there. Not everyone is rich and the normal people that lived there with no rich relatives actually have it harder because of higher prices on the island than the mainland.

    My point is that prices have dropped in places like Mallorca for reasons other than the over supply of property. Same goes with the prime areas of Barcelona, Madrid, San Sebastian ,etc – a million empty homes on the costas are going to affect those markets as much as a million empty homes in Liverpool would affect house prices in central London. And I also think that at some point people will say to themselves hey I can afford a flat in the Eixample, or a villa in Mallorca, and they’ll go for it. At some point those places will bounce back much more than other areas simply because they are desirable places to live. I agree that locals in Mallorca probably suffer from high prices – it’s the same everywhere there is a demand for second homes. I’m not saying it’s a good thing, it’s just the way it is.

    Yes, cheap houses in Madrid are not about to appear in MiraSierra or Somosaguas anytime soon, are they?

    Depends what you mean by “cheap”. “La Finca” in Somosaguas is home to certain Real Madrid footballers but I reckon you could soon pick up property like this for €500k:

    http://www.idealista.com/inmueble/498101/

    and in Mirasierra for a bit less:

    http://www.idealista.com/inmueble/1433401/

    Personally I’d find living in either area a bit like living in a gilded cage. If you head to the centre to prime areas like Salamanca you can now pick up 200m2 mansion flats for similar prices. OK I wouldn’t call it cheap, but 5 years ago you wouldn’t find chalets in Somosaguas or Mirasierra for less than a million.

  • #115251
    Profile photo of DBMarcos99
    DBMarcos99
    Participant

    I’ve been in one of those Somosaguas chalets in winter – cold as anything. Apartments are far better in central Spain imo.

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