Make sense?

[mike]

http://www.guardian.co.uk/money/2008/apr/20/expatfinance.houseprices

This piece confused me

Maxine Crooknorth, 38, from East Sussex, decided to move to the Costa del Sol with her six-year-old son in 2005 in search of a fresh start. She bought her two-bedroom, golf course apartment for €247,000, paying half of the purchase price upfront

then

Nine months ago she put the apartment on the market for €265,000 based on the valuation she was given, but has since had to drop the price to €220,000. ‘I’m finding it quite a struggle,’ she says. ‘But I can’t really drop the price any more because all my equity is tied up in it and it’s a lot of money to lose

Well, she owes the bank roughly €150K on which one would assume that she pays roughly 4% interest. That would mean that she is paying out €500 a month in interest alone. How would a single unemployed parent on the CDS find that money? And why would she spend it on a depreciating asset in the hope of it attracting what is obviously too high a price.

Surely any friend would tell her to drop the price so that she could make a sale and then get the hell out of there. It didn’t work out, move on!

[Anonymous]

In my limited experience looking for a property, generally speaking sellers are very reluctant to reduce the price. Visited a development a year ago and kept the list of available units. Looked again at Easter and the availability list is exactly the same. Asked the developer if he would consider an offer said no straight away. I read an awful lot on this forum and in the press about price crashes etc but personally speaking I see no evidence of it. I’m looking in the Canaries.

[Anonymous]

Villan – according to a new report, there are price falls of between 2% and 6% in Tenerife.

http://www.typicallyspanish.com/news/publish/article_16150.shtml

[Anonymous]

Villan wrote:

I read an awful lot on this forum and in the press about price crashes etc but personally speaking I see no evidence of it. I’m looking in the Canaries.

I am with you on this one. I am looking at Fuerteventura from time to time and I see that not even in drug ghettos like Costa Antigua prices do not decrease. They are the same as they were 2 years ago.

This also means that,with inflation, the prices fell by 8% in 2 years.

[mike]

@Villan wrote:

In my limited experience looking for a property, generally speaking sellers are very reluctant to reduce the price. Visited a development a year ago and kept the list of available units. Looked again at Easter and the availability list is exactly the same. Asked the developer if he would consider an offer said no straight away. I read an awful lot on this forum and in the press about price crashes etc but personally speaking I see no evidence of it. I’m looking in the Canaries.

That’s interesting. In fact fascinating because it suggests that people can sit out a crash as they are not desperate for the money. I wonder how long that will last and if it will break like a damn.

I’ve been thinking about a guy I know. I met him last year after he and his partner had moved in together having sold one of their houses. He told me how nice it was seeing the money in the bank and I was pleased for him. But he did assume an air of sophistication, he had made it in life, he was rich.

I have since wondered if that has affected the behaviour of many people. Being rich is being clever, clever people make good decisions and make money, if they make a loss they are not that clever really. I wonder if that is in some part making people reluctant to reduce their asking prices.

[Author]

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