Archive for August, 2010

Bulle immobiliere?

August 16, 2010

The Paris Dream nails the current obstacles potential buyers are facing:

Paris real estate prices are soaring, wiping out completely any declines in the last two years with a value increase of  up to 15% overall,  year to date*. While prices are soaring, the highest level ever, volume is down 30% from that of the periods between 2002 and 2006 according to Baromètre

A lack of inventory has meant those selling can increase their prices. The historically low interest rates are another factor inflating prices. Large flats / apartments (3 pieces or larger) have also been increasing in the last month or two as families rush to settle in before the school term starts in September.

Ugh.  On the one hand, this explains the recent insane prices and makes me regret that Gobelins apartment from the very beginning like you wouldn’t believe.  On the other hand, I’d rather forgo the Pret a Taux Zero and wait –months or more*– than buy something at prices that are not entirely justified.

Speaking with friends and family back home, who have dealt with entirely different markets — NYC and South Florida — has reinforced this feeling.  When I told a NYC friend how insanely fast properties move here, he got very concerned and described his own search a few years ago, including the time he missed out an apartment because he waited to finish his meal before visiting.  “Yikes!  That reminds me of the NY bubble a few years ago!  Doesn’t that make you worried?”  Due to personal reasons he ended up delaying his search until this year.  Although he hasn’t found a place yet he feels much more comfortable looking now, because of the prices and the better position that NYC buyers are in compared to a few years ago.

And then the property belonging to my South Florida relative was on the market for two years with multiple price reductions before it sold.

I know, it’s silly to compare apples and oranges.  When considering the sky-high prices, the short hours properties stay on the market, the upside down agent-buyer dynamic, “but it’s Paris!” is always in the back of my mind.  But is Paris really so special as to be insulated against a housing bubble, is it really the exception?  I can only hope that la rentrée in September will be bountiful, and fear that I will be writing blog entries here for far longer than I ever imagined.

*Our current apartment is a hole.  But it’s a great location with a lovely concierge and cheap rent.  We can deal.


Holy moly

August 9, 2010

Just got a phone call for an apartment at Stalingrad that is 9100 EUROS the square meter.

When I heard the price the first time, I had to ask the realtor to repeat it because I thought I misunderstood.

Why am I freaking out about this?  Well, it’s an utterly unexceptional fifth-floor walkup overlooking the courtyard in an “emerging” neighborhood that averages 6000€/m2.

We are not looking in this neighborhood and the apartment would be too small for us anyways, but what worries me is the slim possibility that the real estate agent is not actually crazy to be asking so much.

If this is a preview of what’s to come with la rentrée in September, we’re screwed.

Bottoms up!

Notes on the Paris market, riddle me this edition

August 3, 2010

It’s August and many if not all real estate agencies will be closing for a week or two if not the entire month.  I have absolutely no expectations for this month so there might not be any postings.

That being said, in the past week or so I have noticed a “flood”* of listings for outrageously priced studios in the 5th and 6th.  These are not the same properties being posted over and over again, but they all fit the profile of what expat investors look for when buying a pied-a-terre.  Small apartments in central, touristy locations with elevator.  No more no less.

The first few times I saw such listings I kinda gasped at the prices — usually between €12k and €13k the square meter — and moved on.  But since I’ve seen a few of exactly the same type of apartment during a very weak time of the year for the real estate market, I have to wonder, why are these types of properties appearing on the market now?

Are foreign investors pulling out of the market now that the Euro has recovered a bit?

Are sellers considering when potential foreign buyers may be in town on vacation?

Is this the prime time for well-off families to buy an apartment for their child heading off to university in the fall?

Or maybe for families who want to enroll their kids at Henri IV or Louis-le-Grand?**

Pure coincidence?

What are your theories?

To give you an idea of the type of properties I am talking about, today alone I received emails for the following apartments:

€340k, 29 m2 “one-bedroom” near the Pantheon

€330k, 30 m2 studio at Place Monge in the 5th

€350k, 27 m2 studio on Rue Dauphine in the 6th

*”flood” is a relative term for the Paris market.  At least five, perhaps even ten.  I have never seen so many of this type of apartment in these neighborhoods in such a short period of time.

**Henri IV and Louis-le-Grand are two of the most prestigious public schools in Paris, both located close to the Pantheon.  Families will buy a maid’s room or small studio nearby just to have an address within the school zone.