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caixa now only lending 50%?

Home Forums Buying/Renting Propery caixa now only lending 50%?

This topic contains 17 replies, has 9 voices, and was last updated by  Tony 6 months, 1 week ago.

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  • #275034

    jeb2886
    Member

    I just talked with my real estate friends and they mentioned that caixa is now only lending up to 50% for loans, but new construction still gets the 80%! Basically a big hand out to new construction!

    Caixa has also gone from 35% of mortgages in 2010 to 55% in 2014, which is a huge jump. So far more loans are being handled by Caixa. Right now it’s possible to pay a bit more and still get the 80% loans from other banks, but I’m betting they also have much stricter requirements.
    This could really mess with the housing market in ways they haven’t prepared for.
    For those unsure how this will impact housing values, if someone has saved 20K for the down payment on a 100K house, they can now only pay 40K total for that house! That’s a 60% haircut off home values!
    If you buy a new place, great you get 80% financing, but when you go to sell it, there won’t be any buyers! People aren’t going to invest in these new properties, because as soon as they touch it, they become unsellable!
    Reduced buyer pool is going to hurt prices for homes, and apparently has already done so. Higher interest rates was already hurting sales apparently as well.
    But if housing starts to really tank (and it appears more new construction is apartments) it’s going to create a huge inventory of homes that will fairly quickly depreciate in value and quickly create quite a wide gap between new construction prices and home prices and once people realize as soon as they touch it, it’s lost 20, 30 or 50% of it’s value, people are going to slow their buying there too, until they bring down their prices.
    This will probably take 12-18months before it starts to impact new construction, but a simple buyers credit would have been far better here! This could be a disaster!
  • #275042

    Anonymous

    And so it begins.
    [QUOTE=jkennedy]This could be a disaster![/QUOTE]
    …he said with a knowing, sh1t-eating smirk.
    Pick your spot poolside, imbibe of the delights, and enjoy watching it burn.

  • #275050

    ffm
    Member

    [QUOTE=jkennedy]I just talked with my real estate friends and they mentioned that caixa is now only lending up to 50% for loans, but new construction still gets the 80%! Basically a big hand out to new construction!

    Caixa has also gone from 35% of mortgages in 2010 to 55% in 2014, which is a huge jump. So far more loans are being handled by Caixa. Right now it’s possible to pay a bit more and still get the 80% loans from other banks, but I’m betting they also have much stricter requirements.
    This could really mess with the housing market in ways they haven’t prepared for.
    For those unsure how this will impact housing values, if someone has saved 20K for the down payment on a 100K house, they can now only pay 40K total for that house! That’s a 60% haircut off home values!
    If you buy a new place, great you get 80% financing, but when you go to sell it, there won’t be any buyers! People aren’t going to invest in these new properties, because as soon as they touch it, they become unsellable!
    Reduced buyer pool is going to hurt prices for homes, and apparently has already done so. Higher interest rates was already hurting sales apparently as well.
    But if housing starts to really tank (and it appears more new construction is apartments) it’s going to create a huge inventory of homes that will fairly quickly depreciate in value and quickly create quite a wide gap between new construction prices and home prices and once people realize as soon as they touch it, it’s lost 20, 30 or 50% of it’s value, people are going to slow their buying there too, until they bring down their prices.
    This will probably take 12-18months before it starts to impact new construction, but a simple buyers credit would have been far better here! This could be a disaster!

    [/QUOTE]

    Wow! Very interesting. Thanks for sharing this.
  • #275057

    celso
    Member

    Boom and bust Brazil. The bust is coming. No question. Prices tend down to 1/3 peak or lower in Brazil market drops.

  • #275060

    jeb2886
    Member

    This is a huge screwing of anyone who invested in property with the idea of speculating on it’s prices, or even buying more than they could afford because they could always sell it later.

    Now they’re stuck with it, and whatever comes next they have to ride it through.
    1/3rd is something you might see a mild bust cycle in the US! We’ve already seen probably a 1/3rd cut here by means of property not following inflation for the last couple of years. During a good bust cycle, we’re more likely to see a 75% haircut here off peak prices, probably more because of the huge cycle they have had here with plenty of speculation. Every year inflation goes 8% and housing goes down 5-10% is a good 12-18% loss. Considering you can get 13% in bonds right now, if your house isn’t going up at least that much, then you’re losing. So we’re probably seeing closer to 18-22% loss for the last year or two. At least in Natal we’ve seen some good drops.
    The next 2-3 years will probably be a good buying opportunity though, but only if you have cash. Getting a loan will be impossible, rates will be way higher, and appraisals/down payments will make it very difficult. If you’re cash poor, buying now isn’t terrible, as long as it’s affordable. Because your monthly payments are going to remain the same, while inflation will chew away at them.
    Of course to buy, you need to find people who have gotten themselves into a pickle, because most will just hold onto their losses and hope the future brings something better for them. Businesses that have massively over leveraged themselves will be where the deals are found!
  • #275062

    celso
    Member

    As the bust arrives, homes are sold at 1/3 peak pricing. People want cash. Come in with euros and dollars two to three years from now for real,deals. Up in NE starting to see some deals early….Salvador Itaparica.

  • #275063

    ffm
    Member

    But real estate only ALWAYS goes up! (*rolling eyes)

    How many times have I heard this in the past seven years…..
  • #275072

    I think investing in Banana Plantation in the NE is a better idea Smile
    And Levy has been threatening to add income tax to the LCIs. If he does that, they will have even less money to lend out for mortgages. Maybe they’ll cut it down from 50%/80% even more.

  • #275087

    agri2001
    Participant

    [QUOTE=jkennedy]This is a huge screwing of anyone who invested in property with the idea of speculating on it’s prices, or even buying more than they could afford because they could always sell it later.

    Now they’re stuck with it, and whatever comes next they have to ride it through.
    1/3rd is something you might see a mild bust cycle in the US! We’ve already seen probably a 1/3rd cut here by means of property not following inflation for the last couple of years. During a good bust cycle, we’re more likely to see a 75% haircut here off peak prices, probably more because of the huge cycle they have had here with plenty of speculation. Every year inflation goes 8% and housing goes down 5-10% is a good 12-18% loss. Considering you can get 13% in bonds right now, if your house isn’t going up at least that much, then you’re losing. So we’re probably seeing closer to 18-22% loss for the last year or two. At least in Natal we’ve seen some good drops.
    The next 2-3 years will probably be a good buying opportunity though, but only if you have cash. Getting a loan will be impossible, rates will be way higher, and appraisals/down payments will make it very difficult. If you’re cash poor, buying now isn’t terrible, as long as it’s affordable. Because your monthly payments are going to remain the same, while inflation will chew away at them.
    Of course to buy, you need to find people who have gotten themselves into a pickle, because most will just hold onto their losses and hope the future brings something better for them. Businesses that have massively over leveraged themselves will be where the deals are found!

    [/QUOTE]

    This article in the WSJ goes to the core of what you mentioned.
    The vultures are starting to circle above.
  • #275090

    monzon
    Member

    [QUOTE]

    The vultures are starting to circle above.

    [/QUOTE]
    LOL
    I’m no property investment expert but i doubt these global investors will see gains like before. What happened before in Brazil was an alignment of axis under unusual circumstances ie. global recession, commodity boom, oil reserve discoveries, Brazil being awarded both world cup and olympics, and lula capitalizing on this at every given opportunity. And then came the vultures – naturally.
    This time I reckon the market will bottom out within the next 12 month and then after that there will be a gradual upswing, but very gradual, nothing like we saw before. If you’re relatively well off in this country then maybe soon would be a good time to invest in property for the future.
    The poor? once again they are going to be screwed over.
    richsa052015-05-05 10:20:40

  • #275091

    jeb2886
    Member

    I think that article is fishing for some investors. They’re name dropping to drum up interest in that article, I’m not sure which one is looking for the investors, but these guys aren’t going to catch a falling knife. You don’t invest on the way down, you wait until the dust settles, which could be significant since there is also political dust that could end settling.

    I wouldn’t doubt they’re setting up base here and preparing but actually investing in anything major seems unlikely right now.
    The market seems way over built around here. There are just too many investment properties and empty buildings waiting to be sold, and buildings that have gone bankrupt. Until those are flushed out of the system, you can’t have a recovery. Housing is another near zero sum game — someone buys a house, but someone must also sell a house. The only gains come from population increases really, so builders are going to have to wait for the “gains” to catchup with the inventory, and that means waiting for the children in Brazil to grow up, or immigration to come along and buy up the empty properties.
    The poor won’t be screwed over, speculators will be. Anyone who has over leveraged themselves. And probably nouveau rich who have been going all in every year and hitting it out of the park because Brazil was booming… but with the all in strategy and a couple bad years, they’re out.
    The poor were poor, they will remain poor, but they won’t be necessarily any better off or worse off.
  • #276290

    Tony
    Participant

    The poor are getting subsidized. It’s called “Minha Casa Minha Vida”. A government backed loan that subsudizes
    First time home buyers so they can afford their 45 sq meter 2 bedroom hole in the wall. A glorified slum no less.
    The middle class is the one being short changed.
    Yes, all above assessments are fairly accurate.
    However the time to buy for cash buyers is now. You can get pretty good deals if you are properly guided on pricing trends , rental rates, zoning changes, comps, and demand.
    I know nothing outside of the Greater São Paulo. Yet I realize you can drive bargains in these areas :
    – Santos and the whole coastline. Inventory is all time high. The weekend getaway for Paulistanos is costing a pretty penny in condo fees and taxes to sit idle on 80% of the year.
    -ABC. The once Brazilian Automotive Capital is no longer in its former glory. Places like Indaiatuba, Sumare, Sorocaba, Curitiba , and other locales are stealing their manufacturing riches. And with layoffs galore , this is a very depressed market. It still has appeal with its proximity to São Paulo and comparatively low cost of living. It also benefits by being having a decent water supply. During São Paulo ‘s Cantareia drought , the ABC came unscathed.
    – Mogi days Cruzes. There is a value based alternative , price wise. Excellent quality of life ( huge Japanese ancestor community ), two decent universities , ease access to GUARULHOS airport. Very close to São Paulo.
    São Paulo neighborhoods:
    -Morumbi, Butanta and all regions west . Huge price drop pre recession thanks to a surge in violence, given it encases the out if control Paraisopolis Slum.
    – Jardins/ Bela Vista /Aclimacao /Saude /Vila Mariana / Higienopolis / Santa Cecilia/ Consolacao / Cerqueira Cesar/ Vila Madalena/Pinheiros/ Vila Olimpia / Itaim Bibi . There is a balance between demand and supply, so realize gains through negotiated deals are going to depend on the transaction circumstances ( parties involved, listing , location , building improvements ).
    – Zona Leste. Outside the Silver and Red lines, anything is fair game as far as haggling.
    – zona Norte. Up for grabs. Specially outside of the blue line.
    – downtown ( Bela Vista, Republica, Santa Cecilia, Campos Eliseos , Santa Ifigenia, Vila Buarque , downtown proper ) Problem is picking something with a clean title of deed. Hence why new building units are costing a pretty penny. Still, you can negotiate well. Zoning changes and slow and steady gentrification are going to affect this market. Good buys loom everywhere. Where else you can buy a 4300 sq ft 2 pkg condo with only R$ 2.2 mil , facing a public garden and still haggle on the price ?
    – Pacaembu proper. If you are patient to buy and hold, and willing to bargain hard with gusto, for large sprawling mansions in all cash deals , this is where is at. Need to make it pay for itself ? Consider a Guesthouse with rooms to rent, be an innkeeper. Build height restrictions, sprawling burb feeling , impeccable curbside appeal, and an upper crust exodus to the safety of gated apartment buildings makes this neighborhood a great target for the patient investor. Not for the lightweight pocket or the quick buck artist, thought.
    – Campinas. Strong tech, health care, multinational , air hub market. Issues with water supply of late as it is served by the Cantareira Reservoir System. Buyers market with strong upside.

  • #276292

    Tony
    Participant

    Perdizes , Barra Funda, Sumare, Lapa, Vila Romana, Agua Branca. This area is undergoing a drastic change thanks to government backed infra structure overhaul. Strong Job generation. You can get decent deals through negotiation, though.
    Brooklin, Berrini, Moema, Vila Nova Conceicao, Indianapolis , Planalto Paulista. These Toni neighborhoods have surplus inventory, and you are supposed to drive a bargain.

  • #276293

    ffm
    Member

    That’s some nice analysis Rebroker.

    Just a word on Murumbi, I lived there for a short spell in a building on an access road to Paraisopolis. There was a “Ceu”, a poor kid’s school. One afternoon I went for a jog and was attacked by kids as soon as I left the gates. My daughter’s mom was accosted on Giovani Gronchi while coming back from the grocery store with out new daughter and friend in tow. Nothing came of either situations. But it is a sh***y place to live to say the least. Not to mention FIGHTING your way into the commercial areas during and peak hours. A nightmare. With all that said, it is lush and green and has some downright beautiful buildings and great places to eat.
  • #276297

    jeb2886
    Member

    It’s not the time to buy with cash. The time to buy with cash is when 100% of financing dries up.

    When everyone tells you real estate is the worst place to be, that it’s too scary to buy right now…
    THAT is the time to buy. When everyone is scared, even the sellers. That is when you can get the best deals, right now, you’re catching a falling knife.
  • #276301

    agri2001
    Participant

    I agree with Jkennedy on this… particularly here in the NE

  • #28394

    qxglyvzbzr
    Member
  • #311095

    Tony
    Participant

    The lending ceiling has increased and you are seeing 70% financed.

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