Is There A Housing Bubble In Santo Domingo?

[Robert]

NALs, you "appear" to be well connected here, but you still deny the involvement of drugs, either in direct construction or for laundering money in some buildings here, why is that?

Go to any bar, restaurant or club in the "better" part of the capital and you will hear all the gossip and rumors. I have had conversations with some pretty prominent Dominicans, and they all acknowledge the existence of the drug tarde here and it's impact on the local economy. I'm not saying it's a major contributor, but it's prevalent.
No smoke with out fire.

I was just chatting with a friend that was at an opening of a new plaza in Santiago.
He was telling me about the gossip and the "chopo" developers and their funding.
No smoke with out fire.

And how can the Cali Cartel launder money after it became extinct?

Are you sure about that? Go back to Google, it's your friend.

So you're saying that US Embassy officials know exactly what projects are money laundering operations and, for some odd reason the DEA, the FBI, the CIA, etc. plus the Dominican government counterparts choose to look the other way?

Do you think they don't know? Do you really think they are that stupid?

The US can laser guide a missile from an unmanned drone into a camel's butt from 10 miles away, but they can't work out what buildings have drug money involved?

Pleeeese!! This is a business, it's a major employer and money maker on both sides of the fence. Everybody knows who the major players are and what is going on.

I know what I heard and witnessed when driving around the city. Sure the guy could have been BS'ing me, I guess we will both never know.
No smoke with out fire.

As has already been posted in this thread, maybe when it became public knowledge, then they went into damage control. Nah, the government and local alphabet agencies are way to honest to do that, right?

How many of those "Dominican government counterparts" have been or are still directly involved in the drug trade. I guess you haven't read the news papers lately?

50% of the CIA's budget goes on misinformation. Are you on the payroll?

NALs, you need to wake up and smell the cocaine...

 

[Lambada]

Maybe NALS is trying to help the Attorney General here? 'En tanto, Radham?s Jim?nez calific? como una imprudencia las declaraciones de Germ?n Miranda Villalona, de la Unidad de Lavado de Activos, en el sentido de que las autoridades han sido flojas en el caso de Del Tiempo M?rquez. Miranda Villalona hab?a declarado recientemente que existe debilidad en los organismos del Estado para hacer cumplir la Ley de Lavado de Activos.'

Autoridades espa?olas piden discreci?n en caso propietario Torre Atiemar

 

[pedrochemical]

Maybe some people see drugs as morally wrong and therefore resist the notion that they finance much of the great progress that is being made.
As an Englishman I have not got a leg to stand on as the money that paid for our industrial revolution came from a much, much more insidious trade....lest we forget.

 

[Lambada]

According to the President of the Chamber of Commerce, money laundering is making legitimate investors think twice:

Presidente C?mara de Comercio afirma lavado del narcotr?fico est? alejando inversiones y afectando a empresarios dominicanos

 

[pedrochemical]

I still want to know NALS' take on all this....

 

[Lambada]

I still want to know NALS' take on all this....

Yes, that would be interesting:
TREINTA Y SIETE MILLONES FUE LA SUMA QUE LA ENTIDAD GUBERNAMENTAL PIDIO AL INVERSIONISTA, QUIEN TAMBIEN ESTA LIGADO A LA EMPRESA DEL MAGNATE DE LA COMUNICACION DOMINICO-VENEZOLANO GUSTAVO CISNEROS

 

[bienamor]

I still want to know NALS' take on all this....

Well as we all know Nal's is in denial, but where is Pichardo?

 

[mountainannie]

Wachovia Settles Money-Laundering Case - WSJ.com

lest we begin to think that it is just here in the DR that the drug money is being laundered!

 

[AlterEgo]

Is there anyone here on DR1 who is actually ACTIVELY looking for a condo or house in SD right now? We plan to do just that very soon, and I'm curious as to the price range for a 2 or 3 bedroom condo in a decent neighborhood - furnished or unfurnished. Has there been any decrease/softening in prices, or are the owners still very firm in their prices? Not a lot of SD properties on DR1 classifieds....

We checked out a couple of new projects in January, and my husband favors one east of Lincoln, just above Independencia, that isn't finished - I forget the street name/area, all I can remember is Hipolito lived near [if that means anything to anyone reading this].

One of my husband's brothers lives in El Million, but I want to stay away from the chaos of that end of the capital, too much traffic!!!

 

[mountainannie]

Is there anyone here on DR1 who is actually ACTIVELY looking for a condo or house in SD right now? We plan to do just that very soon, and I'm curious as to the price range for a 2 or 3 bedroom condo in a decent neighborhood - furnished or unfurnished. Has there been any decrease/softening in prices, or are the owners still very firm in their prices? Not a lot of SD properties on DR1 classifieds....

We checked out a couple of new projects in January, and my husband favors one east of Lincoln, just above Independencia, that isn't finished - I forget the street name/area, all I can remember is Hipolito lived near [if that means anything to anyone reading this].

One of my husband's brothers lives in El Million, but I want to stay away from the chaos of that end of the capital, too much traffic!!!

Yes, I have been watching condo prices and rentals in SD for the last couple of years... Rental prices have gone up tremendously-.-- it is now almost impossible to find anything for less than $1k a month in the areas where I would consider living...

And the prices on new condos have also gone up--- with the bulk of the really good areas still seem to sell the majority of units BEFORE construction...

In Gazcue, where my search is primarily located, there are a number of small new condos which were all sold before construction... in the low 100k end,... and many units have been vacant since then, looking for those elusive 1k a month renters (WHO are they? And how many do they think this city has)

I have noticed that there has recently been a reduction in rental prices along Anacaona.. probably as a result of the masses of Torres that were built there.....

The "furnished" market is something quite peculiar to SD.. since the aim is to attract short term tenants, who will leave after a few years, so the owner can then raise the rate to market---- since there is rent control in the City and once the lease is over, the tenant can stay on at the same price.

I am in a furnished rental.. and like most of them, the majority of the furniture is not great... plus I have to live with the "taste" of the landlady in art and Txhockies... of which there are far too many.. I am gradually filling the cuarto de servicio with the battered remains of rattan and pottery!!!

I think that an unfurnished rental... with the linea blanca- which are the major appliances... would be the way to go. After all. We have Ikea now!!!

Then you can take your time in looking to buy.. be sure of what neighborhood you want, be sure of the builder and building... so that .... it is one that is actually going to be habitable!

(Come to Gazcue!! Come to Gazcue. Gracie! we can do morning cafecitos!)

 

[AlterEgo]

Yes, I have been watching condo prices and rentals in SD for the last couple of years... Rental prices have gone up tremendously-.-- it is now almost impossible to find anything for less than $1k a month in the areas where I would consider living...

And the prices on new condos have also gone up--- with the bulk of the really good areas still seem to sell the majority of units BEFORE construction...

In Gazcue, where my search is primarily located, there are a number of small new condos which were all sold before construction... in the low 100k end,... and many units have been vacant since then, looking for those elusive 1k a month renters (WHO are they? And how many do they think this city has)

I have noticed that there has recently been a reduction in rental prices along Anacaona.. probably as a result of the masses of Torres that were built there.....

The "furnished" market is something quite peculiar to SD.. since the aim is to attract short term tenants, who will leave after a few years, so the owner can then raise the rate to market---- since there is rent control in the City and once the lease is over, the tenant can stay on at the same price.

I am in a furnished rental.. and like most of them, the majority of the furniture is not great... plus I have to live with the "taste" of the landlady in art and Txhockies... of which there are far too many.. I am gradually filling the cuarto de servicio with the battered remains of rattan and pottery!!!

I think that an unfurnished rental... with the linea blanca- which are the major appliances... would be the way to go. After all. We have Ikea now!!!

Then you can take your time in looking to buy.. be sure of what neighborhood you want, be sure of the builder and building... so that .... it is one that is actually going to be habitable!

(Come to Gazcue!! Come to Gazcue. Gracie! we can do morning cafecitos!)

Thanks for all the info Annie, I do like Gazcue, so who knows what will be? Some great little bakeries we love there too. I don't want a torre, I like the smaller condos, don't want to feel like I'm living in Co-op or Lefrak City, if you know what I mean. Because we won't be there year-round we think a condo is the smarter purchase security-wise. We're just surprised at the costs of the units when everything here at home is plummeting. We'd also like to keep it under the 5 mil/DR price because of the tax issue.

When I look at the homes and condos family members bought in SD for about $40-50,000/US about 10 years ago, I could cry because we didn't invest then.

What they say about hindsight is sad but true

AE

 

[mountainannie]

Yes, certainly, there is a great security in being surrounded by neighbors. I never worry about my own security or about the apartment when I am gone since there are almost all Dominicans here and there are balconies full of people.. etc... keeping an eye on things.

I do not know about the sales prices.. only the asking prices! So they all may close at a lower level but alas, the days of 40 to 50k are gone....

There are some odd issues, as well,, such as the noise from the streets in the Torres appears to be massively amplified. I had a friend who moved into a great apartment on Bolivar.. and the noise from the avenue, on the eighth floor, was unbelievable with the windows open.. I would not have imagined..

In Gazcue, which is zoned historic, the torres are allowed only on the avenues.-

 

[Afgan]

When I look at the homes and condos family members bought in SD for about $40-50,000/US about 10 years ago, I could cry because we didn't invest then.

What they say about hindsight is sad but true

AE

Do not worry. They will go down even lower than that. There won`t be American nor Canadian, nor German, nor British, nor French buyers for the next five years at all. If not more.



Just be patient and sarcastic. Do not bait. Do not panic. Do not overpay. More and more realistically thinking and motivated sellers will be brought to the market.



Hold on to your cash with both hands. No matter what others say. Days of crazy spending and paying six figures for Dominican properties are gone for good. Do not be the last one on record who did it.



Meanwhile buy in Clearwater and Catskils. Condo prices went down by 70%-80% - the way it should be.



Same to artificially overinflated Dominican RE prices - only a matter of time.

 

[mountainannie]

doing the math

Should You Buy or Rent? - Yahoo! Real Estate

there is some sort of formula here for figuring out a bubble but it is hard to translate....

could some of the math whizzs here help out

Assuming that the "average" price for a two bedroom condo in SD is now $200k and the rent on such units is $1200 a month?

Can we use this formula at all here?

I know that the standard rent to price formula in the States is that the annual rent should equal the purchase price in 15 years...

By that standard, the rental prices are about in line....

of course, YES .. they are far far too high for Dominicans... but well, we do have all that "washing" to be done... and there is still lots of money looking for investments...

I am astonished at how many apartments are actually SOLD at the prices being asked.. AND with 100% CASH

because who is going to take a one year ARM at 9%?

 

[PeterInBrat]

The formula in the US used around here now(in upstate NY) is 6x annual rent or 72 x monthly if you want to get buyers. You could get a higher selling price before because it assumed that the housing market would only increase in value, but given that a good chunk of mortgage holders are upside-down, this is no longer realistic.

I did some checking and the 15 year pay off works with about 100x monthly rent which was the standard for rentals about 10, even 5 years ago. That was when we were experiencing a bubble which has burst. It was a fair price while the bubble was growing, but property values are at best treading water now. It is very hard to get a loan on a rental for any more than the 72 monthly-- banks do not like to see mortgages go under water.

There is a small ranch for sale I know of that has been on the market abandoned for 5 years at $100,000 firm. They could maybe get $72,000 with the 6x annual rent rule of thumb, but even that is pushing it. A house twice as big right next door just sold for $84,000 about two years ago.

In the DR, I'm seeing condos selling for $30,000 on the north coast with an expected rent of $350, but that does not consider the maintenance fees.

 

[mountainannie]

The formula in the US used around here now(in upstate NY) is 6x annual rent or 72 x monthly if you want to get buyers. You could get a higher selling price before because it assumed that the housing market would only increase in value, but given that a good chunk of mortgage holders are upside-down, this is no longer realistic.

I did some checking and the 15 year pay off works with about 100x monthly rent which was the standard for rentals about 10, even 5 years ago. That was when we were experiencing a bubble which has burst. It was a fair price while the bubble was growing, but property values are at best treading water now. It is very hard to get a loan on a rental for any more than the 72 monthly-- banks do not like to see mortgages go under water.

There is a small ranch for sale I know of that has been on the market abandoned for 5 years at $100,000 firm. They could maybe get $72,000 with the 6x annual rent rule of thumb, but even that is pushing it. A house twice as big right next door just sold for $84,000 about two years ago.

In the DR, I'm seeing condos selling for $30,000 on the north coast with an expected rent of $350, but that does not consider the maintenance fees.

Thanks Peter.. interesting input

just for your information.. here is one search for rentals under $1200 a month
Aquitucasa.com - Casa | Hogar | Apartamento | Local | Villas | Venta | Alquiler | Santo Domingo | Republica Dominicana
which would mean sales prices at 86,000 according to your 72 times monthly rate... AND BELIEVE me.. there is NOTHING for sale in these neighborhoods for under 100k!!

So we do indeed appear to have bubble, yes?

 

[PeterInBrat]

The other thing to look for is a lowering of construction standards. I did a stint building McMansions and they were using the cheapest materials for $400-$500,000 homes. Lots of fancy architecture but they were made of waferboard sheathing and nice carpeting covering cheap plywood. They were using a technology called "Ply-beams" for the floor joists like this:

They certainly have their points in construction because they are cheap, light and easy to build with, but they burn very quickly and lose any integrity they have in a matter of minutes. The site I got the image from is actually about how dangerous they are to firefighters:

Monroe Fire fighters Union IAFF Local 326 - Dangers of Manufactured I-Joists

Besides making a bundle on the new construction, these buildings are toxic with all of the formaldehyde and other chems out-gassing from the resins. The joists can also fail simply by getting wet!

People who are buying un-built condos in the DR are taking a huge risk. The construction companies won't take a loss when the price of materials go up, so they will inevitably cut corners even more than when they put in a low bit or simply walk away from a project with the money they have gotten to get the job half-way done.

 

[amparocorp]

the only way to win at this game is to shop till you drop, and then do it again. i've been in and out of the DR with a dominican wife and have had properties over a twenty year stretch. they don't go down. i can remember when a three bedroom, new, in a four unit building cost 60K. there are deals to be had but you have to keep on looking and looking, money ready to pounce, good lawyer at your side. look at twenty properties not three. the thing that nobody tells you is that population is going up. in 1976 the US had 200 million people, in only thirty years we now have 300 million plus. people got to live somehere, not enough existing homes, new must be built and those with money will pay whatever it takes to live nice...........

 

[RacerX]

the only way to win at this game is to shop till you drop, and then do it again. i've been in and out of the DR with a dominican wife and have had properties over a twenty year stretch. they don't go down. i can remember when a three bedroom, new, in a four unit building cost 60K. there are deals to be had but you have to keep on looking and looking, money ready to pounce, good lawyer at your side. look at twenty properties not three. the thing that nobody tells you is that population is going up. in 1976 the US had 200 million people, in only thirty years we now have 300 million plus. people got to live somehere, not enough existing homes, new must be built and those with money will pay whatever it takes to live nice...........

Here is an argument in support of urban blight and suburban sprawl

 

[amparocorp]

i don't like urban blight, neglected inner cities, nor sprawl (suburbs. hate 'em). it is much more cost efficiente, eco-friendly, to put people in high rise buildings. but, people with money buy what the market offers. some people like vanilla ice cream and others can and will pay for sprinkles...........even though yogurt is probably better for the system......