Sunday, March 18, 2007

And, this just in from Uruguay....

...Ok I promised to create a post about Uruguay.

This seemed to be the story with the biggest possible effect on foreigners evaluating Uruguay...



March 16th, 2007

Banco Republica Oriental del Uruguay , the government bank, will be giving loans to people who want to purchase or renovate a house. The program is due to launch sometime after June. Banco Hipotecario del Uruguay, which is a state owned bank used to provide housing loans but has run out of resources. BROU has decided to step into this market because of BHU’s problems and the need for further growth in the construction and real estate industries . (Ultimas Noticias 16/03/07)

Right now, with the exception of some private lenders, there just aren't loans for real estate in Uruguay. While that has kept the cost of land and homes relatively affordable outside of the popular spots for tourists, it has made nicer properties untouchable for the middle class that reside here and earn their money here.

As I've speculated before, the money that is supporting the nicer homes in the city are supported by foreign money coming in supported by foreign govts, companies, or just individuals (equity locusts) taking out a heloc or selling an overpriced property in parts that support home values with loans and buying here with cash.

Offering RE loans to the unwashed masses again has the potential to be a "game changer" for Uruguay, and unfortunately from my perspective, for the worse. I understand "everyone" wants the 42 inch plasma, granite countertops, and european (or japanese) luxury vehicle....I'm just not comfortable with easily available credit to do it.

Don't get me wrong, this place is decades behind the US in consumptive behaviour. But, if I'm going to consider putting down roots, I might have to consider buying at a time when I think the volume of equity locusts is getting ready to dry up....otherwise hope that the availability of money to buy real estate locally doesn't make things crazy here.

ciao for now,

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