Prediction: Existing Homes Price-Tags Will Rocket 30-45 Percent Higher

We lived in Texas for years. Gary A. Scott is a familiar name from front yard 'For Sale' signs.

Think he might have a vested interest in "Now is a great time to buy!"  ?

Buy now before the prices plummet and he loses a percentage of his investment/commission?

Certainly no stockpiling seemingly taking place ahead of these new tariffs (perhaps because they were not anticipated).  January imports were down to $220 Million for the month.  November and December imports were around $240 Million for each month, which were down from a whopping $257 Million in imports for October 2014.  Approximately 25% of Ecuador imports are classified as "raw materials."

There's another key factor to appreciation in market value besides replacement cost:  Demand.  Demand generally falls as prices rise, therefore, every dollar of increase in replacement cost does not equal a dollar increase in market value.  Buy when you're ready and not because someone says it will be more expensive in the future. Too many unknown variables (READ:  political changes) tugging in both directions to infer what the author implies.

cccmedia wrote:

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Scott says that the tariff increases imposed last week due to low oil prices and trade deficits specifically will impact coastal Ecuadorian projects.  He is forecasting delays or higher prices on the coast.

A certain favorite coastal project comes to mind.

SawMan wrote:

There's another key factor to appreciation in market value besides replacement cost:  Demand.  Demand generally falls as prices rise, therefore, every dollar of increase in replacement cost does not equal a dollar increase in market value.  Buy when you're ready and not because someone says it will be more expensive in the future. Too many unknown variables (READ:  political changes) tugging in both directions to infer what the author implies.

Agree with that analysis. Especially about buying when you're ready. If you find a place you really like, is in your budget, and you're comfortable with it, then buy it. If those criteria's aren't met then don't buy. There's always going to be some kind of good deal in real estate to be had. Even if the price tag goes up 30-45% that's only the asking price, not the value. How many people are really going to pay a 35-40% premium for property? Given the uncertain economic future of Ecuador at this point, could probably make a strong argument that there will be much more inventory on hand than buyers. Causing prices to drop, or at least be stagnant.

The tariffs imposed are for 15 months and they have to be approved by WTO, which could take four or five months and some believe they are not going to be.

EvaCanada wrote:

The tariffs imposed are for 15 months and they have to be approved by WTO, which could take four or five months and some believe they are not going to be.

WTO...really, because the tariffs have gone into effect here.  There was a recent newspaper article about the difficulties importers and resellers are having buying because of the increased costs.

Not sure if Ecuador is in the mood to listen to the WTO.  What will be interesting is what reaction, if any, the countries of Colombia, Peru and Chile (to name a few) have to these tariffs.  Don't know what Ecuador exports to these countries.

Exactly what "construction materials" are supposed to be affected? Cement, blocks, and wood are all produced in Ecuador. I guess perhaps the rebar and metal roofs. That might account for the total cost of an average house being a couple hundred $ more. As for windows, flooring, fixtures, and plumbing... I couldn't say if there are local manufactures.

(moderated: inappropriate)

quito0819 wrote:

Not sure if Ecuador is in the mood to listen to the WTO.  What will be interesting is what reaction, if any, the countries of Colombia, Peru and Chile (to name a few) have to these tariffs.  Don't know what Ecuador exports to these countries.

Well we already know that Ecuador tried to impose tariffs on Peru and Colombia a few weeks ago, and that they backed right down amid retaliatory threats from those 2 countries. Don't really know why the results will be any different this time? Seems pretty obvious there will be repercussions from all of the countries.

Well, imported items in the market have risen and an article today also  talks about the new tariffs.  The person interviewed was at best guarded aboout the success of these new measures,

Impact of increased taxes

Land cost: no change
Workforce cost: no change
Local raw material cost: no change

Even if you import all the rest (windows, sanitary, flooring, cabinets, etc.), what level of tax would contribute to increase real estate prices up to 45% ??

That's a non-sense.  Talk about a construction boom, unavailability of workforce or land, sourcing problems, etc. that can bring price up, but taxes on imported goods??

I think it's just a strategy to sell condos quickly and put pressure on buyers.

yulrun wrote:

I think it's just a strategy to sell condos quickly and put pressure on buyers.

And sadly enough it's a strategy that am sure will work. Have no doubts there will be enough (not a ton) but enough that will rush in and buy. Am sure many of them will be thinking about the quick 40-50% return they will make on their investment, and of course most who rush in won't be the ones that are in solid economic condition.  Money has a funny way of finding it's way out of weaker hands, and into stronger hands. Will let others here judge who will be the weak hands, and who is the strong hand.

That post on Gary Scott's site was not by him, but was a PAID advertisement from a developer.  There will certainly be a small increase in developer COST to build, that passed on to buyers, but, cost has nothing to do with VALUE, which is strictly a result of supply and demand.  I emailed Mr. Scott and raised my concerns about how this paid article on his site could be grossly misleading to those not experienced in real estate development or investment.  He responded with a curt message that it was clearly marked as a PAID advertisement, meaning "take it for what what you think it's worth, I didn't write it.'

Mesa Cerveza wrote:

... He responded with a curt message that it was clearly marked as a PAID advertisement, meaning "take it for what what you think it's worth, I didn't write it.'

Charming.

Assume this is the article. Looks like Gary was right. Clearly states paid advertisement, and has the author of the article at the end.

http://www.garyascott.com/2015/03/16/41280.html

j600rr wrote:

Assume this is the article. Looks like Gary was right. Clearly states paid advertisement, and has the author of the article at the end.

http://www.garyascott.com/2015/03/16/41280.html

Looking at Alexa ranking, his website ranks around the 50k most visited in Canada which is far from being bad (in terms of traffic).  But when you read the content... ouch!  It just amazes me to find out how many people are looking for a guru, someone who's successful (well, who pretend he succeeded) that you can just follow... and these guys are just cashing in the money from these poor naive pilgrims.

Come on, the guy who made millions, who predicted every financial boom or crash for the last 5 decades will accept that kind of paid advertising on his blog!?!?  At most he did $100 with that paid post.  Ridiculous and the perfect reason to think this guy as no morale at all.

"Buy my book about how to make easy money, for just 4 easy payments of $999"

You will note from the Gary A Scott article that he is not offering personal
property for sale. Also he charges directly for 3rd party real estate adds placed on his site.
He does not charge real estate commissions.
His article is based on real construction price increases due to tariffs imposed on imported
building materials. A good deal of material used in Ecuador comes from Argentina and Colombia.
I think his estimate of a 45% increase is high because supply-demand will ultimately determine the
selling price of real estate.

In the last few months we know five couples  that have left Ecuador. High tariffs,  $42 on packages from out of Ecuador, with added duties, depending on what is in the box and unstructured healthcare has pushed many to the limit. There is a huge inventory of condos, apartments n homes. Rents are too high, an gringos are paying. No one should be stuck paying the aliquot, that should be the owners responsibility. Your rent can go up but our aliquot went up 20%. That is just gouging,  and rent $50 up. We will move after our lease ends, because there are rentals out there that the owners pay that fee. Gary Scott has always been here for residential properties.  He is just marketing his own business, he certainly wouldn't say it is going down. IL does the same thing. Buyer beware.

Lizardo wrote:

There is a huge inventory of condos, apartments n homes. Rents are too high ...

Doesn't sound like a situation that's likely to last long.

Have you think one second at the impact on the local population?

We are lucky because we can decide to take the plane and find another place.

Unfortunately, every good place to live on Earth (all-year nice weather, good infrastructure, relative political stability, low cost of living...) will see a higher than normal inflation.  Moreover, local business people (and foreign businessman) will try to make more money on the back of these newcomers.

They will pay until it gets to a point where it's too expensive for them and leave... But others will arrive and replace them until it becomes a place only very wealthy can afford.

Trying to find a place where your life is better than in your home country while paying less for it is a temporary opportunity.  Everybody on this planet expect a better life, poor or rich.  What was too expensive for the 5 couples who left is probably a deal for another 5 or 10 couples who will arrive tomorrow.

As BobH said, it's probably only the beggining.

I never said it was too expensive for those that left. Builders are too optimistic that everyone will stay. They left due to not being able to obtain medical insurance, grandchildren, moved to Cancun, got a divorce n one couple just plan hate it here! So is quite a variety of reasons.

If money is your god Ecuador is not your place because you are taking a gamble on whether you will go to heaven or hell.
The economic situation in Ecuador is not new.  What is new is the attention it has been getting in the international media i.e. number one place to retire, etc.  And the greedy start to circle like vultures to capitalize on Ecuador's struggles.
So money mongers, go behind your wall and find a comfortable corner in which you can stress out.  The rest of us will enjoy the culture.

JadeRiver, are you still in Austin or are you now living in Ecuador?

I'm still in Austin.  I have been on extended visits to Ecuador three times since last January.  I am confident i have done my homework, know what I am getting into, and have good plan in place.  It helps that I have become very good friends with an native Ecuadorian and when you are friends with an Ecuadorian, at least this one, you become a family member. I plan to make the move to Quito in fall of next year.

Then, until you have lived here and understand the reality, I suggest that you be less judgmental.  Prices are increasing and we do have to worry about rents being raised to meet the cost of living of the owners of rental properties, food costs, the loss of the govt supplement for gas and gasoline... These concerns are not limited to expats. They are voiced by everyone.

I have not seen money mongering on this blog.  Concern for an uncertain future? Yes.

quito0819 wrote:

Then, until you have lived here and understand the reality, I suggest that you be less judgmental.  Prices are increasing and we do have to worry about rents being raised to meet the cost of living of the owners of rental properties, food costs, the loss of the govt supplement for gas and gasoline... These concerns are not limited to expats. They are voiced by everyone.

I have not seen money mongering on this blog.  Concern for an uncertain future? Yes.

Uhm ... didn't this blog start with a 'buy your property now' advertisement?
First, thank you for being respectful in our dialogue.  I appreciate it.  Not all are.  But I must tell you, the circle of Ecuadorians I have come to know in the two years since I made my decision to move to Ecuador are indeed concerned about the state of Ecuador's economy and this new tax as you have stated.  But in my research I have met more than a few non-Ecuadorians who are buying and flipping property and teaching other ex-pats the process.  I am more fearful, and so are my Ecuadorian friends, of the effect of this on the cost of living than I am this temporary tax.  There was even one person I met who lives in a walled off ex-pat community just north of Canoa complain to me "there isn't even a Walmart here!"   So I am sorry if I sound judgmental, but I mean really.  You can find close to the same cost of living in Tennessee and a Walmart to boot.  If you find judgement in my words, please forgive me but just look at the history of Porto Rico.  I would hate for that to happen to Ecuador.

One plus here, in Cuenca is access for local transportation, with a new tranvia (tram) going through out down, many taxis, still inexpensive, n of course buses. What we save on car expense is huge for us. We also, will move to a smaller condo next year, to make-up for the tax increases. One where the owner pays the home owner's dues. They go up every year too we have found out. There are owners that pay that part. On Craigslist, you can see those. We rented from that sight, not a middle man that wants one full months rent as their commission, which is big business here.  When you are here, not before. That is my two cents, for what ever it is worth!

Thanks for the info Lizardo.  I have already found my city, area, and even street where I will live when I move there.  I have talked to several property owners, all Ecuadorian, who I met through my Ecuadorian friends.
Maybe I'm charmed or something, but so far, while I have done a lot of research, and I mean a lot, and have been extremely careful in my relationships with the people I have met, I have had nothing but positive experiences.
I have met some wonderful people and have many better than expected possibilities.  And I am pleased that the money I put into Ecuador's economy will be going to those who have been riding the struggle of the economic waves rather than a business venture.

Prediction? 

What prediction, Lorna?

This thread lay dormant for nine years before you

authored the above anodyne post, without specifying

the potentially dynamic market in Ecuador or the world

that you are discussing.  Any prediction from 2015

is irrelevant.

Perhaps you are a student and are taking Economics 101.

cccmedia

Beach front cannot be produced, imported or transferred from one place to another. I find Ecuador still offer affordable property in areas like Canoa with a high potential for capital gains

Expats must consider the drug-trafficking and violence factors

in Coastal areas before investing in property there.

El presidente has just presented a set of referendum questions

for the people, but Ecuador may be far from getting these

problems under control.

Capital gains may be limited by the potential inability to

re-sell property in Coastal areas going forward.

cccmedia

Total nonsense.

The local economy does not support that nor will it be artificially inflated with Ecuadorians taking on American style debt levels.

Anyone thinking they are going to go down there and make a killing in real-estate is delusional.  If that is your plan, don't bother going.