Of The State Of Real Estate

My birthday passed recently and I was contemplating on how when my father was my age: he owned a house. My parents had spent about 17 years paying for it. I recall the day my mum showed me the title deeds to the house proud that they had paid off the mortgage in full. A decade later, I remember laughing with my mum when she finished paying off a loan for a set of Kensington lounge sofas, and ironically how they cost the same amount as what they had paid for the house in the early 90s.

I live in a world where one can barely qualify for loan to buy furniture, let alone buy a house. The only assets I own; a phone. a laptop and a blog.

Things weren’t like so, the economy was once stable, with inflation fairly minimal and one could commit to being locked into a contractual agreement for the next decade or even two.

Then Zimbabwe experienced a hyperinflation meltdown, people’s savings took a tumble, money lost value overnight and now no one is keen to be tied down with long term payment plans since you never know….

ten trillion zim dollars

Real estate is a thriving business, how can it not be? It is a solid asset that maintains value as the economy twists and turns and can even offer lucrative returns as property prices have been going up and rarely go down. Small wonder the price of premium properties in Zimbabwe tends to cost more compared to the global price markets. An article in The Standard compared property prices in Zimbabwe vs those in South Africa and showed how the prices in Zimbabwe for low-density housing, rivalled premium real estate, beachfront properties in South africa’s coastal cities.

The Zimbabwean economy is largely informal with a high percentage of the population being self-employed in the informal sector and not likely to have requirements to secure a home loan while those who are formally employed would have to be high earners to afford the high rate of mortgages.

There’s also a new breed of entrepreneurs, role models to some, who can afford to buy or build a home in cash. One wonders how they make their money but looking at listings in the local newspapers people have real estate advertised with non-negotiable cash prices and someone is buying.

It used to be Zimbabweans abroad who bought and built properties, taking advantage of arbitrage in the forex market but now real estate price is inflated even in the United States Dollar prices. An article in the Business Tech Newspaper attempted to shed light on some of the dynamics of Zimbabwe’s property market and offered interesting insights on how real estate market seems to be thriving in a slumped market.

Although banks do offer mortgage plans which include financing the outright buying of a house, building one or home improvements and cashing out loans on existing property usually at around 50% of the value; the requirements are usually strict. Most local banks tend to target Zimbabweans living abroad for home ownership projects as it’s a well-known secret that the country practically runs on remittances sent by Zimbabweans abroad.

According to the Reserve Bank Of Zimbabwe’s figures, remittances received from the diaspora for 2020 stood at just over US$1 billion, breaking the record that was set in 2015 (US$939 million)

Banks seem to also be cashing in on the real estate game as a number of development projects are being carried out by banking institutions that acquire land and then develop it into housing schemes which they mortgage out for a profit. The land itself is fairly cheap but the value addition in servicing housing stands and putting up low-cost houses turns a tidy profit.

Its ironic that for all talk about land in Zimbabwe, and the revolutions it has fueled, on the market the land itself doesn’t have value but what adds value are the improvements you put on it. People are waking up to this realization that its cheaper to buy your own residential stand and then building a house which suits your budget than trying to buy a completed house.

Due to the high rates of mortgages and the informal economy in Zimbabwe, the majority of people would probably shy away from even enquiring about a mortage without giving it a second thought, but an application similar to the UK Mortgage Calculator might help see how one compares with handy graphs of loan repayment along with monthly and yearly amortisation tables. While the Mortgage Calculator is calibrated in pounds for the UK market it can be adapted for almost any mortgage market in the world and even helps you calculate how much mortgage you can afford based on your income.

I am curious, do you own your home, are you renting, paying mortgages or paid off, inherited a house or other?; you can elaborate in comments. Maybe, you are like me, pretending that being a global citizen means I can’t be tied down with a house, when the truth is I cant afford one, for now….

~B

25 Comments

  1. My wife and our cat have been renting a 1 bed apartment for the last 10 years, the rent keeps going up but the quality of the complex keeps going down. It took 10 yrs to convince my wife that we should look for a house. I’m the top earner but my salary alone would essentially buy us a low income house in a high crime area, so instead we are saving and plan to utilize the USDA rural loan that doesn’t require a down payment, one must pay all other costs though. It’s a long road but I’d rather retire in a home than this crappy apartment.

    Liked by 2 people

  2. Our corner of the US real estate market has been stable and growing for long enough that our home & lot are part of our retirement plan. So we mostly own our home.
    But we live in California, aka the highest taxed state in the union so are planning on leaving before retirement.

    Liked by 1 person

  3. At my big age, I am still at my parent’s house. I can’t afford to rent, buy, mortgage, or even feed myself for a month🤦🏾‍♀️
    With a whole degree and flight dispatch license “coated in dust”🤦🏾‍♀️

    Liked by 1 person

  4. My hubby and I bought out first house in 1984 when we got married. 3 children later and we are on our 6th house, buying and selling to move into new or newer and moving to experience different areas. We’ve always been able to make money to invest into the next house. There were 2 downturns, one around 1992 that was a resession that we waited out to 2000 and sold moving to our local mountains. That was a nice for a change in life style that lasted only one year. So we sold and moved yet again.
    The house we own and pay a mortgage on now is the longest we’ve lived in one place. This is year 16 and we waited out the resession in 2008 where our house went way below what we paid by half. That was so bad that resession, we saw abandoned homes ~ lots of people lost lots of money but we had secure jobs and just plodded along.

    Liked by 2 people

    1. Sounds like its been quite an adventure!!! Thanks for sharing

      Yeah I also think somehow the 2008 recession somehow fed into our our hyperinflation phase in 2008 although crazy enough property prices held steady and did not take a tumble… I think real estate has sort of become a pseudo-currency especially for investment, like shares on the stock market even
      ~B

      Liked by 1 person

  5. Oh dang, I wrote a long response and it only posted part of it… But I’m using my phone app so maybe that’s why. Lol 😆
    Just wanted to finish up by saying we’ve been lucky to own a home, paying mortgage but better than rent. I’m worried about my grown children, hoping they will be able to own a home one day too. We love real estate, we should have rented some of the homes we owned, but didn’t realize this would be a good way to increase wealth. Woulda, coulda, shoulda….. Interesting topic and am hoping someday you can own your own home! 😀❤️

    Liked by 1 person

  6. My kids have bought properties in Cape Town and at the moment they have both managed to buy two properties each. They say prices are reasonable there as compared to the crazy real estate prices here.
    I bought a house when I was 22yrs old and am still living in the same house 😂

    Liked by 2 people

  7. The state of things in Zim though😢😢😢 I don`t own a house yet. I am renting,hehehe. I hope to own a house someday. But also pretending to be a global citizen isn`t a bad idea at all.

    Liked by 1 person

  8. Before I retired, hubby and I owned a house in Jacksonville, FL. I was transferred to Georgia by my employer and after 4 years of renting the house out, we sold it. Currently, and for the last 5 years we are renting an apartment. We have considered buying a condo but it has to be the right place at the right time. Our apartment is quite sufficient and we have a garage, which some condos don’t have. We live in a great area and everything is close by so why would we want to move? Back in the day, owning a house was a showing of stability but during these iffy times, I prefer the feeling of being able to get up and go.

    Liked by 1 person

    1. yep home ownership has somewhat changed over the years… and you are so right we arent trees rooted to a spot we should be able to move if something isnt to our suiting
      ~B

      Like

  9. I love your honesty and guess what? you will be shocked at how many of us are in this category of owning no home or some other stuff society regards as success, regardless of where you are. I am starting find out that what’s important is improving the self, yes! mindfulness, hard work, focusing on friendships and relationships, and being content with what we have. Above all, good health and happiness you will find will be more than enough.

    Liked by 2 people

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