To IBI or not to IBI, that is the question.


Tuesday, October 13, 2009
More Cost Of Carry

Sometimes the comment facilities provided by blogs work wonders. We'll first deal with a few objections raised about the methodology, data or conclusions of the previous post. Then we'll get to the crux of the matter - how these cost-of-carry figures change, or fail to, as seen by banks in the event of bank repossession in Spain and the United States.

Both reader Mickey and one identifying himself merely as 'J' (plus one e-mail contributor) raised the point about using PPP median income. They are correct. We chose it because it saved a lot of searching of databases. In the new table, seen below, we have inserted the OECD's gross national per capita income instead. This is also unsatisfactory, but if they don't list median income in their country profiles, who are we to argue with them.* This isn't a precision science, anyway.

J also provided us with very different figures for utilities, maintenance and community fees. In the case of the first two, he was citing costs for a lived-in dwelling - not cost-of-carry by any definition of the term. In the last case, community fees are calculated as a given unit's percentage of the total floor space of the building. Consequently, nominal costs vary according to the size of the flat. The costs themselves are divided into operating (utilities, cleaning of common areas, doorman, etcetera), provision for surprises and extraordinary items. If the last is not fully funded by the penultimate and is very large (as when the city comes along and orders an upgrading of the elevator, for example), these costs may be financed and amortized over time. The age of the building certainly affects community fees. We've increased them in the new table, as we have insurance and property taxes - resulting in an 850 euro per year increment in the total. We don't think these changes affect the conclusions, but readers may feel free to differ.



More interesting, however, might be a look at all this from the point of view of financial institutions in the two countries as they decide whether to rush to liquidate repossessed homes - tanking house prices in the process, or not. The comparison that has to be made in this regard would be the difference in the cost-of-carry of owning, for example, 50 repossessed homes in one 50-unit apartment building and that of maintaining 50 single-family, detached residences. That is what 'homes' are in the respective countries.

We suggest that the reader take the following into account:

1). The American figure will turn out to be approximately 50 times the individual cost-of-carry. There are no noticeable savings to be had. The calculations regarding raw cost-of-carry or cost-of-carry as percentage of value, relative to a price reduction and so on will not materially change as the number of examples increases;

But they will in Spain:

2). The individual Spanish homes in a repossessed development will not yet have water and electricity contracted. Savings - 32,500 per year;

2). The Spanish homes will not have individual insurance policies. Savings - 15,000/year;

3). We'll consider the community fee, which is not yet agreed upon, as a proxy for maintenance costs and leave it intact, minus the day-shift doorman that a building of this category will have. Knock 12,000 euros a year off the total;

6). The insurance policy contracted will be the standard for the common areas and may have some sort of consideration for damages that might occur to the exteriors of individual units - this typically being destruction of window blinds by hail or wind storms. To all this, possibly add extra liability coverage and something that pays for damages if squatters move in. We really have no clue, but we think that 10,000 a year might cover it. Add 10,000;

7). Maintenance for outdoor common areas. Let's guess at 12,000 a year;

8). Property taxes on the individual units will have to be paid;

9). We'll leave the annual repairs of 200 per unit intact, although we have a hard time imagining what is going to generate them. Add 10,000/year.

The spreadsheet summary is below. We think that we've allowed sufficient margin for things about which we know nothing, like building insurance, and that we've included some costs that might prove themselves to be optional, according to circumstances - the housecleaning of common areas portion of maintenance might qualify in this regard, as might the care of outdoor areas.



In the United States, the repossess-and-wait-for-better-times option, costing 2.43% of the asset's value per year, is not entirely financially appealing - especially if competitor banks are eroding the market value by putting their stock up for sale. In Spain, if the market has the minimum fluidity necessary to provide some idea of asset values and the banking system does not lack sources of funding, retaining these property assets and converting them to mortgages, one by one, becomes a viable choice on a long enough time line**, particularly if agreement can be had among banks and cajas to do this - something not entirely unimaginable in a country in which economic activity always organizes itself into cartels. It can also be debated that the rolling of credit to developers, if done with better repossession conditions than previously existed, is also not a bad selection among evils - and may not be substantively different in effect. Roll the loan or take back the homes, we're still stuck with asset values underpinning the whole thing.

Pablo's comment that the comparison was not apples to apples exactly describes the entire problem. The use of U.S. data to predict the future of Spanish housing prices probably suffers the most from this mismatch. As for his thought that the American example might be representative of a more affluent economic class than the Spanish, we actually think the opposite is true, in this case.

Reader Sinus is just, plain wrong - although we'd like to know what source he used to calculate 2,000 euros a year in property taxes for the Madrid example.

*We could, of course, complicate the whole matter by bringing up the 20+% submerged economy in Spain. There are lots of approximations here.

**The main threat might be thought to be potential increases in interest rates. We agree, but won't put a date on it as long as demand for credit remains moribund. We think this menace is overrated.

IBEX Salad: More Cost Of Carry

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'If you don't read the newspaper you are uninformed, if you do read the newspaper you are misinformed.' -Mark Twain

En resumen, que en EEUU te crujen a impuestos.

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Es toda una experiencia vivir con miedo, ¿verdad? Eso es lo que significa ser un esclavo - Blade Runner

España, el país de la gente sin casa y las casas sin gente.- Forero anonimo

http://www.burbuja.info/inmobiliaria...as-duelen.html
Próxima capítulo, aprended de España, las burbujas duelen.

Aquí además de crujirnos a impuestos nos van a poner a cantar saetas por las mañanas, eso sí desayunaremos con crujientes galletas!

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Sin un duro pero guapo





133

Muy interesante. Si lo aplicaran en España ya habría menos gente que diría "El ladrillo es una inversión"

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La política es el arte de buscar problemas, encontrarlos, hacer un diagnóstico falso y aplicar después los remedios equivocados. Groucho Marx
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Un banquero es un señor que nos presta un paraguas cuando hace sol y nos lo exige cuando empieza a llover. Mark Twain
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Puedo predecir el movimiento de los cuerpos celestes, pero no la locura de las gentes. Isaac Newton
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como acaba de decir el sr- diputado del PP y exendeso

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ojito con las inmobiliarios

ultimas tablas de cajas actualizadas

2006: First, they ignore you (phase 1)
2007: Then, they laugh at you (phase 2)
200 Then, they fight you (phase 3)
2009: Then, you win (phase 4)
2010: Now, capitulación

Puesto en euros el precio de una vivienda en NY sería:

333.333 e
8100 e Gastos anuales
30731e Renta per cápita.

Ya no canta tanto.

Por otra parte el sueldo medio en España según varias fuentes es de 20.438e no 29000.

El salario medio | BlogoEmpresa

El sueldo medio español debería subir un 59% para equipararse con Europa La cazoleta del arcabuz

Por lo tanto el porcentaje de gasto anual ya no es 11 a 26% sino aprox 16 a 26%. Sigue siendo más caro mantener una vivienda en USA pero sus ingresos son un 30% más altos para MISMOS PRECIOS DE VIVIENDA.

20.438 en 14 pagas sale un sueldo mensual de 1459.8 euros, pero en España hay 11 millones de "mileuristas" sobre todo entre la población más joven, de una población activa de 18.800.000.

Instituto Nacional de Estadística. (National Statistics Institute)

Creo que el artículo fracasa en su conclusión de que en España a día de hoy es posible para los bancos aguantar el stock hasta tiempos mejores.

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"¿No ves que la finalidad de la neolengua es limitar el alcance del pensamiento, estrechar el radio de acción de la mente? " George Orwell 1984.

Hay que tener en cuenta que, mientras los impuestos sobre la propiedad son bastante altos en EE.UU. (con ellos se financia el sistema educativo, por ejemplo), su equivalente del IVA (sales tax) es ridículamente bajo para los niveles europeos. Depende de en qué estado vivas y el máximo, me parece, que lo tienen los de California con un 8,25% que, sumado a recargos municipales, puede llegar a ser de un 10,75% en algunas localidades californianas.

Es un sistema fiscal que me parece bastante más sensato que el español-europeo de crujir a los pobres a golpe de IVA. Por no hablar de la orgía ladrillil de los últimos años, donde los desgraciados que se compraban un piso tenían que pagar ellos solos (a través de mordidas varias vía licencias y precio del suelo): cubrimientos del ferrocarril, fiestas patronales, asesores sobre la viabilidad del cante jondo en Japón, las farolas de todo el pueblo, ...

Sobre lo que pagan de impuesto sobre la renta y como han solucionado la financiación de ONG (si son no gubernamentales, ¿para qué reciben subsidios?), sindicatos, partidos políticos y demás chupópteros de los fondos públicos, ... también han encontrado la solución óptima: hasta un tanto por ciento de tus ingresos, LA MITAD de todo lo que dones a entidades sin ánimo de lucro, se reduce directamente de la cuota final a pagar del impuesto sobre la renta. Eso sí, subvenciones estatales para nadie, cada cual que done (o no) a quien le plazca.

El artículo acierta de lleno en el hecho de que tener una propiedad inmobiliaria en España apenas supone molestias; en cambio, por esos mundos de Dios, si ni vendes, ni vives, ni alquilas, ... se te comen vivo los impuestos.

Es muy significativo que, a la hora de comprar un apartamento en la playa, los extranjeros SIEMPRE preguntan por el IBI, mientras que los nacionales lo hacen por los gastos de comunidad.

También es la causa por la que aquí las viviendas vacías, y que no se vende, no salen al mercado de alquiler.

Si tuvieran un 2 o 3% del valor en gastos anuales salían al mercado echando leches.

bueno, el artículo de arriba no habla de sueldo medio, sino de Renta Media Bruta, son conceptos diferentes.

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Quand la dictature est un fait, la révolution est un droit - Victor Hugo