Happy Friday. This is The Shake 🤝: the weekly newsletter that covers real estate stories beyond our national borders…

Here’s what we got this week:

• 100% Inflation Ruins Homebuyers' Dreams 📈 

• Monthly Giveaway 🎰 

MARKET RADAR

100% Inflation Ruins Homebuyers' Dreams 📈 

Before the Great Depression in 1930, Argentina stood among the world's 10 richest nations per capita. But since the 1950s, few countries have spent more years in recession. Today, more than four in 10 Argentines live in poverty.

Anyone worried about inflation in the US should be careful about complaining to anybody from Argentina. The currency basically loses its value by the hour with inflation eclipsing 100%.

The banks recently lifted interest rates to 97% to try and encourage people to save in the local currency… yeah nice try.

5 years ago I went to Argentina and the exchange rate was $1 US dollar to 17 pesos. Today, that exchange would be $1 to 256 pesos (the going street rate for Ben Franks is 400+ pesos).

In this type of economy, the worst thing you can do is do nothing with your money.

Now imagine this: homes in the country are priced in U.S. dollars, but guess what? Buyers can only get mortgages in pesos, one of the world's worst currencies against the almighty greenback.

Fellow real estate investors – inflation is typically our friend, right?

And that's just the beginning…

Argentina's housing market, once a shining example of President Mauricio Macri's pro-business turnaround, has become a victim of the peso's dramatic plunge this year.

Add skyrocketing interest rates and a mind-boggling property-buying process into the mix, and trying to finance a purchase in pesos is as elusive as finding a unicorn. Thus leading to a nation of renters…

Research shows that 55% of Buenos Aires' property is for rent.

In the last 12 months, rent in Buenos Aires has increased 115.1% for one-bedroom apartments, 140% for two-bedroom apartments, and 109.2% for three-bedroom apartments – faster than the rate of overall yearly inflation. Stop salivating, you dirty cash flow investors 😉  

Seems like a great place to be a landlord? Well, only if you like to break the rules…

As inflation keeps eating at potential profits, many landlords require US dollar payments and completely ignore the country’s Rental Act passed in 2020 which regulates rents by indexing them to inflation and average salary increases with adjustments made only 1x a year. It also mandates that leases have a minimum duration of 3 years!

So what do landlords do? Turn to short-term rentals, of course…

Mariano Garcia Malbran, the president of the Chamber of Real Estate Services Companies in Argentina, puts the number of traditional long-term rentals available in Buenos Aires at only 1,500.

In comparison, the number of short-term rentals in the city is calculated to be around 70,000, according to Gervasio Muñoz, the president of the National Federation of Tenants.

The owners that abide by the law (and don’t turn to STRs) are either opting to leave their properties standing empty or selling.

With more owners deciding to sell, there is now an oversupply of housing stock and a drop in prices -- usually set in dollars, leaving them out of reach of most residents.

The institute estimates there are about 130,000 empty properties in the city.

According to income tax data, there are some 70,000 registered rental housing units in the city, but... about 500,000 households are tenants, just to give you an idea of the scale of informal rentals.

In terms of purchasing, a studio apartment in BA costs US$96,830, while a two-room apartment of 50 square meters sells for US$117,058 and a three-room apartment of 70 square meters is worth US$165,050, depending on the part of town.

A square meter in the exclusive Puerto Madero sells for US$5,578 while the same surface is available for US$1,078/m2 in Villa Lugano.

Those with loads of dollars have no problem finding a roof - many being ex-pats taking advantage of the cheap standard of living and illustrious charm of the city.

Unfortunately for many Argentines, access to decent housing remains a luxury rather than a right – despite it being enshrined in their constitution.

At least they have a shiny trophy to hold onto for the next couple of years 🏆️ 

For now, I’ll be awaiting Messi’s arrival in Miami… where real estate can’t seem to come down in price.

Chau!

MONTHLY GIVEAWAY 🎰

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Shake readers get Threshold Management free for two months 🤝 

This week’s giveaway item is a LARQ Bottle

How do you win?

We are going to post a closed transaction with some high-level details and whoever can guess the right sale price, wins.

If nobody gets it right, the closest guess wins. If two people get it right (screw us right?!) we will hook you both up!

Let’s kick it off 👇️ 

This Argentine getaway home is nestled along the Andes mountain range. At about 16ksf, it holds 10 beds and 14 baths with an indoor pool to enjoy a dip even in the winter months.

FIN 🤝 If you enjoyed this week's edition, don’t be selfish — share with a friend!

^{DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.}