Black hole of the real estate
See also: Black hole (homonymy)
The black hole of the real estate is a Economic crisis out of scissors concerning the sector of the real estate.
The crisis is characterized by:
- a decrease in the demand of residences (weak demography).
- a rise of the offer of residences (great number of new buildings).
- Of the prices of the real estate in fall over one long period, until reaching prices close to zero, in certain areas or certain cities.
By analogy with astronomy, this term qualifies a situation of Déflation structural of the prices of the real estate.
In astronomy, a black hole is an anomaly where the universe contracts. By analogy, in economy, one considers that a black hole of the real estate is formed under certain conditions and that it remains an anomaly.
Which are the conditions of training of a black hole of the real estate?
In the countries in demographic Decline, the fall of the number of households limits the demand for residences, and involves a strong fall of the prices of the real estate.
For example, since the beginning of the years 1990, the prices of the real estate in Germany were divided by two, in constant prices. To Japan, the prices of the real estate returned to their face value of the years 1970.
In certain districts and certain cities, certain real goods lost any commercial value almost, with prices ranging between 1€ and 150€ of the square meter. In Tokyo, one can find goods real estate of quality at the price of 500€ per square meter.
The maintenance of the new buildingIn a rich country, it is impossible to stop any construction.
Indeed, the fall in the price of the old residences constitutes a pressure on the prices of the land one. Consequently, it becomes easy to build great residences, meeting perfectly the modern needs and the ecological standards. Thus, even when the demand for residences is theoretically zero (or very low), one always builds many residences, because of the increase in the incomes and richness.
This situation is very unfavourable for the old real estate, whose prices drop structurally because of a surplus of offer.
The role of the investorsWithout knowledge of the demographic situation, the investors repurchase residences with low costs, thinking of carrying out a good deal.
The investors produce or renovate real goods, whereas the market is saturated by the offer, which worsens the Economic crisis out of scissors.
Often, the investors are ruined in a few years. But like the prices of land and the old real estate are very low and close to zero, it is always investors to invest again and worsen the black hole.
Countries of the black hole of the real estateThe applicant countries with the black hole of the real estate, because of very low levels of the birthrate, are: the Spain, the Italy, the Russia, the Poland, the Hungary, the Slovakia.
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