Known as “Le Provençal,” this petit studio is a breath of sunshine, with three windows on a charming and quiet courtyard, south-facing for light all day long. Nothing is missing, and nothing to do, it’s move-in or rental-ready. Past residents have commented that “it is impossible to be depressed in such a happy space that feels so much bigger than it really is!” Outfitted with plenty of storage space, one could live happily in Le Provençal for a week or an eternity. Reference #004.
To peruse all of our current properties for sale, visit Adrianleeds.com. And if you have a property you wish to sell to our North American/Anglophone market, do not hesitate to contact us at [email protected]
Bonjour French Property Insider Subscriber,
John Rule, our Mortgage Manager and Listing Agent, is one of our best financial analysts and has been helping our clients for years to obtain financing. This week, he wrote the following article for French Property Insider:
"The Financial Planets Have Aligned to Create An Excellent Buying Opportunity for US Investors in Parisian Real Estate"
Mortgage rates at an all-time low + Very strong US dollar + Rare pullback in Paris property prices __________________________________________
= UNIQUE OPPORTUNITY
The three most important factors that determine the cost to an American buyer of owning a Paris apartment all flashing green at the same time is a rare occurrence indeed, but that is exactly what we are seeing at this moment! The result is that apartment prices in US dollars are currently 25% lower, and monthly mortgage payments are 36% lower today than they were just 3 years ago.
1) Mortgage Interest Rates
The European economy continues to flirt with recession, having never really recovered from the financial crisis that began seven years ago. The European central bank has had no choice but to maintain its low interest rate policy. As a result, the 3-month Euribor rate, upon which most variable rate mortgages are based, is now effectively ZERO. This does not mean that one can borrow at 0% though, as there is a bank margin of as much as 2% to add to it.
However, we do not see bank margins changing much and so for those favoring a variable rate loan, rates cannot get any more attractive than they are now.
Three Month Euribor
Because variable rate loans have nowhere to go but up, we currently favor fixed rate loans. They are slightly higher than variable rates, but we think over the long term, they will prove to be the cheapest alternative.
In the past seven years, fixed rates have dropped almost in half, with much of that decline coming in the last 12 months. They could decline further, but represent extremely good value at current levels.
Fixed Mortgage Rates (20 year term)
2) EUR/USD Exchange Rate
The moribund European economy, declining interest rates, the potential for Greece to exit the Eurozone, along with hard to ignore strength in the U.S. economy, have driven the euro to 12 year lows against the dollar --- 35% below all time highs. Europe is on sale!
3) Paris Property Prices
Since the year 2000, Paris apartment prices have grown at a compound annual rate of 7.6%, with very few periods of correction. Even when all looked bleakest and property prices around the world were diving between 2008 and 2010, prices in Paris exhibited but a small downtick, before surging once again between 2010 and 2012. Since then, the average price in euros has pulled back by 5.7%.
In US dollar terms, the average price is down by a whopping 25%!
(Paris Average Apartment Price per m2 LEGEND: BLUE LINE = EUROS PER M2, RED LINE = DOLLARS PER M2)
The Unique Opportunity
Taken in conjunction, the three factors described above have a profound impact on the cost to carry a Paris apartment with a mortgage. We have created an affordability index, which shows how the monthly payment has changed over the past eight years, with the cost in 2007 as the base of 100.
From this chart we see that monthly payments in U.S. dollars have declined from a high of 146 three years ago to the current level of 93 -– a 36% drop.
To use the practical example of a 75m2 apartment, purchased at the average per m2 price, financed with a mortgage of 80% of the purchase price, the monthly payment in US dollars has declined from $4,136 in 2012 to $2,645 based on a fixed rate loan of 2.45% for 20 years. Over the life of the loan, that is a savings of $357,840 or 57% of the current purchase price of the property.
One Further Thought
For those Americans who have benefited from the gains in U.S. stock markets, it may be time for an asset switch. Since its low on March 6, 2009, the S&P 500 is now up over 200%.
Since World War II, only two bull markets have lasted this long and as you can see, when corrections come, they take no prisoners.
In our opinion, a switch from U.S. stocks to Parisian real estate is a no brainer!!
By John Rule, Mortgage Manager / Listing Agent, Adrian Leeds Group
And now that the forces have aligned to create a perfect investment opportunity, the one caveat to investment in Paris are the current rental laws that prohibit the rental of secondary properties less than one year.
Do not let a real estate agent who represents the seller fool you into thinking this is not a risk. Allow us to assist you in finding a property that fully complies with the current laws so that you are sure to make a safe and secure investment -- the do exist!
P.S. Book a one-on-one consultation with me to learn everything you need to know about the risks of short-term rentals. The cost of the consultation applies toward our other services, so nothing is lost, but much is gained to secure your investment. To schedule the session, visit our Consultation page or email me at [email protected]
Financial Planning for Expats
Join us once again for a FREE Financial Forum & Economic Update
Thursday, April 23rd, 2015
6 to 8 p.m.
sponsored by the Adrian Leeds Group with presentations and Q & A by Dunhill Financial.
Join us for one or both sessions with Brian Dunhill and his team for an in-depth look at how American citizens deal with the ever changing regulatory environment and financial challenges and take a look at the future of the economy how that affects your future! Wine, coffee, water and sodas will be served complimentary!
Copyright 2015 Adrian Leeds® Adrian Leeds Group® adrianleeds.com PAdrian Leeds® is a registered trademark in France. INPI: March 10, 2006, #063416238. Adrian Leeds Group® is a registered trademark in France. INPI: December 22, 2014, # 14/4144068. Anyone using these brand names or any kind of advertising without permission may be prosecuted. AdrianLeeds.com, AdrianLeedsGroup.com and AdrianLeedsEnterprises.com are reserved domains for exclusive use of Adrian Leeds® and Adrian Leeds Group®.