Real Estate Investing

So we’ve discussed the flourishing real estate markets of Mexico and Canada. In other international real estate news, one story may come as a bit of a surprise to many — the Baghdad real estate market is heating up. In fact, many Iraqis are trying to find homes, but are unsuccessful because the demand so far outweighs the supply. Amidst the rubble of a war-torn city, it seems a new type of war is emerging — a bidding war. According to the Los Angeles Times:

“Lured by news of decreased violence, thousands of displaced Iraqis returning to Baghdad’s safer neighborhoods are fueling a bit of a real estate frenzy. Last year, home prices plummeted and rents dropped as Iraqis left town in search of more stability. But now, some say it’s almost impossible to find a place to live with sales prices doubling in certain neighborhoods and the most affordable homes being snatched up as soon as they’re placed on the market.”

In Baghdad, homes are more expensive than in America, but the average middle-class income is considerably lower. The article cites a 750-square-foot home in a lower-middle class neighborhood as going for $150,000, whereas a “typical middle-class income” is listed as $400 per month. These numbers don’t quite seem to add up, and makes one wonder whether Iraqis will soon be dealing with something like the American foreclosure epidemic.

The Iraqi culture is inclined to save up money for purchases. However, this is not as feasible an option nowadays, the article points out. Many Iraqis undersold in the recent past to quickly escape the escalating terrorist attacks. They scored quick cash for their escape and are now returning with all their money gone.

Take, for example, the plight of former military officer Alla Mussa, 38, who recently returned from Egypt with his wife to find a home in their native country. According to the L.A. Times:

“To buy a home, he sold his land in a middle-class neighborhood for $41,000, hoping he could put the money toward a home. He has saved an extra $17,000, but even that’s not enough. ‘Maybe if I sell my car, I can get an extra $5,000,’ he said. ‘With my wife, I am roaming, searching for my house, but the supply is low. I have very few choices.’”

Some of the home qualities Iraqis are seeking parallel the concerns of American home seekers, like a safe neighborhood. In fact, to maintain affordability, many Iraqis are trading square footage in exchange for neighborhood safety. Other desirable housing qualities, like bullet-proof glass, are quite different from what most Americans would value. At any rate, while there are still certain neighborhoods of Baghdad that are not safe at all, the bigger picture of a healthier real estate market may be a good sign that the country is getting on its feet.