Hot real-estate market: BAGHDAD
Soaring prices. Precious few homes. Bidding wars. Sound like the U.S. real-estate market a few years back? Welcome to an unexpected bright...
Los Angeles Times
BAGHDAD — Soaring prices. Precious few homes. Bidding wars. Sound like the U.S. real-estate market a few years back? Welcome to an unexpected bright spot in the global housing slump: Baghdad.
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.
"Day by day, the prices are increasing and I keep on decreasing my options," said Hussam Jassem, 35, a government worker who earns about $400 a month, a typical middle-class salary. A 750-square-foot home in a lower-middle-class neighborhood costs about $150,000. In the upper-middle-class neighborhood of Karada, a 2,300-square-foot plot of land alone costs $350,000.
"I will end up with nothing if I don't find something soon."
Jassem isn't asking for much: an affordable home in a safe neighborhood with enough space to fit his parents, two sisters and brother.
But in a city like Baghdad, where insurgents have descended on entire neighborhoods and kidnappings and bombings are still a danger, Jassem's task isn't easy.
In the past two months, he and his family have scoured the city, inspecting more than 40 homes, only to be stymied, again and again, by rapidly increasing prices and a shrinking pool of homes.
They're coming back
In December alone, an estimated 46,000 Iraqis returned to Baghdad from Syria, and more than 67,000 have come back since mid-September, according to the Iraqi Red Crescent Organization.
"The displaced people are coming back," said real-estate agent Mohammed Hassan, who sells homes in Shaab, a lower-middle-class neighborhood in northeast Baghdad. "There is plenty of demand and I have nothing to supply them with."
In September 2005, Jassem, a Shiite, and his family left Dora, a southern Baghdad neighborhood that Sunni Arab militants from al-Qaida in Iraq had claimed as their base. Last year, insurgents drove Christians from the area, demanding that they pay a special "tax" or leave.
"When the security started to become bad, people sold their property for any price because of terrorism," said Baghdad real-estate agent Haji Ranzi. "They just wanted money to leave the country. Now they come back, but they spent all their money."
Jassem, for example, sold his family's five-bedroom home, valued at about $165,000, for $75,000. After such a loss, he can only afford $100,000 for a new house. Nearly all Iraqis pay for their homes in cash, and banks rarely offer home loans.
He said he has exhausted "every option" finding a place to live, with friends, relatives and real-estate brokers all on the lookout.
"We found a suitable house; it was a very good house," Jassem said. "It was like a beautiful rose in the middle of garbage."
But radical Shiite cleric Muqtada al-Sadr's Mahdi Army controlled the property, he said. The small, two-bedroom home cost $150,000 — way out of his price range. He found another house that he figured was worth about $115,000. But because the security situation is better there, the seller asked for $210,000, Jassem said. "We couldn't even make an offer."
Ranzi said the smallest homes are the quickest to sell. They're gone almost as soon as they hit the market, sometimes with multiple bidders. Prices have risen so much that families, even large ones, are cramming themselves into the smaller, and more affordable, units.
But Ranzi also has a stock of million-dollar homes, some costing as much as $3 million. These massive compounds, complete with marble floors, sparkling chandeliers and state-of-the-art security systems, are also surprisingly in demand.
Prices of the bigger homes have increased a more-modest 10 percent to 15 percent in recent months, Ranzi said. Among the buyers are former high-ranking military officers, doctors and members of Iraq's nouveau riche who have made their money from government contracts, lucrative business deals or in less-legal ways, such as looting and corruption.
Trying to make a deal
On a recent day, Ranzi was trying to seal the deal on a $1.5 million home with two men who said they were in the car-import business.
"You see the neighborhood?" Ranzi said. "It's a good neighborhood, better than all the neighborhoods in Baghdad. God will make you see the good when you take this house."
After 20 minutes, the men were still haggling over whether the furniture would be included. They parted ways, with Ranzi promising to take their counteroffer to the owner.
His phone kept ringing, the million-dollar home a momentary distraction from more modest sales. One man called, desperate to unload five houses in a dangerous neighborhood. He made his best pitch: One home was worth $370,000; he'd part with it for half the price. Another, eight bedrooms and 4,000 square feet, had perhaps the best amenity: bulletproof glass. Its price: $300,000.
But even that discounted price remained far out of reach for Alla Mussa, 38, a former military officer with a wife and three children who returned from Egypt in December.
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," Mussa said. "With my wife, I am roaming, searching for my house, but the supply is low. I have very few choices."
In one month, he's looked at more than 50 homes. They're either too small, poorly built or in unsafe neighborhoods. But he hasn't given up hope.
"I missed my country. I missed my family. I missed my people," Mussa said. "I made the choice to come back and I don't regret it. I don't know what to do, but I'm going to continue searching. ... If I keep trying and if God is willing, I will find a suitable house."
Los Angeles Times staff writer Usama Redha contributed to this report.
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