A woman (Kelly Pruitt) is ready to pack up and move to Paris, France — a dream she's had ever since visiting the Marais neighborhood as an exchange student years ago. She's bringing along a good friend who tries to keep her grounded but injecting practicality may be difficult as she decides between the perfect neighborhood and the perfect space.
Everything we thought was going to happen in our lives in the near future is being thwarted by the Coronavirus pandemic. It's a lesson to be learned that what we believe will happen in the future is completely illusory. As philosopher Eckhart Tolle said: "The future is usually imagined as either better or worse than the present. If the imagined future is better, it gives you hope or pleasurable anticipation. If it is worse, it creates anxiety. Both are illusory."
This morning Donald Trump imposed major restrictions on travel from 26 European countries for the next 30 days. With travel restrictions to curb the spread of the virus taking effect, our clients seeking property to purchase or rent have also been thwarted — but, more delayed than cancelled. Preparing for the future at this time of uncertainty is near to impossible and we must take life one day at a time, instead of planning too far ahead. That's not necessarily a bad thing as we learn to live in the present moment, what Tolle preaches in "The Power of Now."
For example, I was planning to renovate my kitchen starting tomorrow, which was projected to take two weeks, and that meant two weeks without a kitchen. I'd been planning it for some time as it's not easy to find a two-week slot when I can devote time and energy to such a project. Living with a renovation: the dust, the odors, the physical requirements to move everything, etc., is a big undertaking, even for a small kitchen like mine.
Late last night I realized it wasn't a good idea to do that in the event of needing to self-quarantine or should restaurants be closed like they are being shut down now in Italy ("Prime Minister Giuseppe Conte ordered all shops in the country to close except for grocery stores and pharmacies until March 25th. Public transportation as well as financial and postal services will continue, but the country’s normally vibrant restaurants, cafés and bars will be shut.") Sadly, I cancelled, or postponed the project until this all blows over and we can find another two-week slot.
My feeling is that this pandemic and "pandemania" it is causing is likely to get worse before it gets better. There's nothing we can do but ride it out and do our best not to contract the virus. As a result, if this goes on for several months, we will have pent-up needs that will explode the moment it's safe to travel and get on with our lives. If that's true, then while the fear is still in the air, prices of property to purchase or rent may come down, but when the cloud lifts from over our heads, demand for property will suddenly increase and we'll see a serious boost in prices. Watch the stock market — we're seeing it plummet right now ("Bear Market"), but it will rise again ("Bull Market") with the lifting of the threat and fear, mark my words.
So, when is the time to buy or rent? Probably when we think the situation is at its worst...and before it starts to go back up, while prices are down. It's the same for the stock market. (Here's an interesting article to read about the stock market)
On a more enlightening note, the first four districts of Paris will be grouped into a single sector called "Paris Centre" as of April 6th, 2020. The Mairie of the 3rd arrondissement was chosen to represent all four districts. If you live in one of those districts, like I do, our postal address will not change. The town halls of all four districts will remain fully competent and active until the municipal elections this month.
This law, enacted February 28, 2017, allows administrative simplification — or that's the goal — but, it also means a new distribution of power between the State and the City by transferring to the City of Paris certain municipal administrative policing power (previously exercised by the State), and a strengthening of the role of district mayors. The grouping of the four central districts will give a higher demographic weight to the new Paris Centre sector, making it more comparable to that of other districts.
In the 19th-century, residents were more concentrated in central Paris, while today they mostly live in the outer districts. The administration claims that the division of the city into 20 arrondissements no longer corresponds to current demographic reality and therefore, it had to adapt. The city administration also complains that Paris is experiencing the same problems as many metropolises around the world: rising housing prices in the urbanized area of the city, driving more foreign investors, bankers, and real estate companies to buy properties, while locals generally occupy the outskirts of the city. A 20 percent tax was set in 2015 for secondary residences to help mitigate the problem of what they view as "empty" units. When 20 percent didn't make much difference, the tax was raised to 60 percent in January 2018.
The tax increase was drastic, but they believe the problem is drastic, too. According to the proponents of the hefty taxes, Paris has 100,000 homes that are permanently empty (40,000 of them are no longer even connected to the electricity grid). The city also has an estimated 92,000 second homes, the majority of which, according to Paris Housing Commissioner, Ian Brossat, are unoccupied for three-quarters of the year. The situation became particularly worrying in the 2nd arrondissement, where the number of empty homes shot up by 6 percent during the 2008 to 2013 period, and the 4th arrondissement, where 29.8 percent of the homes are currently vacant.
Paris isn't the only city facing this problem, and some have introduced similar taxes. Vancouver and Sydney are such examples where the city has implemented a vacancy tax to moderate the amount of empty homes present in the city. This, however, is a risky move, as it could discourage investment and economic growth of the area. The recent drastic increase in Paris’ tax amount failed to deliver their goal to lower the price of real estate in Paris. Instead, prices continue to rise with limited inventory, low interest rates and increasing demand, in spite of the taxes. Now is still a good time to buy!
P.S. I will be speaking at International Living's Fast Track Europe Conference May 21-23, 2020 at the Crowne Plaza Vilamoura — Algarve, Portugal, so sign up to be there! And, mark your calendars for our own Living and Investing in France Conference in Nice and Tour to Provence this coming October 18 to 26 — details to come. To be on a special mailing list so that you can take advantage of early bird special rates, email: [email protected].
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