Italian real estate market: homeowners and investors keep their heads above water

By Bill Vivian

It may still be “La Dolce Vita” in Italy today as it has been for decades. With the American real estate market in shambles for a good percentage of its inhabitants, it’s interesting to note that there are countries in the world where homeowners and investors are keeping their heads above water.
One of them, about the size of California and with similar topography, namely Italia, has been experiencing favorable property appreciation in most of its regions.
This beautiful country ‘il bel paese’ has not seen the “crash” in home prices the U.S. market has experienced because the lending institutions have been very conservative over the years in their lending practices.
Besides the typical screening a prospective buyer must go through to be approved for a loan, the lender will generally not loan on more than one property, unless the buyer is a large corporate entity with substantial assets. The majority of those assets cannot be leveraged.
Surprised? Hardly. That’s part of what got the U.S. in big trouble. With these conservative practices, it’s no wonder there are no short sales or REO (bank owned) properties for sale in the entire country. This has had a positive effect on current property values. Italian mortgage rates have been closer to 6 percent or 7 percent APR for fixed loans for sometime, and the maximum repayment period is similar to the U.S. at 30 years. There is also 80 percent financing from several Italian banks available, with similar loan conditions that exist in the U.S.
As with property anywhere on the globe, location, location, location is paramount for its ability to appreciate. Buying low and selling high is still a desired outcome. Proximity to beaches and access to resorts, large cities, historical sites, excellent restaurants and transportation hubs all will have a positive effect on property value.
In Italy, property in a good location can bring on average 5 percent to 7 percent appreciation per year. There are instances, of course, where a property purchased in the right place at the right time can still appreciate up to 25 percent.
Europeans absolutely love their summer vacations at the beach, sometimes staying as long as four weeks in one location. Rents for these vacationers can average $1,500 per week during the four months of the “holiday season” — nice pocket change for investors. Property management companies are plentiful, and at competitive rates. Surprisingly, there are still some great property bargains in beach cities, some elbow grease required.
As Russian writer Nikolai Gogol wrote after a stay in Italy, “Once you have been to Italy, you will forget other lands. If you have been to Paradise, you no longer need earth … Europe compared to Italy is like a cloudy day contrasted with a sunny day.”
I have certainly witnessed this firsthand. If you would like to peruse Italian listings over the Internet, go to worldproperties.com and search the country of Italy, with the currency in Euros. Arrivederci!

Bill Vivian is a North Park real estate broker.