Saturday, January 07, 2006

Is This How They Do Real Estate Economics In France?

In France, when City Hall decides housing prices are too high, they sure don't mess around. They just stop it. How? Well, the local government simply begins "negotiations" with sellers. At least that's the way it's done in St. Ouen, a suburb of Paris. There you will find nice flats going for half the price of their neighbors in the next quarter across the street, because City Hall has said that's the way it's gonna be. (Source: Eric Colomer, journalist for French TV5's show Complement d'Enquette)

[Painting by Ulrich Leive]

Don't need to tell you that potential buyers of these reasonably priced apartments immediately realized they could make a killing off the stupidity of bureaucrats and started snatching up the properties faster than you can say "C'est la vie," only to turn around and sell them at double the price, half the deal happening off the table if not squarely under it.

I don't know what the Mayor was thinking; I guess it's just your usual socialist logic. Sounds like the People's Republic of Santa Monica, California, with its rent control, where it can cost you up to an extra $50,000 off the record, paid to the former renter, to get the lease.

When will they understand that the free market is not a choice, it's just a fact.


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