Real Estate Valuation: Absurdities and Market Dynamics Explained

Sergey Smirnov reveals that real estate pricing often lacks reality, influenced by absurd market dynamics and speculative listings.

### The Absurdity of Real Estate Pricing and Market Perception
* 🏠 In 2017, a Canadian man inherited an apartment in Russia but faced legal obstacles due to **guardianship laws**, making it **impossible for him or his children to manage the property directly**.
* 💰 Despite having a promising layout, no recent sales data existed for the apartment, leading to **uncertainty about its market value**, which was ultimately based on a cadastral valuation that **lacked transparency**.
* 📉 After listing the property at this valuation, no inquiries were received until a similar apartment appeared on the market at the same price per square meter, prompting reflection on the **irrationality of how prices were formed**.
* 🔍 An experiment conducted with fake listings revealed that neighboring properties adjusted their prices in response, showcasing how **market perceptions can be manipulated** by artificial pricing strategies.
* 📊 Sergey Smirnov, a real estate expert with extensive training experience, emphasized that many listings are not genuine sales attempts but rather **speculative postings that distort true market conditions**.
* 💡 The discussion further delves into the disconnect between real estate prices and actual market dynamics, highlighting the **absurdity of basing evaluations on non-transactional data** from platforms like Avito and Cian.
* 🏦 The central bank's reliance on these inflated appraisals raises questions about the **validity of property valuations**, as they often do not reflect the **realities of market transactions**.
* 🔄 Ultimately, the narrative illustrates the necessity of **understanding the distinction between price, cost, and value** in real estate, especially in a **rapidly changing economic landscape** influenced by external factors and speculative behavior.

### The Shifting Landscape of Real Estate Values and Ownership
* 🏙 The discussion highlights a transition in the perception of real estate values, particularly as **urban living spaces and country houses undergo significant changes in desirability and worth**.
* 💰 A current example involves a property in Lavrushinsky being launched at **2 million out of 33 million rubles**, prompting contemplation on what can be acquired for **900 million rubles** in the vicinity, such as a **mansion with land** rather than an apartment.
* 🏡 The narrative suggests that traditional notions of ownership, such as having one's own **four walls**, are being challenged, as many now **share living spaces and amenities** with neighbors.
* 🔄 Over the next 20 years, there is a predicted "**hellish reassessment of values**," where wealthy individuals may reconsider the worth of high-end properties, leading to a **shift in investment patterns and ownership structures**.
* 🏢 The text emphasizes the contrast between the dreams of the rich and the poor, noting that while the wealthy may seek to **rent or invest in luxury accommodations**, the less affluent are often left with **long-term mortgages that they will inherit rather than own outright**.
* 📉 The changing values in society are further illustrated through the example of young couples investing in real estate, only to find that their **expectations do not align with reality**, leading to **frustration and a desire to revert to previous living situations**.
* 🔍 The speaker stresses the importance of **understanding the evolving nature of values in real estate**, urging individuals to **evaluate their motivations for purchasing property**, especially as societal values shift and the appeal of owning real estate **diminishes**.
* 🌍 Finally, the text warns of a potential decline in the real estate market as money laundering mechanisms fade, suggesting that the established values of properties will undergo a **critical reevaluation** in the coming years.

Нельзя оценивать недвижимость по ЦИАН и АВИТО | Как изменится ценность недвижимости в 2022?

Сергей Смирнов про инвестиции и недвижимость

A Canadian man inherited an apartment in Russia but couldn't sell it due to legal issues and the lack of recent transactions in the area.

The property's price was set based on its cadastral valuation, leading to a surprising alignment with a neighboring apartment's listing.

The author's experiment with fake ads revealed the absurdity of real estate pricing, and he has since trained over 17,000 experts in the field, offering a successful interactive course for aspiring real estate agents.

Real estate prices have been increasing, with developers intentionally raising prices to reduce sales pace.

The correlation between rising building material costs and real estate prices is questioned, as the two do not always align.

The process of property valuation and its impact on bank collateral acceptance is also discussed, highlighting the absurdity of the situation.

The Significance of Real Estate Valuation

Real estate valuation is context-dependent, with different outcomes for individuals based on their timing and decisions.

Appraisal reports often leave people questioning their purpose and usefulness.

The real estate market's dynamics, including the role of agents and the concept of negotiable prices, have evolved over time, but the fundamental question of value remains complex and subjective.

The Absurdities of the Real Estate Market

The real estate market in Russia is characterized by a confusing and absurd transaction scheme, with sellers removing their listings out of fear and uncertainty.

The role of money in these transactions is often disregarded, leading to a chaotic process where deals frequently fall through.

The pricing displayed on real estate portals like Avito and Cian reflects unsuccessful deals, making it difficult to gauge actual market prices and causing frustration for both buyers and sellers.

The real estate market is plagued by fake advertisements and unaccountable agents, undermining its integrity.

Developers often operate without a clear strategy, jumping into projects without proper planning or knowledge.

The cycle of questionable practices and lack of accountability perpetuates the market's problems, making real estate assessment in a large population challenging.

Selling an apartment often leads to the secondary market, with new buildings driving the trend.

Developers manipulate prices to create demand, while the market experiences a paradigm shift.

The current real estate landscape is marked by artificial scarcity and a struggle for buyers, leading to a potential crash in property values.

The Changing Landscape of Real Estate Values

The discussion revolves around the contrasting values of real estate in Lavrushinsky and nearby areas, with a mansion for 900 million rubles being highlighted.

The narrative suggests a shift in values over the next 20 years, with wealthy individuals reevaluating the appeal of owning mansions and potentially investing in apartment hotels.

The speaker predicts that the poor will increasingly own real estate through long-term mortgages, while the rich will no longer be the dreamers in this regard.

Investors need to communicate and allocate funds for repairs, but the costs often exceed expectations.

The real estate market is unpredictable, with potential losses and gains, making it essential to minimize risks.

Diversifying investments across different areas can help balance out the fluctuations in the market.

Investing in a large object, like a container, may seem appealing, but renting out studios could yield more profit.

The risk of depreciation is spread across multiple properties, and the concept of the "smile of the partner" suggests that the largest and cheapest products sell the most.

With a highly mobile population, the value of owning real estate is diminishing, leading to frequent changes in property ownership.

The Challenges of Buying and Selling Country Houses

The speaker discusses the complex setup of heating and power sources in a house, highlighting the challenges of maintaining them.

They note the changing value of country houses and the difficulty people have in choosing homes, with a trend towards smaller plots and unfinished buildings.

The speaker also criticizes real estate agents for their tactics and emphasizes the impact of changing trends on property value and renovation styles.

The Impact of Design and Values in Real Estate

London apartments use simple finishes and decor to create a clean, neat look, avoiding extensive renovations.

The manipulation of values in the real estate sector is leading to a shift in priorities, with insignificant details becoming more important than essential features.

This shift in values is causing a blurring of the real estate market and a potential reassessment of priorities in the near future.

The Changing Value of Real Estate in Urban Areas

The value of a balcony is questioned in the context of needing an open, large area, which is rare in the city.

The necessity of daily commuting in a megacity is also challenged, raising concerns about the future of such urban centers.

The real estate market is facing a shift, with the potential loss of its role in money laundering and a reassessment of property values in the coming years.