Crisis in the real estate market: how is the city of Mo coping?

Real estate prices have been falling for several months, and Mo is an exception to this trend. So, what behavior should sellers and buyers adopt?

The real estate situation in Mo has become very complicated. After the Covid-19 pandemic, the city of Mo and Seine-et-Marne as a whole became very popular among Parisians looking for space after several months of isolation. This significantly increased the demand for real estate. However, three years later, the dynamics have weakened. The health crisis has given way to another crisis, much less favorable for real estate: inflation. There is a decrease in prices and issues with purchasing.

A dozen real estate agencies in Mo have noticed that prices for apartments and houses are falling, and buyers are not rushing to the agencies. "We are seeing significantly lower demand from buyers, and their purchasing power has decreased considerably," explains Audrey Iskain, director of L'Adresse in Mo, located in the Marais district. Where buyers could previously spend up to 305,000 euros on real estate in 2021, they now have only 212,000 euros in their budget. This is a significant drop of 93,000 euros. "Buyers are becoming more uncertain and worried, which makes them reluctant to close deals," notes the real estate agent. All of this is happening at a time when obtaining a loan from the bank is becoming increasingly difficult.

Real estate prices have been affected by rising interest rates. The decline began in July 2022 and significantly accelerated from January. Interest rates have increased by 1.5% since the beginning of the year. Access to credit has become more difficult, with a national decrease of 40% in loans granted. The interest rate for the Action Logement housing loan (previously 1% housing or 1% from the employer) tripled on March 1, 2023. It rose from 0.5% to 1.5%. This is attributed to the increase in interest rates over the past few months.

The Bank of France reported that in January 2023, the average interest rate on mortgage loans was 2.20% compared to 1.14% a year earlier. "There are days when we only take on one new buyer at our agency. We rank second among the best agencies in our network in France. However, despite our experience and our location, there are significant issues in the real estate market right now that are affecting foot traffic," says Audrey Iskain.

Sellers are also suffering from inflation. If buyers do not have strong purchasing power, then sellers are also affected by inflation and are not yet ready to "liquidate" their properties in Mo. "In this context, the role of a real estateagency is more important than ever.

According to the specialized real estate website Meilleurs Agents, the average price of an apartment in Mo as of October 1, 2023, was €3,297 per square meter, which is 0.6% lower compared to September 2023. Houses are selling for an average of €2,869 per square meter. Prices in the Boval district are significantly lower. The city is very diverse, with areas where the average price is €1,900 per square meter in the Boval district and over €3,000 per square meter in the city center. This allows different budgets to find housing in the city. Although prices tend to decline, they still remain higher than before the health crisis: +12.3% compared to 2018 for apartments and +16.5% for houses. Thus, the price decline is starting in Mo, gradually joining the national trend of falling prices.

"This is the perfect moment to sell." Despite the low number of visits to L'Adresse in Mo, the real estateagency still has plenty of properties for sale: "Due to longer sales timelines. These timelines are related to the period between signing the sales agreement and signing the purchase agreement. This extension of timelines can be explained by various factors, such as longer negotiations between the parties, stricter financing controls, or other reasons that may cause delays in the sales process," continues the agency director. Longer timelines, but this should not deter sellers.

Audrey Iskane categorically asserts: "This is the perfect moment to sell." Indeed, interest rates on loans may still rise by the end of the year, which could lead to further declines in sale prices. Therefore, now is also a good time to buy, to avoid higher loan interest rates that will need to be repaid to the bank.

“If you are a tenant, 100% of the rent is lost, and tenants often find themselves in an unfavorable situation with limited options to reduce rent. When you are an owner, even with higher interest rates, at least 43% of the monthly payment goes towards paying down the principal. You have the option to defer monthly payments for 6 months in case of financial difficulties, and in unforeseen circumstances, insurance companies may cover the payments. Additionally, at the end of the loan term, the property fully belongs to you, which is a beneficial long-term investment,” reminds the director of L'Adresse.

Mo remains an attractive city. This is because the city has advantages that will continue to attract future buyers. The presence of a bus station that allows access to the center of Paris in less than 30 minutes is an important factor for workers from Paris who want to enjoy the expanses of Mo while keeping their job in the capital. For those who prefer to drive, the A4 and N3 highways are right nearby. "The availability of schools and shops also makes the city always appealing. Mo is a dynamic city with many businesses," adds Audrey Iskain, who is nonetheless concerned about the future.

“We hope that sellers will understand that if they want their project to succeed, it is important to consider offers from serious and financially reliable buyers. We are also concerned about the sale of land plots. Indeed, the cancellation of the 0% rate for private homes, combined with the rising cost of construction, could become a significant obstacle for future buyers,” she concludes.

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