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As house prices rise, Iraqis find they can't go home again

Many who sold at rock-bottom prices as they fled violence are now priced out of their old neighborhoods.

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"The Iraqi government is considering different polices and strategies in order to facilitate the return of displaced people to their homes, but I'm not sure you're going to find much sympathy on the part of the government for those Iraqis who freely … decided that it was in their interest to sell their homes, even if ... prices were unusually low," says Jason Gluck, an expert on Iraqi property laws at the United States Institute of Peace, a government-funded, nonpartisan think tank in Washington, D.C.

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The government is more likely to focus on helping those who retain the legal deed to their house and need help reclaiming it, says Mr. Gluck. And to avoid creating a new class of displaced people, Iraqis who were squatting in private homes may receive about $250 a month for six months. There are no indications, though, that the government has issued rent assistance yet.

Still, those who sold at the bottom and lost up to three-quarters of their equity may find assistance. If a family revokes their official status as displaced and meets other criteria, the government will provide them with $850 to help them resettle.

Not everyone who sold at the bottom lost money. In 2006, Sadiq al-Zohari, a contractor, realized that his home in Baghdad's Saydeya district was not only unsafe, but was a losing investment. Although he sold his home for a quarter of its original value (a loss of $235,000), he immediately reinvested in a smaller parcel of land in Baghdad's upscale and traditionally stable Karada district. The investment has since appreciated enough to cover most of Mr. Zohari's losses.

A shrewd investor, he argues that if someone knows Iraq's real estate market well, it's easy to come out ahead. "In Iraq, we trust in property investments more than anything else," says Zohari.

Still, for most, starting over isn't this easy. Abdul Ahmed al-Habeeb wanted to sell his farmhouse on the fringes of Baghdad, but the best offer was less than 10 percent of its original value. "I don't want to go back to my family home," says Mr. Habeeb, who lives in a storefront that he converted into a home for his wife and four children. "It's a sensitive issue for me because both my brothers were killed there."

While he's eligible for aid as a displaced person, he says it's not worth it, as he'll lose at least half the value of the grant in bribes he'll have to give government officials just to get the money.

For now, he has accepted that it's unlikely he'll sell – or return anytime soon. But, he adds, "I hope that one day my children will be able to use this house."

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