kashyapd

Hello ppl,

I feel the RE is taking the turn for the worst. I have been hunting for the property in Thane area for past 6 months. The prices ppl still quote are crazy i.e. both resale and New Construction ( to be ready in 6 months time).

Its pretty sad to see that ppl are still stuck in dreamy prices that they have seen in late 2007 & early 2008. This way they are not only stagnating the real estate market but also eventually will default on their debts. This is true for both resale end users and builders. Builders might abandon the projects & Resale sales wont happen at all.
The real estate brokers are playing dirty game of price cartel of RE prices so that there 2 % commission money will be higher. An Interesting article in Property Times on Saturday Times of India, shows that how resale values need to drop to initiate some kind of sales in RE and how brokers are literally killing the resale market by refusing to close the deals on lower prices.
My advice to the ppl who are holding the property for possible exit: this is the best time to sale the property for whatever profit you are making. holding the property tight on your wish list pricing will see a greater value erosion on the profits.
Also I seek the advice from experts on how Thane property market is heading and how one should deal there in terms of right cost of property or valuation of property in Thane city & GB rd area.
Your replies are appreciated.

Thanks,
Kashyap

vdpande

Dear Kashyap,

Its not right to blame people just because you need a property and not getting lowered price.

Please let me tell you these is a tremendous drop in price at all locations. yes it may not be to your expectations but in line with the down fall projected by the experts.

How ever please give your expectations in terms of price and area expected I may help you in this regard.

Mind well I am not a broker and hence dont worry for 2%.

Vinayak Pande

kashyapd

Dear Vinayak,

I appreciate your response. I am not saying that there is not a single drop in the pricing. I am just saying that as an end seller there is still lot of apprehension & confusion created by brokers/agents regarding price points. May not be all the agents but significant amount of them do.

For e.g. : a 2 BHK flat in Raheja township in Thane was purchased for INR 22 Lakhs in 2006 (with agreement value reference) is currently offered at 1.2 Cr.. Now it may have been possible to sell this in booming economy but will be difficult for him to get this price points in real world now.

I have friend who is a broker in Thane , who is ready to deal with the actual price points but unable to do so coz of pressure from existing broker cartel. The big broker fellows made lakhs in selling these flats at inflated prices are doing this to safeguard their own Interest & which is killing the market.

well regarding my price points let me tell you my friend, I am not blaming anyone for the price they are quoting. It is their virtue to tag a purticular price point to their product but it does not always go down as right as a market price and the brokers are supporting their moves to safeguard their own interest.
I am not sure what offended you in my post but I dont mean the way if it has so.
If you can help then I am looking for 2 BHK property in Thane city area. from Naupada- Bhaskar Colony- Ghantali - Panch Pakhadi. If you can help with right price and valuations then I would be greatful.
The article I was referring to is on the below link.
http://www.narains.com/Residential-A...Realistic.html
I gave the reference because it really depcited the state we are in.

Please let me know if you need any more info. I would be glad to share.

Regards,
Kashyap

nick_alan_76

Real Estate is one of the few investments that can Gain an Actual Negative Value. Here is how. The investment in real estate would make sense if
The /rent equation never made sense in the first place. So In fact you are actually losing money just sitting on the RE.

The only place holding (or PARKING) the RE would have made sense was if the year over year gains in RE surpassed the expenses (left side of the above equation). Mind you that this DID happen for past few years. However the RE prices have gone beyond the affordability (even if you do not make /rent calculation... which would be really stupid) of majority of population. RE is not coming back to the same levels. In fact the er pool is reducing with the job losses (high paying jobs) and ongoing economic turmoil. FIRST TO EXIT IS A SMART SPECULATOR..

I saw an interesting phenomenon in RE in USA. The guy who is able to make mortgage payments is actually defaulting on his loan and so is his neighbor. Then the house goes in foreclosure. Then the neighbor s his house cheap and he s his neighbors’ house... cheap. Read it up.

AND FOR GOD’S SAKE STOP READING AND BELIEVING THE SO CALLED EXPERTS.

nabishek

Many thought they could do the same in India too.Give back the property to the bank and walk away.

Banks in india dont offer loans on exculpatory clause(non recourse).

i.e. A provision in a Mortgage allowing the borrower to surrender the property to the lender without personal Liability for the loan.

The Home loans in India are granted on recourse.

If one takes a loan of 80Lakhs from a bank for 1C worth property.On foreclosure, if the property was sold only for 60 Lakhs, the borrower is personally liable to pay back the delta amount of 20 Lakhs to the bank.

Moreover, defaulting on EMI will affect the credit rating and impact credit worthiness while availing any kind of loan in the future.

The attractive option of swapping mortgages at lower prices by foreclosing the property is not available for Indian borrowers.

If a person's debt is choking them and paying EMI regularly seems unmanageable, its prudent to cut down on losses and exit ASAP.

nick_alan_76

Not that I am suggesting. But think about it... right now if the person exits his position (from RE), the incurred loss is lesser than the incurred loss if he/she exits later. Plus he would have saved on the ongoing expenses.

Similar property could be had for much cheaper looking at the way things are going.

Are you guys looking at the unemployment numbers in USA... 8.1% thats not even their U6 unemployment number. Things are getting nasty and even I am getting squeezed now (though my positions are well contained).

lincsus

DLF blore on Baneghatta road reduced prices by 30%.

ssman

I would like to agree with and add to this with some thoughts/opinions of my own:

During the last property boom, there were lots of people buying property. Broadly speaking, we can put them in two categories:
1. The investors who had money, didn't need loans and saw RE as a good investment in the short or long term.
2. Salaried people who bought a home to live in, and then perhaps another as an investment, and have taken loans, hoping to pay them off by their salary. IT and BPO crowd, both local and onsite were a big part of this.

Both these put together added up to more than 100% demand - there was a shortage of houses/apartments to supply both types of buyers so the prices went up.

A huge amount of properties started getting constructed to cater to this demand.

Real demand - was still low: the rents did not rise at the same acceleration - and rentals are what give you the picture of true demand based on people who want to actually live in the homes.

Now with the crunch, salaried people don't have the optimism to buy a home. They have left the market and are renting apartments. There is a huge supply because of all the homes constructed during the boom, so there is no shortage of housing and rentals aren't going up.

Since salaried people aren't buying any more, half the demand equation has died down. the demand is now less than 100% (i.e. for every 100 homes, there are say 50 buyers). Plus more homes are completing construction (e.g. Sohna Road and Golf Course Road in Gurgaon which are full of constructed and empty apartments. Similarly areas towards the international airport in Bangalore).

So why aren't prices coming down?
1. The investors don't need the money immediately, so are willing to wait for a desperate buyer
2. The salaried classes are living in their homes. They are very worried about the EMIs, but still aren't selling out because they are actually living in the homes.

When will they come down?
1. The investors will need money soon - the slowdown will continue for atleast a year and businesses will need cashflow. Investors will sell property to get cashflow, to keep their business afloat.
2. The salaried class will continue to live in rented places and will not come back to the market. The huge number of constructed apartments available will go out on rent to these people and rentals will not go up. So there will be no pressure on anyone to buy a home to actually live in. The concept of buy a home early in your career will die a slow death.

The ones worst squeezed in this will be the developers (and their investors) who will have huge inventory, large loan repayments and buyers aren't buying. The second worst squeezed in this will be the property agents who have seen their month to month cashflow dry up (because no transactions are happening).

We will not have a boom in the next few years. There will be no upward pressure on property for many years to come.

Prices have come down and in the absence of any support they will gradually deflate for a number of years.

Today the prevailing sentiment is that property prices always rise, so people are still waiting to enter the market hoping to make or save money.
After many years of prices deflation, when they reach affordable levels, they will not rise fast because by then people will only remember the price deflation and the prevailing sentiment will be that you should not stick a lot of money in property.

So if you have property that you want to dispose, sell now.
If you want to buy a home, go for a rental. Do some bargain hunting, you'll get a good deal on rentals. Don't think that you're throwing away money that you could have invested in your own home - remember that if you buy a home on loan, the first few years you're just paying off the interest on the loan and still owe the full cost of the house.
If you wait a few years, you'll save more money for a downpayment, prices will be lower, therefore the interest outflow will be on a smaller loan and you'll come out ahead even if you consider the rent you paid for the intervening period.

abk

here is the bear rally and what about the top 10 stocks which have gained 100-180%.


Those who got the timing of bottom-fishing right have gained handsomely in stocks since early March when the Sen decided to shoot up on hopes of a global economic recovery. Unfortunately, there weren’t too many of them as the upswing has caught most investors on the wrong foot.

But while the Sen has made a strong recovery of 40% from March 6, there are many in the BSE-500 which are buzzing. Almost 275 stocks in the BSE-500 category have given more than 50% return during the period. As worries over the global outlook subside with rising optimism of a speedy recovery, equity markets across the world have rallied during the last one month, appreciating between 11-30 %.

Here's a list of the top 10 stocks which have gained over 100% on the BSE:

]http://economictimes.indiatimes.com/articleshowpics/4408519.cms[/url]

wiseman

SSMAN, I have said precisely the same thing several times in the past. In fact, I'm in the process of selling property at handsome profits while also considering renting for the next few years waiting for the near-bottoms.


abk. Bear market rallies are quite common. In fact, in the stock market, traders make the maximum profits in the shortest time during bear crashes. The second most profitable period is during bear rallies. Bull markets are only third in profit potential for a very good reason. While bull markets actually give very good profits, these profits are lost when people continue to pump them in even at the top of the market and the subsequent crash wipes out most profits gained!

I was lucky enough to pick 9th march as turnaround day. This happened to be precisely the day the market made an intermediate (not final) bottom. Unlike stocks (which I will get into when the real bottom comes), I currently do only options (don't try it at home unless you have spent at least 1 year studying it and understanding it and also have very good exit/stoploss strategies). Do you know that a reasonable call option on the Nifty 2900 Call, went from Rs.26 on 9 mar to over Rs.615 just a couple of days ago? And for the completely crazy risk-taker the 3300 call has gone up 120 times in the same period?

As someone said, there are a quite a few people still making money!

As Nick said, while RE is probably going to be the foundation of wealth-building for most people, it is still an asset that behaves like an elephant at most times (slow to move and slow to turn) and sometimes even like a dinosaur!

Please remember that it is a high-leverage asset (you are leveraged 10 times on a very-high-value asset) and if you get stuck with illiquidity as well as declining value which may see you go underwater, if you then also lose your earning power, then you are well and truly stuck possibly for decades!!! Very important reason to keep your head and play it safe rather than go all-out into it at any cost!

cheers