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Big bang before correction or is it ?

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Big bang before correction or is it ?

Last updated: June 10 2011
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  • Big bang before correction or is it ?

    I am flat hunting from almost the end of 2010 till date, I am looking to buy a 1 bed room in the borivali area and in the east/west side , almost everybody who is selling is asking price is 10000rs/sqft on saleable area , people who are selling are apparently rejecting offers of even 1 lakh or so below the asking price ,for me all this correction hope is fading and now with the increase in rent by 30% , prices of rents have gone to 12000rs per month
    such is the state of Mumbai

    Dek sansar ki kya halat hui hai Bhagwan .. kitna badal gaya insan
  • #2

    #2

    Re : Big bang before correction or is it ?

    Shashank,
    Hang tight bro, we are at a tipping point. Greed will fail for both builders and home sellers.

    Originally posted by shashankgujjar View Post
    I am flat hunting from almost the end of 2010 till date, I am looking to buy a 1 bed room in the borivali area and in the east/west side , almost everybody who is selling is asking price is 10000rs/sqft on saleable area , people who are selling are apparently rejecting offers of even 1 lakh or so below the asking price ,for me all this correction hope is fading and now with the increase in rent by 30% , prices of rents have gone to 12000rs per month
    such is the state of Mumbai

    Dek sansar ki kya halat hui hai Bhagwan .. kitna badal gaya insan

    Comment

    • #3

      #3

      Re : Big bang before correction or is it ?

      I understand and all this makes sense

      Originally posted by catchnitin View Post
      Shashank,
      Hang tight bro, we are at a tipping point. Greed will fail for both builders and home sellers.
      Thanks Bro

      I understand and all this makes sense about how things are but how do i convince my wife reasoning goes out of the door .. you know what i mean

      Comment

      • #4

        #4

        Re : Big bang before correction or is it ?

        This is how I did it ...

        Originally posted by shashankgujjar View Post
        Thanks Bro

        I understand and all this makes sense about how things are but how do i convince my wife reasoning goes out of the door .. you know what i mean

        Friend,.

        I too face this all the time in not only RE but also other kinds of investment.

        When in 2006 I started telling people that they should start buying gold and silver in equal measure as the best investment going forward for the next 5 to 10 years (even beating RE and stocks), they decided I had finally left my senses completely. Today, they have all come back to ask, what next? - especially after the recent parabolic rise in silver (parabolic rises always end badly!).

        Coming back to your not wanting to buy at these extreme levels, here's what I did when I was not ready .

        I told my wife, I have absolutely no objection to buying a house. Only, since I did not have the money enough, would she arrange to pay the down payment as also all the instalments. This way, she would fully enjoy HER possession.

        As soon as I said this, the grumbling and muttering continued, but thankfully I got rid of the continued insistence that I buy, buy, buy, now, now, now with the added litany that yesterday price was 6000, today it went to 6500 and the next flat, owner is asking 8000 already!

        You just have to live with it. Besides being a social issue (if you don't own your own house - actually bank owned - you are not a 'real' man! )

        All the best!

        cheers

        Comment

        • #5

          #5

          Re : Big bang before correction or is it ?

          See it is very difficult to time the market.. No one knows what will be the tipping point..

          Realistically 10,000 psf at Borivili is obnoxious.. and there should be a correction.. When and how much at this point is purely speculation..

          Also even if there is a correction.. anyone negotiation on second sales might not see immediate impact... after the correction.. Why should I sell at a lower price if I had seen a higher price ... Human tendency..
          why houses it happens in all investment class..

          I have friends holding on to some stocks like DLF, Purvankara .. saying it reached some peak price in 2007.. and it will sometime touch the same price..

          I am not sure if it is a Indian tendency or just human...

          Comment

          • #6

            #6

            Re : Big bang before correction or is it ?

            RBI increases key interest rates by 50 bps.. Will have an impact on growth.. Might bring down the RE prices also.. but loans will get expensive and the elusive RE will continue to be out of reach..

            Also the switch to system provisioning of NPA instead of the current manual ones will put more pressure on RE advances..

            Tough times ahead.. Tighten your seatbelts.. Not a good time to take a huge loan..

            Comment

            • #7

              #7

              Re : Big bang before correction or is it ?

              Thanks guys


              I really am on the edge but common sense kicks in I am going to hang in there and hold off on buying .. lets all hope prices correct

              Comment

              • #8

                #8

                Re : Big bang before correction or is it ?

                I will share my recent home buying experience here .
                I have been house hunting for months now, and had been to many suburbs, like kandivali, borivali, malad, goregaon, even mulund, bhandup, etc, have seen both resale and under-construction flats.
                Over the period of time I have been searching flats, I have had similar experiences to what you have had, which is that most homes are priced too high, 10,000 psqft or higher , most sellers were not interested in reducing the prices by much ( or in some cases anything) , even builders aren't negoitiating much, but I never came close enough to sit with a check-book in hand ready to book a flat , so cannot say for sure whether they would have reduced the price some or not.

                At one point I had even considered buying in pune, since my current work location is in pune, and saw some really awesome projects in pune, even gave the offer on one flat there, but all of a sudden I got an onsite assignment which required me to be out of the country for 2-3 yrs, and this made me change my mind, since having no family in pune it'll be difficult to maintain the house here, if I'm not physically present, so finally decided against it, and resumed mumbai home search.

                Now, after resuming the search in mumbai, I had made up my mind that I'm not gonna wait for the so-called correction, it may happen or it may not, but since I have to leave the country in a few days, I was running out of time. So this time, I decided to close in on a flat as soon as I like it. I was looking at both 1 bedroom and 2 bedroom options ( bigger 1 bedroom and smallish 2 bedrooms) . I gave an offer on 3 flats , here's how it went down...

                1. 1 bedroom in Thakur village : 525 sqft, this guy was asking an obscene 72 lakhs ( since parking was included in his flat, which is limited in that complex, so 10 lakhs was for parking) , gave an offer or 57 lakhs without parking ( as I already own another flat which comes with parking, so didn't need parking per se) , which was promptly rejected .

                2. Meanwhile, I saw another 1 bedroom-2 bathroom in Thakur village itself, same complex, different building, this was a better flat, but without parking, the asking price was 63 lakhs, for 575 sqt flat, it was a well done up flat, vastu compliant, etc. i made an offer on 58 lakhs roughly 10,000 psqft rate, the agent said someone had already made an offer higher than mine and the seller accepted their offer ( my doubt was that this a tactic to get me to go higher ) , then a few days later the agent contacted me again saying that the earlier deal got cancelled and if I'm still interested, he'll put in a word to the seller, now i was convinced he was trying to fleece me, and rejected the offer .

                3. This is final offer i gave, saw an 800 sqft 2 bedroom in Thakur village, and liked it, was priced at 86 lakhs, I negotaited it down to 83 lakhs, and finally the seller accepted, I think part of it was also that the seller was in a bit of a hurry to sell, and their earlier deal got cancelled due to some issue over the price itself, so this time they wanted the deal to go through.
                So finally I purchased a 2 bedroom in the area in wanted, for 83 lakhs, building is decent, about 7-8 yrs old, well maintained, and good complex too, so atleast I got what I was looking for, would have liked it, if I would have gotten it, a few lakhs cheaper, but since this flat will be personal use, and will be kept atleast for 8-10 yrs, so I didn't think too much about the price aspect.

                Now after my recent home buying experience in Mumbai, here's my take on things, the prices are definately high, no doubt, I think there's a disconnect in what sellers are thinking, and what buyers are hoping, which was also what I understood from the sellers of my flat.
                Sellers keep thinking, that as always people cry that mumbai prices are too high, and market will fall, and mostly it never does, so they feel that that this time too, will be the same, and prices will not fall, whereasw buyers feel market is overdue for correction, it remains to be seen , who has it right in this case.
                I don't think people are negotiating much, not in resale atleast, maybe a lakh or 2 here and there, but beyond that it's a bit of luck as well, if you happen to strike a deal at the right price. Sellers in mumbai seem to have a mentality that if at a particular price point, they are getting a lot of people who are interested in buying, it's and indication that they've priced it too low, and they promptly up the rate, this did happen to me a couple of times too.
                In my case, if I didn't have to leave the country shortly, I probably would have waited another month or 2 for correction, but there's no way to know if there will be some correction for sure. Mumbai is a tough RE market, and the lack of space doesn't help the prices . Let's see where this market is headed, only time will tell....

                Comment

                • #9

                  #9

                  Re : Big bang before correction or is it ?

                  Thanks for sharing the 1st hand experience, it's always helpful to others and Congratulations on your new Flat!!

                  I would like to add here is that most of the buyers here (i think) are hoping for a price correction primarily from the builder side as there are quite a few of them who are holding onto their or the so called investor's inventory which very soon they will have to dispose off to get some liquidity.

                  The resale flats (as mentioned in the forum already) are generally tougher to negotiate and solely depend on the individual sellers capacity, they would reduce their price only after the builders start to budge down and the hence the overall prices for that area start to reduce.
                  As in a scenario where an individual resale flat is sold at a very low price would not still trigger a price correction in the market.

                  Having said that, IMHO if the flat is for personal use and not for investment it should be bought when needed rather than timing the market and waiting for too long.

                  Comment

                  • #10

                    #10

                    Re : Big bang before correction or is it ?

                    is the stamp duty and registration included and without being

                    is the stamp duty and registration included in the price and was there a black/white component involved

                    Thanks for sharing

                    Originally posted by usadesi View Post
                    I will share my recent home buying experience here .
                    I have been house hunting for months now, and had been to many suburbs, like kandivali, borivali, malad, goregaon, even mulund, bhandup, etc, have seen both resale and under-construction flats.
                    Over the period of time I have been searching flats, I have had similar experiences to what you have had, which is that most homes are priced too high, 10,000 psqft or higher , most sellers were not interested in reducing the prices by much ( or in some cases anything) , even builders aren't negoitiating much, but I never came close enough to sit with a check-book in hand ready to book a flat , so cannot say for sure whether they would have reduced the price some or not.

                    At one point I had even considered buying in pune, since my current work location is in pune, and saw some really awesome projects in pune, even gave the offer on one flat there, but all of a sudden I got an onsite assignment which required me to be out of the country for 2-3 yrs, and this made me change my mind, since having no family in pune it'll be difficult to maintain the house here, if I'm not physically present, so finally decided against it, and resumed mumbai home search.

                    Now, after resuming the search in mumbai, I had made up my mind that I'm not gonna wait for the so-called correction, it may happen or it may not, but since I have to leave the country in a few days, I was running out of time. So this time, I decided to close in on a flat as soon as I like it. I was looking at both 1 bedroom and 2 bedroom options ( bigger 1 bedroom and smallish 2 bedrooms) . I gave an offer on 3 flats , here's how it went down...

                    1. 1 bedroom in Thakur village : 525 sqft, this guy was asking an obscene 72 lakhs ( since parking was included in his flat, which is limited in that complex, so 10 lakhs was for parking) , gave an offer or 57 lakhs without parking ( as I already own another flat which comes with parking, so didn't need parking per se) , which was promptly rejected .

                    2. Meanwhile, I saw another 1 bedroom-2 bathroom in Thakur village itself, same complex, different building, this was a better flat, but without parking, the asking price was 63 lakhs, for 575 sqt flat, it was a well done up flat, vastu compliant, etc. i made an offer on 58 lakhs roughly 10,000 psqft rate, the agent said someone had already made an offer higher than mine and the seller accepted their offer ( my doubt was that this a tactic to get me to go higher ) , then a few days later the agent contacted me again saying that the earlier deal got cancelled and if I'm still interested, he'll put in a word to the seller, now i was convinced he was trying to fleece me, and rejected the offer .

                    3. This is final offer i gave, saw an 800 sqft 2 bedroom in Thakur village, and liked it, was priced at 86 lakhs, I negotaited it down to 83 lakhs, and finally the seller accepted, I think part of it was also that the seller was in a bit of a hurry to sell, and their earlier deal got cancelled due to some issue over the price itself, so this time they wanted the deal to go through.
                    So finally I purchased a 2 bedroom in the area in wanted, for 83 lakhs, building is decent, about 7-8 yrs old, well maintained, and good complex too, so atleast I got what I was looking for, would have liked it, if I would have gotten it, a few lakhs cheaper, but since this flat will be personal use, and will be kept atleast for 8-10 yrs, so I didn't think too much about the price aspect.

                    Now after my recent home buying experience in Mumbai, here's my take on things, the prices are definately high, no doubt, I think there's a disconnect in what sellers are thinking, and what buyers are hoping, which was also what I understood from the sellers of my flat.
                    Sellers keep thinking, that as always people cry that mumbai prices are too high, and market will fall, and mostly it never does, so they feel that that this time too, will be the same, and prices will not fall, whereasw buyers feel market is overdue for correction, it remains to be seen , who has it right in this case.
                    I don't think people are negotiating much, not in resale atleast, maybe a lakh or 2 here and there, but beyond that it's a bit of luck as well, if you happen to strike a deal at the right price. Sellers in mumbai seem to have a mentality that if at a particular price point, they are getting a lot of people who are interested in buying, it's and indication that they've priced it too low, and they promptly up the rate, this did happen to me a couple of times too.
                    In my case, if I didn't have to leave the country shortly, I probably would have waited another month or 2 for correction, but there's no way to know if there will be some correction for sure. Mumbai is a tough RE market, and the lack of space doesn't help the prices . Let's see where this market is headed, only time will tell....

                    Comment

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