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ITS OFFICIAL - Slump in realty sales hits brokers really hard

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ITS OFFICIAL - Slump in realty sales hits brokers really hard

Last updated: June 22 2011
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  • #41
    #41

    Re : ITS OFFICIAL - Slump in realty sales hits brokers really hard

    Originally posted by bhuvang View Post
    Hi guys,

    I'm a novice in RE. However, does know a bit about finance. I do believe if another recession (predicted to be deeper) hits US, it could prove catastrophic for the entire world economy. India may have a bit lesser impact, but it'll be there.

    Reasons (bit longer, but still brief) -

    1. 2008 crash/recession was primarily caused by RE burst. That's why it was called "Sub-Prime Crisis".
    That's why, this time world and especially China - India are correlated to US like never before. Pray that US shall never ever enter into recession again.
    It is a misconception that the Indian Economy is dependent upon the performance of US Economy. As per a conservative estimate which involves the Black Money plus the unaudited money in rotation, Indian Economy is more that $ 3 trillion in size, leave aside the savings in equity and private gold banks. Recent figures in Foreign Reserves estimate around $ 300 billion, that is just 10% of the economy.

    IT Services/ BPOs are not a major contributors to the economy.

    Oil payments need $$$s for now, but even oil countries are seeking substitute for the dollar. There seems a fair transition in sight, as most countries are seeking substitute for this currency. China is aggresively following the pursuit.

    US's doomsday should be taken as a positive sign rather now for the new trade horizons to emerge; don't panic, global financial fall already passed last year.

    Crisis like "Sub Prime crisis" can never ever touch India, Economy-banks-investments are dead end conservative in this sector. Fool Proof!

    Cheers - one of my Economist friend (prominent national personality) told me all that!
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    • #42
      #42

      Re : ITS OFFICIAL - Slump in realty sales hits brokers really hard

      Home prices to rise 10% as loans become costly - NDTV Profit
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      • #43
        #43

        Re : ITS OFFICIAL - Slump in realty sales hits brokers really hard

        Slight corrections ...

        Originally posted by vkumar1 View Post
        It is a misconception that the Indian Economy is dependent upon the performance of US Economy. As per a conservative estimate which involves the Black Money plus the unaudited money in rotation, Indian Economy is more that $ 3 trillion in size, leave aside the savings in equity and private gold banks. Recent figures in Foreign Reserves estimate around $ 300 billion, that is just 10% of the economy.

        IT Services/ BPOs are not a major contributors to the economy.

        Oil payments need $$$s for now, but even oil countries are seeking substitute for the dollar. There seems a fair transition in sight, as most countries are seeking substitute for this currency. China is aggresively following the pursuit.

        US's doomsday should be taken as a positive sign rather now for the new trade horizons to emerge; don't panic, global financial fall already passed last year.

        Crisis like "Sub Prime crisis" can never ever touch India, Economy-banks-investments are dead end conservative in this sector. Fool Proof!

        Cheers - one of my Economist friend (prominent national personality) told me all that!

        The $ 300 billion is not your earned reserve. A lot of that money belongs to others!!! Its like our Industrialists saying they are rich, after seeing one side of their Balance Sheet - the Asset side. You will find their Liabilities side a little bigger - if you cared to look!

        The India which we are focusing is a small part of the $3 trillion. That India has a disproportionate part of total wealth, it is the one which will be sizeably affected by IT / BPO & is the one buying all the things going into the GDP "growth" story. So, IT / BPO (& other exporters) do have a disproportionate effect on the economy - the one that buys all those expensive flats in NOIDA / Ggn.

        Or are you saying that the millions of farmers who earn 1000 a month - & who make up bulk of the $3 trillion - are the ones buying up all the apartments & DZires?!!!

        It does not matter how you pay for your oil. You have to pay. From where are you going to find money? Govt is running on empty Khazana & lots of Promissory Notes called Treasury Bills!

        The only thing abundant in India is warm humans. & we are producing them like mad! But last I checked, around 48% of Indians in US see a situation where they may have to return (recent survey - dont ask for copy). So that mode of payment is out. Do you want the real truth? Oil majors have such a high opinion of India's capability to pay, they are seriously looking at Gold as payment mechanism - sorry to disappoint you about what a strong economy we are perceived as!

        Sorry friend. US doomsday WILL hit us hard as US is still 25% of Worlds Economy & 60% of our s/w business!!! You will see it shortly if you care to separate the jingoism from the facts!

        cheers
        Last edited June 16 2011, 04:51 PM.
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        • #44
          #44

          Re : ITS OFFICIAL - Slump in realty sales hits brokers really hard

          while I am not sure if vkumar1 is correct or you. but at least he is providing some figures and logic for his conclusions, you are just ranting. at least try to make a coherent argument.
          Originally posted by wiseman View Post
          The $ 300 billion is not your earned reserve. A lot of that money belongs to others!!! Its like our Industrialists saying they are rich, after seeing one side of their Balance Sheet - the Asset side. You will find their Liabilities side a little bigger - if you cared to look!

          The India which we are focusing is a small part of the $3 trillion. That India has a disproportionate part of total wealth, it is the one which will be sizeably affected by IT / BPO & is the one buying all the things going into the GDP "growth" story. So, IT / BPO (& other exporters) do have a disproportionate effect on the economy - the one that buys all those expensive flats in NOIDA / Ggn.

          Or are you saying that the millions of farmers who earn 1000 a month - & who make up bulk of the $3 trillion - are the ones buying up all the apartments & DZires?!!!

          It does not matter how you pay for your oil. You have to pay. From where are you going to find money? Govt is running on empty Khazana & lots of Promissory Notes called Treasury Bills!

          The only thing abundant in India is warm humans. & we are producing them like mad! But last I checked, around 48% of Indians in US see a situation where they may have to return (recent survey - dont ask for copy). So that mode of payment is out. Do you want the real truth? Oil majors have such a high opinion of India's capability to pay, they are seriously looking at Gold as payment mechanism - sorry to disappoint you about what a strong economy we are perceived as!

          Sorry friend. US doomsday WILL hit us hard as US is still 25% of Worlds Economy & 60% of our s/w business!!! You will see it shortly if you care to separate the jingoism from the facts!

          cheers
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          • #45
            #45

            Re : ITS OFFICIAL - Slump in realty sales hits brokers really hard

            Which part did you not understand?

            Originally posted by alokgarg View Post
            while I am not sure if vkumar1 is correct or you. but at least he is providing some figures and logic for his conclusions, you are just ranting. at least try to make a coherent argument.
            Garg,

            Apart from your desire to hide away from the avalanche of new threads coming up about the impending decline - perhaps because you have bought at a high price & are having a tough time - which part of the rant did you not get?

            Btw, is there anyone else that finds the post incoherent? Pls feel free to tell me. I can understand one not agreeing with me. But incoherent? That beats me!

            I do not deny its a rant. How else to wake up guys who are asleep on the railway track & refuse to acknowledge the train coming their way?

            ......


            OK! I got what Alok did not get in the post!!!

            I should have concluded that, therefore, since most of us are well-leveraged (if not over-leveraged), the oncoming slump, which should be worse than in 2008 & will result in at least as bad losses in earning power, will quickly see all of us who at the margin/edge (poor reserves & high, recently acquired leverage with low equity in the asset) quickly go under the wheels of the train!

            Coherent now? I thought this was self-evident!!!

            cheers
            Last edited June 16 2011, 05:13 PM.
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            • #46
              #46

              Re : ITS OFFICIAL - Slump in realty sales hits brokers really hard

              first a correction. I am no investor. just an end user who has bought one flat after doing research for 1 year in noida market, and this one flat is appreciating handsomely. I don't write if I don't have anything worthwhile to say, it is as simple as that. IT is my day job and I don't pretend that I know everything about RE or world finance as some other people here do.

              that said, I can certainly follow logic in other people's argument. vkumar1 said, foreign reserves is only 10% of India's GDP. if doom comes to US worst case scenario we will loose that and we will not even complete loose that. in great depression US gdp decreased by 25%. there will be impact on India of a recession in US. but it will not be a apocalypse.

              regarding prediction of coming real estate meltdown, people are making them for last 2 years. there is one big thread on pune forum where people have been predicting coming meltdown in next 2 months for last 2 years. so forgive me, if I don't put much weight on these predictions.

              finally, if someone keeps predicting same thing for a long time, some time it will come true. that doesn't mean that he is a seer, its just that law of averages works, even for low probability events.
              Originally posted by wiseman View Post
              Garg,

              Apart from your desire to hide away from the avalanche of new threads coming up about the impending decline - perhaps because you have bought at a high price & are having a tough time - which part of the rant did you not get?

              Btw, is there anyone else that finds the post incoherent? Pls feel free to tell me. I can understand one not agreeing with me. But incoherent? That beats me!

              I do not deny its a rant. How else to wake up guys who are asleep on the railway track & refuse to acknowledge the train coming their way?

              ......


              OK! I got what Alok did not get in the post!!!

              I should have concluded that, therefore, since most of us are well-leveraged (if not over-leveraged), the oncoming slump, which should be worse than in 2008 & will result in at least as bad losses in earning power, will quickly see all of us who at the margin/edge (poor reserves & high, recently acquired leverage with low equity in the asset) quickly go under the wheels of the train!

              Coherent now? I thought this was self-evident!!!

              cheers
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              • #47
                #47

                Re : ITS OFFICIAL - Slump in realty sales hits brokers really hard

                I like your comment on law of averages hitting bulls eye sometimes if uttered every day of the year for too many years. The recession that came by in 2008, had minimal effect on Indian GDP unlike in leveraged western countries. I remember Gurgaon RE didn't buckle much during recession and after the event had gone much beyond 2007 peak. So I am fervently looking for another recession so that in 3 years time we go beyond peak reached in 2010.

                Originally posted by alokgarg View Post

                finally, if someone keeps predicting same thing for a long time, some time it will come true. that doesn't mean that he is a seer, its just that law of averages works, even for low probability events.
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                • #48
                  #48

                  Re : ITS OFFICIAL - Slump in realty sales hits brokers really hard

                  Do not be predisposed!

                  Originally posted by alokgarg View Post
                  first a correction. I am no investor. just an end user who has bought one flat after doing research for 1 year in noida market, and this one flat is appreciating handsomely. I don't write if I don't have anything worthwhile to say, it is as simple as that. IT is my day job and I don't pretend that I know everything about RE or world finance as some other people here do.

                  that said, I can certainly follow logic in other people's argument. vkumar1 said, foreign reserves is only 10% of India's GDP. if doom comes to US worst case scenario we will loose that and we will not even complete loose that. in great depression US gdp decreased by 25%. there will be impact on India of a recession in US. but it will not be a apocalypse.

                  regarding prediction of coming real estate meltdown, people are making them for last 2 years. there is one big thread on pune forum where people have been predicting coming meltdown in next 2 months for last 2 years. so forgive me, if I don't put much weight on these predictions.

                  finally, if someone keeps predicting same thing for a long time, some time it will come true. that doesn't mean that he is a seer, its just that law of averages works, even for low probability events.

                  Garg,

                  I'm not arguing with you.

                  But where exactly did I talk about Apocalypse in India (as you insinuate)? If you bothered to read my posts carefully I have only talked of the effects of over-leverage especially on RE purchases.

                  Second, saying our FE is only 10% of GDP only means that whenever we say something, we should make sure we know what we are talkin about. FE reserves has very little to do with GDP. I dont know how old you were in 1990 when we had only 3 weeks of FE left in reserves (we need hard currency to buy essentials like Oil, etc). We had to part with our Gold (nothing else would do) inorder to buy some more FE & that was seen as nearly catastrophic. In fact MMS's entire reputation was built upon managing that crisis & getting this country on Reforms which is why you earn the high salaries that you do today!

                  In any case a significant part of our FE is hot money inflow, which can (& will) flow out if the investor is in distress OR sees no reason to park it here. You might notice that in 2008 distress pullout was a major reason to crash our Stock Market which had a Domino effect on RE as well. Its the same even now.

                  Please realise that a $10-20 billion pullout will result in stock indices going down 3000 to 6000 points or more - Sensx. This alone can create a big crisis in these tense times! So you can imagine what would happen if we "lose" "only 10% of our GDP" as you put it. You will see the Sensx at 3000 again & this country revert back to 1995 in economic terms.

                  Besides, this whole thng about "if you talk doomsday long enough, you will get lucky someday" is a whole lot of nonsense quite a few people use to put down some genuine arguments. They assume that if the train wreak does nt arrive as predicted, it does not exist. Sure. If the West did not do bailouts & create bubbles to relieve other bubbles exploding we all would have had this crisis back in 2003!

                  First of all 2 years is very short in RE timescale. In addition it now becomes clear that the next recession / depression was merely a postponement of the 2008 one - which itself was a postponement of the 2000 one - simply by printing more money & pretending that all was well. Its called "extend & pretend".

                  In a timespan of 20 years (time it takes to pay off a loan) there would be a couple of minor slumps (80s & 90s). But you can not have 3 major declines within 10 years & call it normal.

                  I reiterate that the continuous call for caution over last 3 years was fully justified, had its sound basis & (as time will prove) have serious repercussions on many people who ventured into RE prematurely at excessive prices.

                  Lets wait & watch.

                  cheers
                  Last edited June 17 2011, 01:48 AM.
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                  • #49
                    #49

                    Re : ITS OFFICIAL - Slump in realty sales hits brokers really hard

                    Originally posted by wiseman View Post
                    Garg,

                    I'm not arguing with you.

                    But where exactly did I talk about Apocalypse in India (as you insinuate)? If you bothered to read my posts carefully I have only talked of the effects of over-leverage especially on RE purchases.

                    Second, saying our FE is only 10% of GDP only means that whenever we say something, we should make sure we know what we are talkin about. FE reserves has very little to do with GDP. I dont know how old you were in 1990 when we had only 3 weeks of FE left in reserves (we need hard currency to buy essentials like Oil, etc). We had to part with our Gold (nothing else would do) inorder to buy some more FE & that was seen as nearly catastrophic. In fact MMS's entire reputation was built upon managing that crisis & getting this country on Reforms which is why you earn the high salaries that you do today!

                    In any case a significant part of our FE is hot money inflow, which can (& will) flow out if the investor is in distress OR sees no reason to park it here. You might notice that in 2008 distress pullout was a major reason to crash our Stock Market which had a Domino effect on RE as well. Its the same even now.

                    Please realise that a $10-20 billion pullout will result in stock indices going down 3000 to 6000 points or more - Sensx. This alone can create a big crisis in these tense times! So you can imagine what would happen if we "lose" "only 10% of our GDP" as you put it. You will see the Sensx at 3000 again & this country revert back to 1995 in economic terms.

                    Besides, this whole thng about "if you talk doomsday long enough, you will get lucky someday" is a whole lot of nonsense quite a few people use to put down some genuine arguments. They assume that if the train wreak does nt arrive as predicted, it does not exist. Sure. If the West did not do bailouts & create bubbles to relieve other bubbles exploding we all would have had this crisis back in 2003!

                    First of all 2 years is very short in RE timescale. In addition it now becomes clear that the next recession / depression was merely a postponement of the 2008 one - which itself was a postponement of the 2000 one - simply by printing more money & pretending that all was well. Its called "extend & pretend".

                    In a timespan of 20 years (time it takes to pay off a loan) there would be a couple of minor slumps (80s & 90s). But you can not have 3 major declines within 10 years & call it normal.

                    I reiterate that the continuous call for caution over last 3 years was fully justified, had its sound basis & (as time will prove) have serious repercussions on many people who ventured into RE prematurely at excessive prices.

                    Lets wait & watch.

                    cheers
                    Wiseman, if I am not mistaken, you are the person who predicted real estate CRASH in way back in 2009 ... we are still waiting for it.

                    And when you talk about CRASH, please do a simple thing, compare the price of 2009 and your crashed price now in 2011... or may be 2012 or no one knows.
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                    • #50
                      #50

                      Re : ITS OFFICIAL - Slump in realty sales hits brokers really hard

                      Originally posted by alokgarg View Post
                      first a correction. I am no investor. just an end user who has bought one flat after doing research for 1 year in noida market, and this one flat is appreciating handsomely. I don't write if I don't have anything worthwhile to say, it is as simple as that. IT is my day job and I don't pretend that I know everything about RE or world finance as some other people here do.

                      that said, I can certainly follow logic in other people's argument. vkumar1 said, foreign reserves is only 10% of India's GDP. if doom comes to US worst case scenario we will loose that and we will not even complete loose that. in great depression US gdp decreased by 25%. there will be impact on India of a recession in US. but it will not be a apocalypse.

                      regarding prediction of coming real estate meltdown, people are making them for last 2 years. there is one big thread on pune forum where people have been predicting coming meltdown in next 2 months for last 2 years. so forgive me, if I don't put much weight on these predictions.

                      finally, if someone keeps predicting same thing for a long time, some time it will come true. that doesn't mean that he is a seer, its just that law of averages works, even for low probability events.
                      Alokbhai, cool down

                      Seasonal birds comes, create noises and then disappears. We have seen many such people coming for few posts, venting their frustration and then disappear.

                      It is better to ignore them and they will disappear on their own. If the discussion is not fruitful, meaningful and practical.... discussion just for academic purpose on some hypothesis... no one will be interested in reading those craps for days and you know the outcome.

                      Anyone thinking my above post as crap can do the same thing on me too... just ignore.

                      So Alokbhai, cool down and eek eek ho jaye aapke liye aur mere liye
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