Hereby I will prove how the realty boomers arguments are false.

What are the boomers arguments?

1.) Buy today, houses always increase in value in the long run.
WRONG. House prices cannot increase more than incomes in the long run. This is obvious if you think about it. If house prices go up more than people can afford to pay, buying stops, like it has stopped now.
Even Warren Buffett have pointed out that houses don't increase in intrinsic value. Unless there's a bubble or a crash, house prices simply reflect current salaries and interest rates. If a house is 100 years old, it's value in sheltering you is exactly the same as it was 100 years ago. Then came the maintenance as the house didn't renovate itself. It also has taxes, and insurance - costs that always increase and never go away. The price of the house went up about as much as salaries went up.
To put this is simple perspective, vegetable were costing Rs.5-6/kg when 5 digit salary was a rarity.
Today, the prices have gone up by about 4 times but so have the salaries. So, sounds very much like the reasoning people use now when they talk about how much their father's house appreciated "in the long run" without considering that salaries rose a proportional amount.

2.) Renting is just wastage of money.
WRONG. As said before renting is now much cheaper per month than owning. If you don't rent, you either:

* Have a mortgage, in which case you are throwing away money on interest, tax, insurance, maintenance, costs that increase forever.
* Own outright, in which case you are throwing away the extra income you could get by converting your house to cash, investing in bonds, and renting a similar place to live for much less money. This extra income is sufficient for emergency expenses,retirement etc.

Either way, owners lose much more money every month than renters and that's assuming prices don't correct to very high level & everything is smooth in the economy.

3.) As a renter, you won't have any money left as you will spend them on vacations,cars & hence won't have equity/savings etc.
WRONG. Equity is just money. Renters are actually in a better position to build equity/savings through investing in anything but housing. Renters can get rich much faster than owners, just by investing in conservative stocks & bonds.

* Owners are losing every month by paying much more for interest than they would pay for rent. The tax deduction does not come close to making owing competitive with renting.
* Owners must pay taxes simply to own a house. That is not true of stocks, bonds, or any other asset that can build equity/savings. Only houses are such a guaranteed drain on cash.
* Owners must insure a house, but not most other investments.
* Owners must pay to repair a house, but not a stock or a bond.
* Owners lose their money as house prices reduce. The EMI's remain constant in spite of reduction in rates. At the end of loan tenure, they would have paid almost twice than that of current renters who will buy at logical rates. Keep interest rates in mind. Most of the EMI is not principal amount but interest.

4.) There are great tax advantages to owning a house.
WRONG. Many people believe you can just reduce your income tax by the amount you pay in interest, but they are wrong. Buyers may not deduct interest from income tax; they deduct interest from taxable income. And even then, the tax advantage is not significant compared to the large monthly loss from owning.

If you don't own a house but want to live in one, your choice is to rent a house or rent money to buy a house. To rent money is to take out a loan. A mortgage is a money-rental agreement. House renters take no risk at all, but money-renting owners take on the huge risk of falling house prices, as well as all the costs of repairs, insurance, property taxes, etc.

5.) RE is based on local factors, it's not a national phenomenon. RE of Delhi-NCR,Bangalore & rest of the cities has nothing to do with Pune RE.
WRONG. Lending rates remain the same throughout the country. ALL loans are harder to get. This will drive prices down everywhere.

6.) A rental house provides good income. So, you can rent if you have purchased as investment.
WRONG. Rental houses provide very poor income in hyped areas and certainly cannot cover mortgage payments. Remember there is almost 300% difference between EMIs & rent for the same house.

It's pointless to do the work of being a landlord if you can make more money with no risk, no work, and no state income tax by investing in assured good returns bond.

7.) If owning is a loss in monthly cash flow, but appreciation will make up for it.
WRONG. Appreciation is negative. Prices are going down. It only adds to the injury of already high EMI's.

8.) As soon as prices drop a little, the number of buyers on the sidelines willing to jump back in increases.
WRONG. There are very few buyers left, and those who do want to buy will be limited by increasing difficulty of borrowing now that many house owners are near bankrupt as they don't save anything at the end of the month due to high EMI's.
No one has to buy, but there will be more and more people who have no choice but to sell as their payments rise. That will keep driving prices downward for a long time.

9.) House prices never fall atleast in Pune.
WRONG. If you see the RE scenario of 1996, prices crashed by 50% & took a whole 7+ years to recover.
Exact 1996 scenario may not be there today but strong correction is inevitable across the city.

10.) House prices don't fall to zero like stock prices, so it's safer to invest in real estate.
WRONG. House prices won't be zero, but the equity or the principal amount you paid can be zero or even negative. What you will pay as EMIs later in actual terms is not for the principal amount but only the interest as house prices dip. So, you will be only serving the bank.

11.) Prices will soften gradually, won't crash immediately.
WRONG. Prices are falling off a cliff. No one knows exactly what will happen, but it looks like prices will continue to fall for long time. These are just more manipulation of buyer emotions, to get them to buy even while prices are falling.

12.) The bubble prices were driven by supply and demand alone.
WRONG. Prices were driven by low interest rates and risky loans & good returns for investors in initial phases of boom in 2004-05.
Prices went up, interest rates went up & buyers savings went down. So prices are violating the most basic assumptions about supply and demand.

13.) There is lack of land.
WRONG. Ample of land is available & continue to be even in future in Pune. Sales volume are down. Even in Japan (small country with less land), prices went down. Current prices here are the same as that of 23 years ago. If we really had a housing shortage, there would not be so many vacant rentals.

14.) If you don't own, you'll live in a cheap neighborhood later.
WRONG. For the any given monthly payment, you can rent a much better house than you can buy. Renters live better, not worse. There are downsides to renting, such as being told to move at the end of your lease, or having your rent raised, but since there are thousands of vacant rentals, you can take your pick and be quite happy renting during the crash. There are similar but worse problems for owners anyway, such as being fired and losing your house, or having your interest rate and property taxes adjust upward. Remember, property taxes are forever.

15.) There's always someone predicting a real estate crash.
TRUE, yet irrelevant. There are very real crashes every decade or so. Even a broken clock is right twice a day.

16.) Local incomes justify the high prices.
WRONG. The mortgage should be more than your 3 years earning. It is much higher today. Most are already in danger/red zone.

17.) You have to live somewhere.
CORRECT. But that doesn't mean you should waste your life savings on a bad investment. You can live in a better house for much less money by renting during the down slide in RE.

18.) It's not a house, it's a home.
WRONG. Wherever one lives in it is home, be it apartment, condo, bungalow , mansion or house. Calling a house a "home" is a manipulation of your emotions for profit.

19.) If you don't buy now, you'll never get another chance.
WRONG. History proves otherwise.
Here's a beautiful quote from a analyst:-
"The real issue isn't whether you will be stuck being a renter all your life, she says. Its whether you'll get so scared about being shut out that you'll buy at the market's peak and be stuck in a property you can't afford or sell."

20.) It would take major economic recession or a major earthquake that wipes out this area in order for the price to fall by over 50%.
WRONG. Even today, if the prices fall by 50%, there will still be very few people who can buy at this levels due to uncertainty in jobs & most importantly high EMIs. Also, look at the rental rates for equivalent houses. Which loss per month is larger? EMI or rent?

contd....
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  • Just found another forum. I see realacres active in this one. As a broker :) ?

    http://www.r2iclubforums.com/forums/forumdisplay.php/99-Pune-Real-Estate?
    CommentQuote
  • Originally Posted by Space
    Just found another forum. I see realacres active in this one. As a broker :) ?

    http://www.r2iclubforums.com/forums/forumdisplay.php/99-Pune-Real-Estate?


    Real Acres is "breaker" and not broker :D He has broken back of many projects , false promises of developers and brokers
    CommentQuote
  • Originally Posted by Space
    Just found another forum. I see realacres active in this one. As a broker :) ?

    http://www.r2iclubforums.com/forums/forumdisplay.php/99-Pune-Real-Estate?


    I am too a broker on that forum...and with the same id 'monds'...i broke backs of many fake members last year...now that forum is silent as all ran away after taking kicks on their a$$....
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  • Originally Posted by Space
    Just found another forum. I see realacres active in this one. As a broker :) ?

    http://www.r2iclubforums.com/forums/forumdisplay.php/99-Pune-Real-Estate?

    I am the member of this forum much before than I joined IREF:bab (34):. It was one of my friend on R2i who invited me here, hence, I retained my username as well:).
    Originally Posted by puser
    Real Acres is "breaker" and not broker :D He has broken back of many projects , false promises of developers and brokers

    Thanks man:).
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  • Beware of Plot Schemes

    Friends,


    There have been some discussions about plot schemes here. I would though however like to warn you all before entering such deals:-

      It has been observed that the builder has alloted a plot to the buyer even when the buyer had selected some other specific plot i.e. change in plot location,
      The builders show the amenities at 'X' location based on which people buy plot. Later this amenity is shifted elsewhere & the not-so prime plots earlier becomes prime ones & builders tries to sell them at higher rate then,
      Some builders have contract that the constro has to be done from them & not from any 3rd party vendor,
      Builders charge the rate of constro atleast 55-60% higher than market rates,
      The charges are based on SALABLE AREA & NOT CARPET AREA, hence, points 4. & 5. make you pay a lot more than you would have otherwise incase of building on your own,
      To make matters worse, many schemes are not even NA (non-agri). Hence, you pay to builder & when this NA issue is bought in the open, you loose the land + you need to pay penalty as well.
      There are many other factors as well like infra, collector's sanctions etc. And yes, as always, don't bet on anything PROPOSED, calculate yourself the viabilty of the area, the builder & the project prospects & then take the final call.

      * Beware of all the projects marketed by Disha Direct. These are one of the biggest fraudsters in this segment, don't know why a renowned Marathi actor:- Prashant Damle has become the brand ambassador for such a junk company . There were many sites like Mulshi.com which used to sell land at Mulshi, but this site is now gone off the web:D. Hope you got the meaning:bab (34):.There are many other factors as well like infra, collector's sanctions etc. And yes, as always, don't bet on anything PROPOSED, calculate yourself the viabilty of the area, the builder & the project prospects & then take the final call.

      * Beware of all the projects marketed by Disha Direct. These are one of the biggest fraudsters in this segment, don't know why a renowned Marathi actor:- Prashant Damle has become the brand ambassador for such a junk company . There were many sites like Mulshi.com which used to sell land at Mulshi, but this site is now gone off the web:D. Hope you got the meaning:bab (34):.There are many other factors as well like infra, collector's sanctions etc. And yes, as always, don't bet on anything PROPOSED, calculate yourself the viabilty of the area, the builder & the project prospects & then take the final call.

      * Beware of all the projects marketed by Disha Direct. These are one of the biggest fraudsters in this segment, don't know why a renowned Marathi actor:- Prashant Damle has become the brand ambassador for such a junk company . There were many sites like Mulshi.com which used to sell land at Mulshi, but this site is now gone off the web:D. Hope you got the meaning:bab (34):.There are many other factors as well like infra, collector's sanctions etc. And yes, as always, don't bet on anything PROPOSED, calculate yourself the viabilty of the area, the builder & the project prospects & then take the final call.

      * Beware of all the projects marketed by Disha Direct. These are one of the biggest fraudsters in this segment, don't know why a renowned Marathi actor:- Prashant Damle has become the brand ambassador for such a junk company . There were many sites like Mulshi.com which used to sell land at Mulshi, but this site is now gone off the web:D. Hope you got the meaning:bab (34):.There are many other factors as well like infra, collector's sanctions etc. And yes, as always, don't bet on anything PROPOSED, calculate yourself the viabilty of the area, the builder & the project prospects & then take the final call.

      * Beware of all the projects marketed by Disha Direct. These are one of the biggest fraudsters in this segment, don't know why a renowned Marathi actor:- Prashant Damle has become the brand ambassador for such a junk company . There were many sites like Mulshi.com which used to sell land at Mulshi, but this site is now gone off the web:D. Hope you got the meaning:bab (34):.There are many other factors as well like infra, collector's sanctions etc. And yes, as always, don't bet on anything PROPOSED, calculate yourself the viabilty of the area, the builder & the project prospects & then take the final call.

      * Beware of all the projects marketed by Disha Direct. These are one of the biggest fraudsters in this segment, don't know why a renowned Marathi actor:- Prashant Damle has become the brand ambassador for such a junk company . There were many sites like Mulshi.com which used to sell land at Mulshi, but this site is now gone off the web:D. Hope you got the meaning:bab (34):.There are many other factors as well like infra, collector's sanctions etc. And yes, as always, don't bet on anything PROPOSED, calculate yourself the viabilty of the area, the builder & the project prospects & then take the final call.

      * Beware of all the projects marketed by Disha Direct. These are one of the biggest fraudsters in this segment, don't know why a renowned Marathi actor:- Prashant Damle has become the brand ambassador for such a junk company . There were many sites like Mulshi.com which used to sell land at Mulshi, but this site is now gone off the web:D. Hope you got the meaning:bab (34):.There are many other factors as well like infra, collector's sanctions etc. And yes, as always, don't bet on anything PROPOSED, calculate yourself the viabilty of the area, the builder & the project prospects & then take the final call.

      * Beware of all the projects marketed by Disha Direct. These are one of the biggest fraudsters in this segment, don't know why a renowned Marathi actor:- Prashant Damle has become the brand ambassador for such a junk company . There were many sites like Mulshi.com which used to sell land at Mulshi, but this site is now gone off the web:D. Hope you got the meaning:bab (34):.There are many other factors as well like infra, collector's sanctions etc. And yes, as always, don't bet on anything PROPOSED, calculate yourself the viabilty of the area, the builder & the project prospects & then take the final call.

      * Beware of all the projects marketed by Disha Direct. These are one of the biggest fraudsters in this segment, don't know why a renowned Marathi actor:- Prashant Damle has become the brand ambassador for such a junk company . There were many sites like Mulshi.com which used to sell land at Mulshi, but this site is now gone off the web:D. Hope you got the meaning:bab (34):.
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  • Incredible India, in coma...!!!

    check this link, I am speechless after reading this,,,try it and try to digest...


    http://www.thehindubusinessline.com/2010/05/31/stories/2010053150300900.htm

    and look at the readers comments -

    http://blogs.timesofindia.indiatimes.com/Main-Street/entry/shame-india-sold-its-dead
    CommentQuote
  • Originally Posted by monds
    check this link, I am speechless after reading this,,,try it and try to digest...


    http://www.thehindubusinessline.com/2010/05/31/stories/2010053150300900.htm

    and look at the readers comments -

    http://blogs.timesofindia.indiatimes.com/Main-Street/entry/shame-india-sold-its-dead


    Thanks for sharing BusinessLine link...And this all is happening when we have "Mr Honest" Manmohan Singh as PM, Think of those days when Mayawati or Lalu could become PM or maybe Proxy PM or Kingmaker in India...
    CommentQuote
  • Originally Posted by monds
    check this link, I am speechless after reading this,,,try it and try to digest...


    http://www.thehindubusinessline.com/2010/05/31/stories/2010053150300900.htm

    and look at the readers comments -

    http://blogs.timesofindia.indiatimes.com/Main-Street/entry/shame-india-sold-its-dead

    It is interesting to see Sharad Pawar's name missing from the list.
    Btw, we discussed IPL scam, sugar scam but hey, what happened to Telgi Stamp Paper scam???? Everything was hushed up:bab (45):.
    CommentQuote

    • The house purchase in US has dropped to 13 month low,
      France is selling 1700 properties including some big chateaus to ease it's financial situation.
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  • Developers may sell assets to repay loans

    Another hammer for RE builders;

    Many real estate companies may have to sell their assets to honour their repayment commitments of the loans restructured during recession despite improvements in the cash flow situation.

    http://www.business-standard.com/india/news/developers-may-sell-assets-to-repay-loans/397927/

    Man, if the buyers are there, cash flow is good, then why sell assets?????
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  • Originally Posted by realacres
    Another hammer for RE builders;

    Many real estate companies may have to sell their assets to honour their repayment commitments of the loans restructured during recession despite improvements in the cash flow situation.

    http://www.business-standard.com/india/news/developers-may-sell-assets-to-repay-loans/397927/

    Man, if the buyers are there, cash flow is good, then why sell assets?????



    And this payment timing is exactly matching with start of Double Dip ....:bab (35):
    or those who consider this as bull market when the WORLD Stimulus Party will be over .... and the hangover ....
    So this is my prediction ... but lets see ...
    This Diwali 30% + drop ....


    after all I am a day dreamer ;)
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  • Unauthorised floors of building in Pimple Nilakh may be regularised

    Man, even the Govt doesn't care for the residents. The additional floors will be regularised when this entire project falls in floodline area meaning more risk to additional people, if they buy ofcourse.

    Better be cautious/avoid deal with such builders whose fundamentals (of them & the constro) are not strong.

    http://epaper.timesofindia.com/Default/Scripting/ArticleWin.asp?From=Archive&Source=Page&Skin=TOINEW&BaseHref=TOIPU/2010/06/06&PageLabel=5&EntityId=Ar00501&ViewMode=HTML&GZ=T
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  • Over 50% Of New Property Owners Occupy Premises Without Completion Certificates

    This news is of Pune. Man, more than 50% of flats don't have CC:bab (45):.

    http://epaper.indianexpress.com/IE/IEH/2010/06/06/ArticleHtmls/06_06_2010_581_031.shtml?Mode=1
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  • Realtors Delay IPOs Due To Glum Market,Raising Funds Via QIP Route is Not Giving Good

    A lacklustre stock market that is not going anywhere coupled with lack of investor interest in realty stocks is forcing cashstrapped real estate companies to put their initial public offering (IPO) plans on the backburner and look elsewhere for funds.

    http://indiatoday.intoday.in/site/Story/99694/Business/Realtors+delay+IPOs+due+to+glum+market.html

    Btw, Rakesh Jhunjhunwala, the leading stock broker doesn't hold a single scrip of any listed RE co. Why, we all know:bab (35):.
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