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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  • Originally Posted by chinmay686
    no dude!! i didn't miss tht point..tht infact is the whole essence of the deal...

    lemme understand through a calculation..currently price in LocA is say around 3000 psf (just assumed for ease of calculation) idealiitic 20% discounted rate is 2400 psf...now if u see honestly noone pays the floor price even if they go as an individual...everyone gets atlst 100-150 sg ft depending on bargaining power, in most case more than that...the brokerage is say 2% - with combined value of the flat as the base of calculation it is smwhr arnd 100 psf..so ideally what you are saving is 300 psf...and for 50 bulk deal (out of say 100 flats) tht project in most of the cases will be UC (infact i will be surprised even if 10% construction would have completed)...ni tht case Builder anyways gives you a gud discount for believing in him blindly :) ..go with a group of 10 and you can get it easily :)

    Please treat the above calculation just an indicator of the point i am trying to derive!!


    My frends booked tht too for a project almost 80% complete at market price - 400 psf myself with 15 people!! and if the project is like Blue Ridge / or any large project, the chances of getting even more discount is possible!!

    (Maximus Concepts & Technologies???) -- what kind of name is that?

    also quoting from the mail "
    For specific projects in Pune we shall offer housing at price lower than the floor price (in market) – lower by about 15 % to 20%"

    A
    floor price is how low a price can be charged for a product rather than the market price
    , as suggested above...before putting a business proposal if they are not so careful about the wordings, then i guess you sudn't expect them to be too professional as well :)

    Not discouraging you from going for this..i might be wrong as well..this is just my 2 cents from the mail..may be a bit of tweaking in terms and conditions will help you get a better deal here...but the question is if it will be worth it!!

    Disclaimer : I am not questioning the intention of this proposal and will be delighted to see some unique business proposal, which can actually help the end user!! I know of a big time Technology evangelist of India getting into Low cost housing and hopefully the formal launch will happen in days to come!! Only such people can change the state of this industry now, else....


    Our smart buyers in Pune do not have time to think so much and do all these calculations. They are happy with 10% discount and feel special with 15% discount. All this 15% discount on what base price, does not matter. Only 15% lower than market price is what matters.

    So builders conveniently raise prices 20% first and then offer 10-15% discount to our smart buyers and they feel delighted and buy.
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  • Originally Posted by realacres
    Hey, so you want to join NCP?D Anyways, post Sharad Pawar, there won't be any NCP, some elements will go in SS, others in Cong.

    Btw, now if you want to join Cong, I suggest you go to Congress Bhavan near PMC; get all the details & see what suits you better. You join the IYC (Indian Youth Congress). Now they have also started conducting interviews to some extent, so if you become an asset to the party, you may become a good political heavyweight in Wanowrie;). Post Congress bhavan visit, they will guide you based on your locality & yes, remember that you focus on MLA constituency & not ward (corporator) coz you (like me) stay on rent & change in ward due to house purchase will again have it's own issues. Keep me updated.

    Btw, ever thought why these chaps don't have sense to talk properly? Coz people like you are absent:o. I though appreciate your action:).

    For rest, who don't want to join any party, join or make a 'Mohalla Committee'. It will be an org of local citizens group taking the issues with concerned authorities:).



    Yes, I know Netaji Subhashchandra Bose bhawan near PMC...Anyway thanks for suggestion, might visit it sometimes :-)
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  • Restore Pune 'gutter' to original river, says Jairam

    Minister asks PMC to submit Mula-Mutha clean-up plan with help from central funds
    Abhay Khairnar. Pune

    Union Minister of state for environment and forests, Jairam Ramesh, on Saturday said the Mula-Mutha river passing through the city now resembled a "gutter" and called upon the Pune Municipal Corporation (PMC) to accord top priority to its cleaning and conservation.
    "I have been visiting Pune for many years now. Of late the river is looking like a running sewer. I am going to speak with local
    body officials on the issue," the minister said.
    Stating that the Union government would help local authorities in this matter, he urged the mayor and PMC officials to put forth a proposal for the river's upkeep.

    "The Union government is implementing the National River Conservation Programme for 38 rivers in the nation, including the Ganga and Yamuna. Recently we sanctioned Rs70 crore to Kolhapur to improve the Panchgana river. The Mula-Mutha could also be included," Jairam said.
    He told media persons there were two apparent reasons for the sorry state of Pune's rivers: emptying of the city's untreated sewage and industrial effluents.

    "If is beyond the municipal corporation's capacity, the Union government will assist the PMC to clean the river. I will be visiting Pune again in August. I hope the PMC will have readied an action plan by then," he added.
    Jairam also asked the civic authorities to shift all public transport to green fuels, such as compressed natural gas (CNG), stating that availability of CNG would get easier with the Union government force all cities to convert their public transport vehicles to run on CNG.
    Mayor Mohansingh Rajpal told media persons that since the Union government was ready to allocate funds for cleaning the river, the PMC would prepare a detailed plan to submit to the minister.

    Source:- 3dsyndication

    >> Guys, do you think it is possible for PMC to do so completely??

    Btw, I have heard that some crocodiles have been released in Khadakvasla to keep people out from venturing into waters:). Now what I wonder is after rainfalls when the gates of the dam will be opened, what if some croc flows through it & comes in the city?:D
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  • 3 dead in 11th floor cave in

    Another eg. of poor saftey & constro methods used by many builders in Pune:bab (45):.

    Pune Three construction workers died after an under-construction gallery on the 11th floor of the Crystal Castle, Manas Society, collapsed at Wadgaon Dhayari on Sinhagad Road around 7 pm on Saturday....

    Read for complete story:-

    http://www.expressindia.com/latest-news/3-dead-in-11th-floor-cave-in/636099/
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  • Originally Posted by realacres
    , Jairam Ramesh, on Saturday said the Mula-Mutha river passing through the city now resembled a "gutter"

    National River Conservation Programme for 38 rivers in the nation, including the Ganga and Yamuna. >> Guys, do you think it is possible for PMC to do so completely??



    Hell no. After all this conservation the Yamuna is one big giant sewer which stinks exactly like a sewer (smell penetrates thru closed windows of an AC car).

    Things can definitely get worse.

    Maybe sewage will flow in the streets (as it does on and off when sewer lines clog in Delhi)

    Things get better? CLean up? Improvement? Get real, Real, this is India.
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  • Originally Posted by Venkytalks
    Things get better? CLean up? Improvement? Get real, Real, this is India.

    Well maybe yes for now. Even look at Mumbai. Hundreds of crores have been spent last year for rain drain systems & cleaning of nallahs. What happened? This year, in just 1 rain, large areas in Mumbai were submerged & there are around 4 months to go!!

    Btw, the bridge near RTO is always under water, don't know why isn't this resolved by having another elavated bridge?? I find it funny when Karve road areas get submerged upto knee levels:D & builders state that prices are high due to good infra.
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  • Originally Posted by realacres
    builders state that prices are high due to good infra.


    Karve Road has great infrastructure, roads with an average 3 potholes/30 meters, poorly timed signals (hey, atleast we have signals here!) and PMC water supply. Loosely translated in builder lingo, that would read as well- tarred ivory black roads, well-planned amenities and exclusive, purified, oxygenated water supply.
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  • Delayed Possession Of Flats Lands City Builder In Trouble

    Bharati Developers asked to pay Rs7,000 per month to each of the 27 buyers
    Sat Jun 19, 2010

    The Pune District Consumer Disputes Redressal Forum has penalised a builder for delay in handing over the possession of flats to 27 buyers at the Wonder Futura housing project (phase-II) on Pune-Bangalore Highway. The forum has also directed the builder to repay Rs4 lakh along with 9% interest per annum taken from one of the buyers.

    A three-member bench of the forum, in its order on June 6, directed the owners of Bharati Developers, Manoj Agarwal and Satish Mittal, to pay a compensation of Rs7,000 per month to each of the 27 aggrieved buyers with effect from July 1, 2007 or from the date of agreement till they are actually given the possession.

    The forum, however, directed the buyers to clear their dues to the developer by July 31. In case, the party refuses to accept the payment, the buyers would have to deposit the amount with the forum before August 13. If they failed to comply with the orders, the forum's conditional order will be vacated.

    The consumer court has asked the builders to give possession of the flats to the buyers by August 15 with the promised amenities.

    The buyers had moved the forum following a three-year delay in getting their flats. They had formed the Wonder Futura Residents' Association after the builder failed to respond to their repeated pleas. The builder was supposed to hand over the flats in June 2007.

    One of the reasons cited by the builder for the inordinate delay was that a certain portion of the land was reserved for construction of a police station or chowki. However, the forum said that he should have made efforts to de-reserve that portion from his land.
    Another reason cited by the builder for the delay was the ongoing correspondence between the Pune Municipal Corporation (PMC) and the National Highway Authority (NHA) regarding some alleged encroachment on the highway.

    "The builder's argument about the ignorance of the fact that the land is a part of the NHA cannot stand. In accordance with the rules framed by the authority, certain portion from the centre of the national highway is to be kept vacant," the court said, adding that this rule was in existence when the plot was bought.

    The court also refused to buy the argument of the builder that the construction was stayed by the local authority on the grounds that there was no order issued by the latter to stay the construction.
    The forum rapped the lawyers for creating confusion over the amenities and facilities mentioned in the brochure and in the agreement.
    "When the facilities and amenities are included in Annexure F of the agreement, it becomes obligatory on the part of the builder to provide the same to flat owners," the forum said.

    When contacted, Mittal said that they are yet to decide on the future course of action and legal opinion is being sought on the issue. "We had sent letters to the flat owners six months ago to pay the arrears and take possession of the flats," he said.
    Attachments:
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  • New norms for realty valuation

    The urban development ministry, along with the Indian Bank Association (IBA), the National Housing Bank (NHB) and the corporate affairs ministry, has drafted a handbook on policy, standards and procedures for real estate valuation by banks and housing finance institutions. The exercise, the first ever, is to put some order in real estate valuation.

    Read for complete article here:-

    http://www.realtyplusmag.com/rpnewsletter/fullstory.asp?news_id=9042&cat_id=8
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  • How is gutter system in European cities or English cities like London etc.

    Their cities look so clean...why India cant have such cities?
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  • Originally Posted by realacres
    Bharati Developers asked to pay Rs7,000 per month to each of the 27 buyers
    Sat Jun 19, 2010

    The Pune District Consumer Disputes Redressal Forum has penalised a builder for delay in handing over the possession of flats to 27 buyers at the Wonder Futura housing project (phase-II) on Pune-Bangalore Highway. The forum has also directed the builder to repay Rs4 lakh along with 9% interest per annum taken from one of the buyers.



    Pity that in India, compensation is so poor and limited to take care of financial loss only.

    What about compensation of inconvenience caused? I think that attracts bigger compensation.

    But our smart buyers in Pune are feel happy with this compensation and queue up with check book to buy properties from such builders.

    License of such builders must be taken away.:bab (45):

    I remember I was in the sales office of Wonder Futura some where in 2006, and the sales man was acting smart. Today I feel so happy that I did not buy here; lucky me:D:D:D
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  • Originally Posted by puser
    How is gutter system in European cities or English cities like London etc.

    Their cities look so clean...why India cant have such cities?

    Gutter system no good mate. Small rain 5% of Mumbai floods most parts of the London city. Same holds true for other cities in UK.
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  • Originally Posted by realbee
    Gutter system no good mate. Small rain 5% of Mumbai floods most parts of the London city. Same holds true for other cities in UK.


    We use the same gutter system made by Britishers... so explains why Londna nd Mumbai botjh get flooded. :bab (59):
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  • Originally Posted by veeemkay
    We use the same gutter system made by Britishers... so explains why Londna nd Mumbai botjh get flooded. :bab (59):



    May be in case of Mumbai .....city planner might not have thought about Mithi " Nala " and in case of London .. its about ...Counter's Creek .... they call it as " lost rivers " , Atleast in india rivers convert to Nalas ... but there its completely lost ....:bab (59):
    So we can say this is all about lack of foresight of city planners .... :D:bab (4):
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  • One more news about rogue Pune builder

    Pune: The city court on Thu has ordered police to probe a land grab case involving nice parties of whom one is city based builder Anirudha alias Anil Seolekar (who is also owner of Hotel O, Oxford Properties). He is the same chap who had attacked journalists. The court ordered a probe after police failed to act despite the land owner lodging complaints with the cops.

    The land has been grabbed at Mundhwa, S.no. 9 to 14.

    I read the complete story in today's Pune newsline, IE. Look how big goons are these builders & heir junk NCP chaps:bab (45):. Yet, builders say they are so good & stick to their commitment:D.
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