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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  • Why not launch a separate thread for this topic?

    Originally Posted by harshalx
    Alright,

    I'm not going to go further into the rhetoric that wiseman's advocating. Lets get back to the main problem and discuss as to how will we clean the political system to that it does what its supposed to do, take care of its people!

    Can somebody throw off some practical sustainable ideas?


    Just as pcpune launched a Stock Advice thread to keep all stock related discussion apart from the RE topics, why don't you launch a appropriately named thread so that ideas can freely be thrown in?

    cheers
    CommentQuote
  • Originally Posted by realacres
    Here are some facts:-

    *PS:- About 2 months ago India finally unveiled it's first indigenously built nuclear submarine, this project was top secret for past 7 years. Also, India has Trishul Class stealth frigates, some of these like INS Delhi & INS Talwar give pains to even Chinese Navy.



    Didn't know we had a home built nuclear submarine capability!

    Hope, unlike our Power Plant reactors, every now-and-then the sub's reactor does not go down so that the sailors get their paddles out and start paddling like mad!!! :D

    cheers
    CommentQuote
  • Originally Posted by aditi sharma
    The Aadhar UID project has been launched at Tembhali(or pembhali?) village in MH.

    http://www.indianexpress.com/news/aadhar-takes-off-pm-sonia-launch-uid-in-tribal-village/689953/

    Just reading this news, I came to know that this village is where many projects of UPA govt are launched in past, including election campaign of Indira Ghendy etc and it has elected one congress MP for nine times.
    I thought what a blessed small village, first citizens to get UID. And a launch pad of some important national projects,
    Until I read this.......
    "There are 273 families in Pembhli, among which 263 are below the poverty line."


    Most of the Congress's safest winning seat like this ONLY since last 50 years, ppls are illiterate,below poverty line...coz they know if they become educated then they will not vote for them, thats why we still dont have even 50% literacy in our country even after 60 years on independence..what a sham:bab (45)::bab (45):
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  • Originally Posted by harshalx
    Here are some of mine:

    - The miniscule movements like PPI (Professionals Party of India) need to be supported by folks like us. We need to start being active members of the Party. At the end of the day, we need a force that can stand up to the biggies and that force will build one step at a time.

    Good idea but such parties don't have rural appeal & most seats come from rural areas. Educating & winning seats, both are different, & at the end of the day, one needs to win seats...educating alone won't help. In anycase, one can't educate drunkards & sadistic wife beaters:bab (45):.

    My take:- Get in some established party, you get ready made infrastructure & make the change within. When I was a scorpio chap, our team defeated 2 of our own corporators, one a sitting corporator & we backed an independent who won & now supports from outside:D. This way, he gets things done as noone can afford to loose his support.

    - The change is going to come from within the Govt. We cannot stay out of the Govt and say that 'clean it up'. So how can we motivate the people to consider Govt positions? How can we motivate ourselves to take up Govt positions?

    +1. This is what I was saying from beginning, jump in. Things are easy once inside. Man, some people try to scare good men as they don't want them in.

    - Corruption needs to be legalized to some extent. All Govt services need to have a 'Regular fee' and a 'Premium Fee' and 'tips'. Pls Don't misunderstand this (especially for people like wiseman).

    I disagree to this. However, I think things like gamb.ling, betting should be legalized with 30% tax. Govt can earn atleast 20,000 Cr by this way .

    For e.g. If I need a passport within a day, rather than paying the agent Rs 5000 the officials in the Govt get the cut directly. In fact raising the premium processing fees to even 10000 is alright so that the benefit goes to everybody. However, checks need to be in place and working, so that the Rs 10k is not 'under-tabled' to 15k or 20k.

    As far as I know, when I was small kid, their was a tatkal scheme under which the passport used to be issued in a week & some charges were officially present. Even in RTO, for select nos. one needs to pay.

    This is not a solution to the problem, but is just a practical, workable technique to climb one step of the ladder so that someday we might reach the first floor. We can't solve it in one-shot. We have to take it step by step.

    +1. Agreed.

    - Govt stops running businesses.

    +1 again. Infact, the first thing Govt should get out is from Air India & hand it over to it's real owners, the Tatas. Out of 5 flights, 3 have emergency landing, 1 is hit by bird & 1 is canceled:D. But man, if these things happen, how will mantris, MPs & babus travel free of cost??:o

    Hence, to keep their travel free, Govt won't allow this to happen easily.

    As far as infra is concerned, BoT should be implemented, though toll matters need to be looked into if company is not maintaining it.

    In RE, the builder should be made to build road, water lines etc. in lieu of permission in remote areas or where PMC/PCMC infra is not sufficient. For this, additional TDR can be given to builder.

    All in all, it is high time that 9 to 5 job people go out. If not, they will continue to remain as mango man, who is exploited day in & day out:o.
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  • Most of the Congress's safest winning seat like this ONLY since last 50 years, ppls are illiterate,below poverty line...coz they know if they become educated then they will not vote for them, thats why we still dont have even 50% literacy in our country even after 60 years on independence..what a sham

    Completely true. Congress couldn't do in 65+ yrs what Modi did in less than 10 yrs. Btw, it seems Kallu has given few crores to 10 Janpath as Congress isn't taking any action against him.

    * This time ITGs will loose a holiday as takla jayanti is coming on Saturday. Man, how I hoped than Nathuram Godse should have hit him 6 months ago. Even better he would have come under the train he was thrown outside.
    Originally Posted by wiseman
    Didn't know we had a home built nuclear submarine capability!

    Hope, unlike our Power Plant reactors, every now-and-then the sub's reactor does not go down so that the sailors get their paddles out and start paddling like mad!!! :D

    cheers

    Yep, it is part of nuclear submarine program under the name INS Arihant. Here is a pic of the same:-
    Attachments:
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  • Another FD From Builder

    Man, it was Wadhwa in Mumbai who came up with 16% interest recently & walking on his footsteps, Lallu Jain of KUL (Ex-Kumar Builders) too has come up with FD scheme with 16% interest:D. What's more, as mentioned before, there have been no takers for realty shares on stock markets, hence alongwith other 12 RE cos, KUL too isn't issuing IPO despite being given go ahead from SEBI!!:bab (34):
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  • Originally Posted by realacres

    * This time ITGs will loose a holiday as takla jayanti is coming on Saturday. Man, how I hoped than Nathuram Godse should have hit him 6 months ago. Even better he would have come under the train he was thrown outside.


    The best part of him, he fought in SA for years while SA was not his motherland. I would appreciate if anyone come forward and fight with builders for your own people.
    CommentQuote
  • Real picture?

    Originally Posted by realacres
    Completely true. Congress couldn't do in 65+ yrs what Modi did in less than 10 yrs. Btw, it seems Kallu has given few crores to 10 Janpath as Congress isn't taking any action against him.

    * This time ITGs will loose a holiday as takla jayanti is coming on Saturday. Man, how I hoped than Nathuram Godse should have hit him 6 months ago. Even better he would have come under the train he was thrown outside.

    Yep, it is part of nuclear submarine program under the name INS Arihant. Here is a pic of the same:-



    Real,

    This looks computer generated. Is it real?

    Otherwise when is it going live? Also, is it attack sub or missile platform?

    Just curious ...

    cheers
    CommentQuote
  • Originally Posted by realacres
    Good idea but such parties don't have rural appeal & most seats come from rural areas. Educating & winning seats, both are different, & at the end of the day, one needs to win seats...educating alone won't help. In anycase, one can't educate drunkards & sadistic wife beaters:bab (45):.

    My take:- Get in some established party, you get ready made infrastructure & make the change within. When I was a scorpio chap, our team defeated 2 of our own corporators, one a sitting corporator & we backed an independent who won & now supports from outside:D. This way, he gets things done as noone can afford to loose his support.



    The problem with an established party would be, we will have to follow their pre-established norms. If we try to do something out of the box, they'll stop us.
    CommentQuote
  • Originally Posted by wiseman
    Real,

    This looks computer generated. Is it real?

    Otherwise when is it going live? Also, is it attack sub or missile platform?

    Just curious ...

    cheers



    Google "Submarine" in Image section.

    BTW, Virginia-class attack submarine
    CommentQuote
  • Originally Posted by wiseman
    Real,

    This looks computer generated. Is it real?

    Otherwise when is it going live? Also, is it attack sub or missile platform?

    Just curious ...

    cheers

    Here are the launch pics. It was launched by Mrs. Singh, wife of MMS, Indian PM. Also enclosed the captured image from CNN-IBN.
    Attachments:
    CommentQuote
  • Kumar Urban Development to build Rs 1,000 crore green IT SEZ

    Developer Kumar Urban Development Limited (KUL) is setting up an IT Special Economic Zone (SEZ) project in Pune with a proposed total investment of Rs 1,000 crore. The company will invest about Rs 400 crore in the first phase of the project, christened as Cerebrum IT SEZ, which is coming up near the first phase of Rajiv Gandhi Info Tech Park, popularly known as the Balewadi Silicon Valley.....

    Read for complete story here:-

    http://www.realtyplusmag.com/rpnewsletter/fullstory.asp?news_id=10353&cat_id=1

    I would like to know whether there is scope for further large scale absorption for such IT parks in H'wadi now especially after seeing large scale vacancies at EON IP PARK, Kharadi?? :bab (38):
    CommentQuote
  • Originally Posted by realacres
    Developer Kumar Urban Development Limited (KUL) is setting up an IT Special Economic Zone (SEZ) project in Pune with a proposed total investment of Rs 1,000 crore. The company will invest about Rs 400 crore in the first phase of the project, christened as Cerebrum IT SEZ, which is coming up near the first phase of Rajiv Gandhi Info Tech Park, popularly known as the Balewadi Silicon Valley.....

    Read for complete story here:-

    http://www.realtyplusmag.com/rpnewsletter/fullstory.asp?news_id=10353&cat_id=1

    I would like to know whether there is scope for further large scale absorption for such IT parks in H'wadi now especially after seeing large scale vacancies at EON IP PARK, Kharadi?? :bab (38):


    Pune is not attracting new IT investment. Most of the new setup is going to Chennai and Bang. Even Mahindra is setting up 3200 cr setup in Chennai. Let’s keep hope these SEZ will be occupied by companies. Otherwise they will convert it as residential or commercial space.
    CommentQuote
  • Originally Posted by Saurabh01
    Pune is not attracting new IT investment. Most of the new setup is going to Chennai and Bang. Even Mahindra is setting up 3200 cr setup in Chennai. Let’s keep hope these SEZ will be occupied by companies. Otherwise they will convert it as residential or commercial space.

    But I remain negative on residential front as this area has max no. of vacancies in entire city, add to it BR & MPolis or even maybe Hirco if it comes, I think selling residential project here is now really difficult.:bab (22):
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  • Originally Posted by realacres
    But I remain negative on residential front as this area has max no. of vacancies in entire city, add to it BR & MPolis or even maybe Hirco if it comes, I think selling residential project here is now really difficult.:bab (22):


    MPolis is totally for Mumbai wasi. I know 4-5 people from Mumbai who booked in MPolis but never met any single one from Pune. Anyway, after 4-5 years it would be better than current situation. But only investor can book that place.
    Even I heard Kumar Properties taken by ABIL but don’t about validity abt this news.
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