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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  • Interesting Frugal ...

    Originally Posted by frugality
    many of us RE buyers in list are thinking what Japanese thought in 80 - 90s
    check out the Image attached (Original and Modified) ... where we are now and where Japan and US were ......

    There is nothing new in India that rules of world will not apply ... its all brick and mortar house and earth has Plenty of it :)

    adding to your points and Realacres points
    how do you justfy VFM .....
    Indian Metro service sector are so highly paid that it surpasses the RE prices of US and Europe ??

    when did that happen ... are our pays higher then US/Europe counter parts ?
    But our houses are .... so either the pays are low or RE is a Bubble...

    what it is
    illogical??
    Dillogical ?
    Greedlogical ?



    Frugal,

    I think our maid got it right when she was discussing the debts she was getting into just to be able to afford her kids a decent future. Lst month she had taken a loan to meet some sudden expense and this month she was looking forward to some money to spend for this month. When she realised how little was left after deducting the loan, she was shocked. Her specific statement was ...

    "however much I work, the money never seems to be enough. How much can a person work?"

    And this is from a maid who earns significantly higher than maids generally do in the city and she is only 24! Imagine the plight of the others in worse situation!!!

    This statement hit me very hard. The poorest of people are starting to feel cornered and this is definitely not good for our society! High Inflation is starting to really get to people. And with the kind of open corruption (with the "great" opening of CWG, what do you think will happen to the proposed investigation of the Conman Games money trail?) and the unviable populist spending of our Govt I believe we are on the verge of runaway inflation in the near future and deficits will start getting closer to developed countries levels (think Japan, etc)!

    Agri products along with other commodities will run away in rupee terms. Rupee should get very weak and match other currencies in the race to zero. And with lesser and lesser jobs in the world trying to meet an ever increasing population, jobs coming to India due to wage arbitrage will start going to cheaper destinations (this is already well on its way).

    We will see a peculiar situation of high quoted prices, low deal prices and significant illiquidity in the RE markets with lots of unfulfilled demand along with lots of empty houses. Real Tragedy!

    And with people having large debt on their houses, they will see low real growth in their property value. You are correct. RE is gaining in value but much of that gain is due to debt. Early stages of the bubble that ruined Japan, US and EU now.

    What would you call that? A happy situation?

    btw, Venky. I could'nt believe my eyes when I saw gol.d rise swiftly to $1320 so fast. And the DI is now 78, striking distance to its all-time low of 74.21. Surprisingly oil is also rising fast. Peculiar situation. All of this is telling us that the general feeling worldwide is things are NOT getting better in most places. They are getting worse by the day, especially in the countries that are pumping money into our markets. How long before they listen to Venky and withdraw the funds massively leading to large falls in our markets?

    Still think gol.d/silver best bets for next decade (even in India, even at these prices). Folllowed by trading returns from the high volatility in Stocks. Even dividend funds and bond funds will give irregular and poor returns given the increasingly risky debt situation worldwide. RE will be patchy at best.

    cheers
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  • So, all senior's with Guns pointing on my head!!

    Great, atleast my 2 points are coming up correctly
    5. I know these guys are so '....' (i don't find any adjective)..., that they can defend themselves and prove me wrong..
    6. Also, all 'seniors' are united! so, if any one of so called junior challenges them, he will be out of picture within a day. (I know I'll be victim now).



    Originally Posted by RAJESHP
    Can you please publish your "research". How you arrived at conclusion that 3200 prize was good price? and also why do you think 4K+ across Pune is stupidity?

    Why I am asking is because according to me nothing is worth after 2006 even with the dip of 2009. I follow the rent formula to arrive at this conclusion.

    I am curious to know what you use to arrive at different conclusion. May be I am missing something, so want to learn from you. Please publish.


    --> Guys, I'm extremely sorry for using word "research", I know I'm not of that caliber atleast in economics and market analysis.
    Hence, I take back my words of "research"..
    So, while buying a house I did very simple calculation that I can do.. Also, did some waiting to..

    I was planning to buy an home since 2008 Jan. But, as I was bit of following markets, I saw the crash in markets and lost bit of money..
    Then markets keep going lower and lower, I was not sure of buying a home.. (Though I was buying stocks, and beleive me lost much at that time.. And now looking as merket, feel I did right...).
    Meanwhile, I saw some of the projects in the location I prefer... I had a budget of 40lacks and I could afford some of them at that time...
    But, I'm very convinced by the fact that markets always predict future of economy by atleast 2 quarters.. Hence, I didn't dare to buy at that time..
    The prize of the same project in Nov-2009 was 3700 with no negotiations possible (and it was recently launched). I liked the project for its location (and comparing with other nearby projects), but didn't buy that time, as I had seen bad phase of Market..
    Later, when I went to builder in March or something RE was in very bad phase, and builder was ready to negotiate.. I used the tricks told on similar blogs and could come to to 3300.. Still I was not convinced, as I started reading these blogs.. Thank you guys! You saved my 100/sq ft.
    After 2 months I could get it as 3200 (and 4-5 floors up of the project), and could negotiate on parking as well.. Finally, I decided to buy it.. as it was very much affordable... I got it at 31lack, much lesser than my budget a year ago.
    So, I thought, anyways its affordable to me, why not buy it... And I was always eying at that project.

    Again, I don't say this is great project/builder n all. Its a reasonable construction n amenities, etc.. Only thing, due to good locality most of the flats are sold....Even he missed the possession date of Sep 2010, But, as I have my home (1bhk bought by my father) at same location (and not giving rent to him :)), I can afford it to get delayed... from current status it looks like is will be ready by December...
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  • No one is pointing a gun. Its actually a stick to get you out of the quicksand!

    Originally Posted by asdf2357
    So, all senior's with Guns pointing on my head!!

    Great, atleast my 2 points are coming up correctly



    asdf,

    All seniors are not ganging up (recently I differed from Venky's prediction with both of us knowing that any or all of these predictions can easily go wrong. Its all part of the probability game!).

    Second, if you think you have prices being quoted higher than you have paid, even if you seemingly bought at high price, good for you (and your sentiment).

    You will notice that Real, Venky, myself (the grreatest bargain hunter) and others are constantly stating that prices are too high, which is, in fact another way of saying "not affordable". So, we are all on the same side speaking in different dialects, thats all.

    Let me explain why we think its not affordable. We are seeing that property which had sedate rise in value till 2004 suddenly saw very sharp rise till 2007. Not because suddenly people became rich, but because suddenly banks started stuffing their pockets with loans.

    Then sanity returned in 2008 and 2009. But once again its returning to prices being quoted sharply up, once again not because you suddenly have too much of your own money in your pockets, but because once again banks are willing to stuff your pockets with loans.

    People with lots of money stuffed in their pockets suddenly seem to forget that they will have to pay it back with interest (and that too is going to rise sharply!!!). When people can get screwed with 1 lakh debt on credit card with 36% interest, do you think they can do better with 36 lakhs loan at 14% interest? :)

    Finally, we "seniors" hope that you have not had to take too much debt at those "high" prices because, in our experience, it will invariably lead to certain times in your life when you will curse why you bought that house at those debt levels due to the normal downswing in people's fortunes over time.

    All normal part of life. All on same side in the same boat! :)

    cheers
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  • Thanks Wiseman, for explaining it very very well!!
    I really feel, I'm on the same boat too.. As you see my earlier post, even I was feeling the prices are too high (and now may be because I bought, I'm thinking other way)..

    Just, the point that I want to make is, there are many guys who must be thinking of buying home since 2-3 years (or even more)... There was some hope due to consolidation in 2008 and drop in 2009.....

    But, due to some negativity in the blogs, (And I must say the confident predictions) by some of the members, few of those buyers may have further delayed their deals, and I don't know until some time they need to wait, considering prizes again fall..

    You can say, what is harm in renting, but everyone knows.. its not easy..
    E.g. you are searching for 2-3 years, then saw some dip, did not buy, and then convince your mind, "its ok! lets stay on rent and wait for next fall...."
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  • Originally Posted by asdf2357
    Thanks Wiseman, for explaining it very very well!!
    I really feel, I'm on the same boat too.. As you see my earlier post, even I was feeling the prices are too high (and now may be because I bought, I'm thinking other way)..

    Just, the point that I want to make is, there are many guys who must be thinking of buying home since 2-3 years (or even more)... There was some hope due to consolidation in 2008 and drop in 2009.....

    But, due to some negativity in the blogs, (And I must say the confident predictions) by some of the members, few of those buyers may have further delayed their deals, and I don't know until some time they need to wait, considering prizes again fall..

    You can say, what is harm in renting, but everyone knows.. its not easy..
    E.g. you are searching for 2-3 years, then saw some dip, did not buy, and then convince your mind, "its ok! lets stay on rent and wait for next fall...."



    http://www.moneycontrol.com/news/business/greed-returns-to-real-estate-is-therebubble-lurking_487387.html

    According to a report by Jones Lang LaSalle Meghraj, the market value of under-construction projects in India has crossed over USD 100 billion from USD 9.4 billion at the end of 2006. While commercial market still remains flat, the residential property market has witnessed a sharp rebound.

    Keeping with the trend, Jones Lang LaSalle Meghraj recommends investing only in residential properties as they see revival in commercial property unlikely before next Diwali. In the commecial office space, Mumbai, NCR-Delhi and Bangalore contributes to about 70% of the market value.

    In an interview with CNBC-TV18’s Udayan Mukherjee, Anuj Puri, Chairman and Country Head at Jones Lang Lasalle India and Anand Narayan National Director-Residential at Knight Frank discuss the possibilities of a real estate bubble.

    Anuj Puri said that the greed for real estate had returned in Indian metros. Realty prices in Mumbai have crossed its 2007 peak but realty markets in the rest of India were still unheated and remain safe, he said adding, “There is strong resurgence of demand coming in metros but overall, other than some micro markets in major cities, I don’t think there is a bubble that is being formed.”

    On the sky rocketing price in Mumbai, he said, Navi Mumbai and the suburbs of Mumbai were doing really well, while prices in Central Mumbai too were up quite sharply. Puri expected a correction of price in the mill land area in Mumbai.

    Anand Narayan, meanwhile, sees huge demand in Lower Parel and Prabhadevi region in Mumbai. He feels that Sewri, in Mumbai, is the most undervalued pocket.




    So leave apart Mumbai
    Rest all metros this does apply....
    India didn't invent Stock market or Loans or Bonds or Business ......
    for that matter most countries follow same business rules ......


    here is the list of countries which you can just Google and derive info.
    I picked from Wiki.
    http://en.wikipedia.org/wiki/Real_estate_bubble

    For individual countries, see:

    * Australian property bubble
    * British property bubble
    * Bulgarian property bubble
    * Chinese property bubble
    * Danish property bubble
    * Indian property bubble
    * Irish property bubble
    * Japanese asset price bubble
    * Lebanese property bubble
    * Polish property bubble
    * Romanian property bubble
    * South Korean property bubble
    * Spanish property bubble
    * United States housing bubble


    This Image and there are couple of more images....
    and many of us are feeling exactly the same as in the Japan chart attached earlier.....
    Is that not the enough indicators ???
    and Biggest issue is Global Debt/Asset valuation issues......

    All these Bubbles above have no such factors when they burst .... it was their local issues....

    Doesn't that imply our bubble is building in most Dangerous times ??
    :o

    its your wish .... TV shows lots of Ads ... you don't bilendly believe them and buy everything....
    So whatever forum speaks apply your mind ....:)
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  • Originally Posted by asdf2357
    Thanks Wiseman, for explaining it very very well!!
    I really feel, I'm on the same boat too.. As you see my earlier post, even I was feeling the prices are too high (and now may be because I bought, I'm thinking other way)..

    Just, the point that I want to make is, there are many guys who must be thinking of buying home since 2-3 years (or even more)... There was some hope due to consolidation in 2008 and drop in 2009.....

    But, due to some negativity in the blogs, (And I must say the confident predictions) by some of the members, few of those buyers may have further delayed their deals, and I don't know until some time they need to wait, considering prizes again fall..

    You can say, what is harm in renting, but everyone knows.. its not easy..
    E.g. you are searching for 2-3 years, then saw some dip, did not buy, and then convince your mind, "its ok! lets stay on rent and wait for next fall...."


    asdf,

    I agree with your view that there was some chance for prospective buyers in 2009. But do not understand your stand of not disclosing any details about your purchase apart from the rate & appreciation in that. Agreed that one can not share much details on public forums but still sharing approx location etc is required so that people reading the post would get benifitted. other wise purchase at 3200 & now it is selling at 4300 etc etc this kind of information is of no use to readers. Just see kind of incormation shared by one member on another thread. Not that much but definitely some more details from you would have been appreciated.

    https://www.indianrealestateforum.com/forum/city-forums/pune-real-estate/11442-finally-booked-a-flat?t=13793

    PS: Also do not be under impression that neighbouring builder or your own builder is now quoting 4300 so rates have rosen upto that level. If you try to get a deal builders are even today negotiating rates by fe hundreds & I have experienced this. So 4300 is not definitely 4300 in reality. Also this is rate at which builder sells his units, if you try & look in resale market you will find lower rates for propertied not old than 2 yrs.
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  • Finally, this is it !

    asdf and others who are itching to buy,

    Let me try to keep it very simple (difficult for a guy who goes on and on! :))

    Everyday in the stock market, I watch for setup (opportunities where the probable upside is 4-5 times downside). And when this "new low" price comes up, get into the market confidentally.

    But surprise! Very often the price goes up around 15-20% and suddenly turns around and creates yet another "new low"!!! Makes one look very foolish!:D

    So, over time I have learnt to trade according the the severity of the drop. If there is a small drop, I do a small trade and pull profits/losses quickly. If there is a humongous fall (and all else seems to be okay), then I get in with more and wait for longer.

    Whats the point of all this?

    Its all about the timeframe. Many youngsters are in such a hurry to buy a home because to them a 2-3 year wait is too much for their patience.

    For the seniors, 2-3 years may even be too little so long as they do not get the humongous falls. I have learnt in the stock market that it takes 5-8 years to get one of those humongous falls. And these buying opportunities give you 5 and 10 baggers easily (sometimes even 20 and 50 baggers).

    Similarly, if some of the youngsters learn to wait for the trmendous falls (and opportunity) they will benefit vastly. Remember, there may never be a fall for another 15 years! That too is part of the game.

    Finally, if you are too impatient and think a decent fall is good to buy, simply go in an buy but being sure that you can take care of the EMI under any circumstance!

    I spent a long time renting and I have no hangups at all since the pockets are bulging with cash and life becomes easy! I will wait for any amount of time for the bargain I'm looking for (like my friend says, if you have cash in pocket, you can even get 2 for 1 of original quoted price these days from builders).

    Just do things so that they FEEL RIGHT for you!

    Was that short? :D

    cheers
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  • Originally Posted by wiseman


    I spent a long time renting and I have no hangups at all since the pockets are bulging with cash and life becomes easy! I will wait for any amount of time for the bargain I'm looking for (like my friend says, if you have cash in pocket, you can even get 2 for 1 of original quoted price these days from builders).

    Just do things so that they FEEL RIGHT for you!

    Was that short? :D

    cheers


    Though I am not an RE bull nor I am not at all itching to buy. Still i think this is extreme thinking. Specifically words highlighted.

    God know when senior members from this forum will stop comparing RE with stocks. Everyone knows that stock always outperform RE, but what is point discussing same thing over & over when people are thinking / asking / talking about buying a home for self-use?

    It would be better now if we call this forum as Indian Real Estate 'Investment' forum

    as majority of senior members with lots of cash always see towards this as investment, nothing else.
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  • How many do NOT think of a home as an asset?

    Originally Posted by rsatitkar
    Though I am not an RE bull nor I am not at all itching to buy. Still i think this is extreme thinking. Specifically words highlighted.

    God know when senior members from this forum will stop comparing RE with stocks. Everyone knows that stock always outperform RE, but what is point discussing same thing over & over when people are thinking / asking / talking about buying a home for self-use?

    It would be better now if we call this forum as Indian Real Estate 'Investment' forum

    as majority of senior members with lots of cash always see towards this as investment, nothing else.



    Friend,

    Let me do a poll. How many people are there on this forum who have NEVER even once thought about their home in terms of its value and how much they have "made" from their purchase? EVER?

    If there is anyone who has NEVER ONCE thought of hiss/her home as something that made money (on paper at least) for them which could be of use just in case, please respond to this ...

    If you even once (in passing), thought of your home in terms of it being an asset in times of extreme distress, then, in the back of your mind, you do view it as an investment; heart of hearts!

    I think, honestly, even if you are living in your home, if you bought at 30 lakhs and its now 90 lakhs, deep down you would be patting yourself (now-and-then) about what a good "investment" choice you made. Would you not?

    So, where is the argument of RE NOT ALSO being viewed as an investment (besides being viewed as a home)? Only difference is, some do it openly, some think they do not do it!:D

    Thats all the difference between you and me (differernt parts of the same boat actually).

    cheers
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  • Nice graph frugal & this time I completely agree with wiseman about the dip.
    asdf, you thought that 2009 prices are good. But good when compared to what? 2007-08? Anything less than 2007-08 will look good, but in reality, even 2007 prices were high. Like in case of auto, if M800 is priced at 15L & then it is available for 12L, it will look good....but see the real value, & even 6L will be high!! As said by rsatitkar, I too fail to understand why you are not ready to even give the location....if location can't be given...how can we trust what you are saying?? Look at Harish, manu, m^2, hitmady etc. who give details. Now we are not even asking you project name, nor the builder. And man, asking such questions don't mean pointing gun at you!:bab (35):
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  • Banks hike base rate, loans likely to become expensive

    This is what we were expecting, hike in base rates. Hiking of base rates clearly indicates how expensive credit has become & inflation becoming a big demon eating into savings of most. Banks will hike interest rates further very soon. The good news though, the FD interest rates will be hiked as well. So, good for depositors.

    http://in.biz.yahoo.com/100930/50/bawbnm.html

    This one from FE:-

    Mumbai: LIC Housing Finance and Magma Fincorp have raised lending rates by 50 bps as money turns more expensive.

    Close to ten banks hiked their base rates last week by 25-50 bps as deposits became costlier and other non-banking finance companies (NBFC) and housing finance companies (HFC) may follow suit. LIC Housing Finance hiked prime lending rate(PLR) by 50 bps to 13% during its quarterly meeting held late last week.


    http://www.financialexpress.com/news/LIC-Housing-Finance--Magma-hike-rates--other-NBFCs-to-follow-suit/692485/
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  • Good in theory, not practical

    Originally Posted by rsatitkar
    God know when senior members from this forum will stop comparing RE with stocks. Everyone knows that stock always outperform RE, but what is point discussing same thing over & over when people are thinking / asking / talking about buying a home for self-use?


    I am still to meet a single person who buys home(for self use), when he firmly believes prices are going to fall tomorrow. Did you? Then I can agree with you.

    Every single buyer, believes prices will not fall (if not appreciate) and even if they fall they will rise back in 6-12 months.

    While I too believe some where in my heart that, for self use, it does not matter if price falls, but if you have any friends in USA who bought home at peak prices in 2006, ask them how they feel today!

    When home buying is one of the biggest purchase, why not make it the best bargain and best purchase?

    What is the urgency? are we on footpaths without shelter or living in tents and camps? On the contrary, we have the luxury of very cheap rentals from our smart investors, so fail to understand the urgency in buying a "Home sweet home"

    So I have been maintaining even for self use, make sure you pay the right price, calculated according to your own calculations, not by what EMI you afford and what builder quotes.
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  • Another point of view ...

    For centuries in the past, Indians have been brought up thinking there is something wrong with them if ...

    - They do not follow their father's footsteps into career
    - They do not get married by age XX (24 for men and 18 for women?)
    - They do not buy their own self-stay home by so-n-so age

    and so on. These may have been good advice for times when life different. In the old days, most people were born and lived till they died in the same locality/region. And money was hard to come by. Then it made sense to do buy what was the only asset which would guarantee gradual increase in value. Then, there was also social prestige associated with owning a home. You only need to attend a Gruhapravash to see the preening and display of pride (on borrowed money!) to understand this.

    But times change. And changing with the times is always a sign of forward thinking (so long as change is positive for you).

    Being in a rented home, for me, has no shame or deficiency in my self-esteem. I have enjoyed some really beautiful homes on rent which I would have otherwise not lived in because of being forced to live in my own self-use home.

    We need to change some of our thinking and get rid of this false sense of increased self-esteem in owning our own home when, actually, to start with, 80% of the home is actually owned by the bank!!!:D. And till you pay the last EMI, you can be harassed by the bank if you default even when you have paid 90% of the loan. Therefore, as many so-called "seniors" have been saying, buying a home should be first of all a practical financial decision unencumbered by emotional reactions. If you really want a peaceful and profitable ownership of your own home, first get the calculations right. Then (mostly) things should be okay.

    Sometimes we misunderstand the meaning of the word OWN, thinking that, just because we have to pay the maintenance and repairs of the house, we own it, despite the papers being locked up in the bank! :)

    cheers
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  • Originally Posted by wiseman
    For centuries in the past, Indians have been brought up thinking there is something wrong with them if ...

    - They do not follow their father's footsteps into career
    - They do not get married by age XX (24 for men and 18 for women?)
    - They do not buy their own self-stay home by so-n-so age

    and so on. These may have been good advice for times when life different. In the old days, most people were born and lived till they died in the same locality/region. And money was hard to come by. Then it made sense to do buy what was the only asset which would guarantee gradual increase in value. Then, there was also social prestige associated with owning a home. You only need to attend a Gruhapravash to see the preening and display of pride (on borrowed money!) to understand this.

    But times change. And changing with the times is always a sign of forward thinking (so long as change is positive for you).

    Being in a rented home, for me, has no shame or deficiency in my self-esteem. I have enjoyed some really beautiful homes on rent which I would have otherwise not lived in because of being forced to live in my own self-use home.

    We need to change some of our thinking and get rid of this false sense of increased self-esteem in owning our own home when, actually, to start with, 80% of the home is actually owned by the bank!!!:D. And till you pay the last EMI, you can be harassed by the bank if you default even when you have paid 90% of the loan. Therefore, as many so-called "seniors" have been saying, buying a home should be first of all a practical financial decision unencumbered by emotional reactions. If you really want a peaceful and profitable ownership of your own home, first get the calculations right. Then (mostly) things should be okay.

    Sometimes we misunderstand the meaning of the word OWN, thinking that, just because we have to pay the maintenance and repairs of the house, we own it, despite the papers being locked up in the bank! :)

    cheers


    Well I will write in precise points:

    1. I agree that in today's date buying property in Pune is not advisable as prices are bloated. Here I concur with senior members
    2. At the same time I belive there was an opportunity in 2009 where prices came down by 15-20%, here I differ with most of the senior members. Agreed that may not be the only opportunity but, yes it was an opportunity.
    3. Renting forever (or even 5+ year ) is not an option. You may call my thinking poor, old fashioned or whatever you wish. But this what I think. I differ a lot with senior members on this point.
    4. Now comes buying at logical & affordable price. Yes we are advising people to buy at a price which is both logical & affordable. Affordable is still a quantifiable term which can be directly linked to buyer's income / savings. But how about logical price? When to call that price is at logical level, unfortunately it's very difficult to determine this & hence so far no one has given a quantified answer for a what a logical price would be?

    Let us take an example 'Samrajya' Jit_Sir's project is the one most discussed on this forum & most of the senior members haveopinion that project is good but price is not logical. Can any one state what will be a logical psf price for this project in today's date? This will indeed help prospective buyers, than just mentioning that today's price is not logical, most of the people know that.

    Remember affordable price can vary as per the person but logical price has to be same irrespective of the person.
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  • Logic is possible if all parameters are equal. Here the end users is using all white money, whereas the builder is using black money to speculate and raise prices. Assuming the buyer had never paid tax on his income for 10 years he would have a substantial portion of money which could then provide for the down payment. What does the builder do ? Most of his income is tax free. He has 30% of tax savings every year. Add it up for 10 years and you will see how buyer can never keep up with quoted prices by the builder.

    Similarly person working in the Gulf/Singapore with a lifestyle at the purchasing power parity of one working in India in 10 years will have a bigger savings balance thanks to lower taxes. The only way out is to either join the builders club or go to a lower tax country
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