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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  • * PS:- I have stopped attending property exhibis, found them useless & illusive.

    Agreed 110%. I spoke to few builders who I follow about exhibition and they all had one common thing to say.... nothing sells at exhibition. Its just to show you are still in business. LOL
    I was at an exhibition a year back and heard the owner of Nandan prospera tell some other fellow builder that his 10 lacs worth of stall was worth it 'cose he sold 17 flats and was showing off 17 booking checks. Next day I was at their site to see their much talked about sample unit and probed the sales lady about the sales at exhibition. Her answer no sales at exhibition.. but builder had sold 10+ flats much prior to exhibition and those guys were called to give the check at the stall.
    Now that is sleezy and sucks.

    Agreed 110%. I spoke to few builders who I follow about exhibition and they all had one common thing to say.... nothing sells at exhibition. Its just to show you are still in business. LOL
    I was at an exhibition a year back and heard the owner of Nandan prospera tell some other fellow builder that his 10 lacs worth of stall was worth it 'cose he sold 17 flats and was showing off 17 booking checks. Next day I was at their site to see their much talked about sample unit and probed the sales lady about the sales at exhibition. Her answer no sales at exhibition.. but builder had sold 10+ flats much prior to exhibition and those guys were called to give the check at the stall.
    Now that is sleezy and sucks.
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  • Originally Posted by realacres
    I have confirmed reports why Congress is not ready to make the names public of whom have stashed billions in Swiss Bank:-

    It is anti-national Rajiv Gandhi who figures in this list . The amount:- US $ 2.3 bn, it means over INR 10,000 Cr!! .


    From where did you get this information...? Is it reliable?:bab (35):
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  • Pune builders couldn't sell much in last 3 years and are going in to infinite loop...each time, they claim - almost sold out, few flats left...I always wonder, who they sold to last time, last to last time...? Ghosts?? :D

    I will call these exhibitions "Most Haunted, almost live..!!!" :D:D:D
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  • Originally Posted by realacres
    I have confirmed reports why Congress is not ready to make the names public of whom have stashed billions in Swiss Bank:-

    It is anti-national Rajiv Gandhi who figures in this list . The amount:- US $ 2.3 bn, it means over INR 10,000 Cr!! And this is the amount he stashed in 1980s & 90s.


    Another real_leaks.:)

    WikiLeaks Swiss bank account details of a former Prime Minister of India included in the details handed over to WikiLeaks today
    18 Jan via web
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  • Originally Posted by lucky_123
    Another real_leaks.:)

    WikiLeaks Swiss bank account details of a former Prime Minister of India included in the details handed over to WikiLeaks today
    18 Jan via web


    About the 2.3 billion $ , it was mentioned on some news channel y'day during a debate . I think real_leaks is right !
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  • Originally Posted by home123
    From where did you get this information...? Is it reliable?:bab (35):

    It is 100% reliable. In addition to this, Sonia Maino has transfered few thousand crores outside by Hawala & part of it has been sent to her relatives in Italy who in turn have brought properties in Italy including hotels, pubs, some near Milan as well. Part of this money also goes to the Vatican to spread Christianity in poor countries.

    The relatives of Sonia Maino very hardly middle class people till 2004. From 2004-2009, they have made millions. Their incomes can easily be verified from Italy's local tax dept as well, called as "Agenzia delle Entrate" & it will clearly show how their income tax i.e. "Imposta sul Reddito delle Persone Fisiche" too have gone up in these years.

    Sonia's father was close to Mussolini & even today, she has political contacts with parties like The People of Freedom (Popolo della Libertà), Democratic Party (Partito Democratico) who in turn have close links with the Sicilian Mafia.

    Problem is even RAW & IB knows about this but can take little action against her as Congress is in power , atleast for now.
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  • Revolution against corruption party (Congress)

    It seems we need another Nav Nirman Movement to clean this country like this.

    60 REVOLUTIONS — NAV NIRMAN MOVEMENT
    The 1974 Gujarat Nav Nirman or reconstruction movement was the collective outcry of people against corruption in public life. This was the first and last successful agitation after Independence that ousted an elected government. It inspired Jayaprakash Narayan to launch the “total revolution” movement, the outcome of which was the Emergency and not a resurgence of public morality.
    Chimanbhai Patel became the chief minister of Gujarat in 1973, his reputation for corruption winning instant protest from students and teachers.
    READ MORE:
    From past tense to future perfect, the journey of India

    Expectations for radical politics were running high at the time, courtesy Indira Gandhi’s Garibi Hatao campaign. The urban middle class was unhappy because of the high price of essential commodities while the countryside was demanding minimum wages and food security. But what sparked off the agitation was student protests in Ahmedabad in December, 1973 because of the high mess bills and poor quality of food.
    There were clashes between the police and students, and the students’ committee, later known as the Nav Nirman Yuvak Samiti, was formed to voice grievances. An indefinite strike in schools and colleges was called from January 7. Their demand was reduction in educational fees, more campus facilities, distribution of quality food and arrest of black marketeers.

    Students protest in Ahmedabad in 1974

    The call for Patel’s resignation now became vociferous. The Ahmedabad and Vadodara bandh of January 10 turned into widespread riots for two days. On January 25, the day of the Gujarat bandh, the government imposed a curfew in 44 towns and the agitation spread throughout Gujarat. Dissident leaders of the ruling party also openly supported the agitation. Under mounting pressure, Indira Gandhi asked Patel to step down. He resigned on February 9. The governor suspended the state assembly and President’s rule was imposed.
    While agitators were celebrating Patel’s resignation, another section insisted on the dissolution of the assembly. Uprisings spread to the countryside. Opposition parties led the demand for dissolution, with leaders like Ravishankar Maharaj and Jayaprakash Narayan showing support.
    The resignation of 15 Congress (O) MLAs triggered the next phase of the agitation. By March, students had got 95 of 167 to resign. Morarji Desai, leader of Congress (O), went on an indefinite fast on March 12 in support of the demand. On March 16, the assembly was dissolved.
    Nav Nirman was a buzz word for students and their mentors. But their value system was no different from the politicians they were combating and the agitation had no effect on arresting corruption. Patel became chief minister again with BJP support in 1990, emerging as an icon of Gujarat’s development, while the agitation provided Narendra Modi, who was working as an organiser of RSS and ABVP during the movement, an opportunity to carve out his political space. In hindsight, Nav Nirman provided ground for reactionary forces to flourish.




    Pulse of the people : Cover Story: India Today
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  • Originally Posted by realacres
    Problem is even RAW & IB knows about this but can take little action against her as Congress is in power , atleast for now.


    when its not in power and say bjp is in power, still i dont expect any of this whatever u hav said to be brought to the public light and culprits be punished


    long story short - in india politicians r above law, and if ur like in position of party chief or part of its high command, forget abt it
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  • Originally Posted by rambarve3
    It seems we need another Nav Nirman Movement to clean this country like this.



    we have maharashtra NAV NIRMAN sena :)
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  • Originally Posted by realacres
    It is 100% reliable. In addition to this, Sonia Maino has transfered few thousand crores outside by Hawala & part of it has been sent to her relatives in Italy who in turn have brought properties in Italy including hotels, pubs, some near Milan as well. Part of this money also goes to the Vatican to spread Christianity in poor countries.

    The relatives of Sonia Maino very hardly middle class people till 2004. From 2004-2009, they have made millions. Their incomes can easily be verified from Italy's local tax dept as well, called as "Agenzia delle Entrate" & it will clearly show how their income tax i.e. "Imposta sul Reddito delle Persone Fisiche" too have gone up in these years.

    Sonia's father was close to Mussolini & even today, she has political contacts with parties like The People of Freedom (Popolo della Libertà), Democratic Party (Partito Democratico) who in turn have close links with the Sicilian Mafia.

    Problem is even RAW & IB knows about this but can take little action against her as Congress is in power , atleast for now.



    The very reliable story about Sonia Maino’s effect I am aware is from 1980. The Vanaz company used to mfg LPG Gas regulator valves & it was a kind of monopoly. A family from Kothrud (paud phata) had the national level agency/distributorship.
    But Mr. Rajiv Gandhi revoked that agency/distributorship from them & gave it to Maino’s relative. So above story may be expansion of similar activities.
    :bab (36):
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  • Posting report from Mumbai forum. Courtesy - Manoja

    Group Admits To Unaccounted Cash Receipts Of . 200 Crore: I-T Source


    Mumbai Based realty major Lodha Group had been charging customers for car parking space, a practice now declared illegal by courts, sources in the incometax department said.


    I-T officials who raided the Lodha Group offices and residential premises of senior executives of the group last week acted on a tip off that payment for car parking space was made in cash. Therefore, when the I-T officials confronted Lodha officials with evidence of receiving payments in cash, the group admitted to unaccounted cash receipts of . 200 crore.

    A significant portion of the cash seizure was made after opening bank lockers, some of which are in the names of the company's employees. The I-T sleuths also seized cash of . 8 crore from the group's premises.

    According to a Supreme Court verdict in 2010, a developer of a housing complex cannot charge members for parking space. The ruling said the developers cannot sell open spaces and stilt areas in their buildings as these are meant for common use and form part of the flats. I-T officials are examining how many of the car parking spaces were sold before the Supreme Court verdict.

    "We have no comments to make on this issue," Abhishek Lodha, managing director of the group, told ET .
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  • Originally Posted by puser
    when its not in power and say bjp is in power, still i dont expect any of this whatever u hav said to be brought to the public light and culprits be punished


    long story short - in india politicians r above law, and if ur like in position of party chief or part of its high command, forget abt it

    Atleast when someone else is in power, the corruption by Gandhi/Nehru/Mainos will decrease drastically & anti-India decisions won't be taken.

    Man, Chota Rajan & Dawood, both are underworld dons but Chota Rajan is better for India.....so one is pro-India & other anti-India, we need to take what suits the best for our country. Hope you got the point.

    * It was height of stupidity when moron Kapil Sibal said that 2G scam doesn't exists (so did Raja went off for timepass??) & it was good that the court lashed out at him & asked to keep his sewage based mouth shut :D.
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  • State gets Rs 9-cr fine from 40 construction projects

    Pune Builders of nearly 40 construction projects in the city have been penalised in the last financial year (2009-10) for not adhering to the norms of the Maharashtra State Pollution Control Board (MPCB). The penalty has added about Rs 9 crore to the state government coffers.

    “There were many cases where fees was not paid for getting environmental clearance. These projects had to take permission for constructions and to operate under Water Prevention and Control of pollution Act 1974, Air Prevention and Control of Pollution Act 1981,” said Pune region head of MPCB P K Mirashe.

    The guidelines state that projects with over 20,000 sq mts built up area have to pay 0.01 per cent of their capital investment if it is more than Rs 100 crore before they start their construction and they have to follow it up by operations fee of 0.01 per cent of the fee for two years of the capital investment. If the investment is less than Rs 100 crore, there are different slabs.

    “We have showed a turn over of nearly Rs 10 crore from Pune region and the fines collected from these constructions comprise nearly 90 per cent of it,” said Mirashe.

    The guidelines for these constructions under the act state that they have to follow the mandatory operation rules for every project like the use of stone crushers, ready mix plant, auxillary plants and so on.

    Developer Satish Magar and head of Pune Confederation of Real Estate Developers Association of India said usually developers are a little confused on the interpretation of the law :D. “There was confusion about payment on the built up area or the land area. Although I am not aware who the defaulters are :D, we as a developers’ body have been reiterating in our meetings on the need to adhere to the rules,” he said.

    Environmentalist and sustainable development planner Aneeta Benninger calls the trend alarming. “If there is so much of construction in the city it is bound to create waste land. This is an artificial construction boom. Such constructions have no takers and poor will again continue to be deprived of shelter. The administration needs to pay attention to this.”

    State gets Rs 9-cr fine from 40 construction projects - Express India
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  • Blast at Rohan Tapovan

    Couple of days ago I came to know that some blast took place at Rohan Tapovan where the wall of storage room of LPG cylinder room was blown away. Fire-brigade officials said that the leakage was taking place for 3 days & was ignored which led to this accident. Does anyone have further updates on it??
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  • Originally Posted by imtpass
    Posting report from Mumbai forum. Courtesy - Manoja

    Group Admits To Unaccounted Cash Receipts Of . 200 Crore: I-T Source


    Mumbai Based realty major Lodha Group had been charging customers for car parking space, a practice now declared illegal by courts, sources in the incometax department said.


    I-T officials who raided the Lodha Group offices and residential premises of senior executives of the group last week acted on a tip off that payment for car parking space was made in cash. Therefore, when the I-T officials confronted Lodha officials with evidence of receiving payments in cash, the group admitted to unaccounted cash receipts of . 200 crore.

    A significant portion of the cash seizure was made after opening bank lockers, some of which are in the names of the company's employees. The I-T sleuths also seized cash of . 8 crore from the group's premises.

    According to a Supreme Court verdict in 2010, a developer of a housing complex cannot charge members for parking space. The ruling said the developers cannot sell open spaces and stilt areas in their buildings as these are meant for common use and form part of the flats. I-T officials are examining how many of the car parking spaces were sold before the Supreme Court verdict.

    "We have no comments to make on this issue," Abhishek Lodha, managing director of the group, told ET .

    And you know why such raids have taken place only on Lodhas?? It is because Lodhas are close to the BJP & in recent land deals related to purchase of textile mills, it had taken Indiabulls realty head-on & one such deal (I think NTC mill deal) is pending in court as Lodhas state that their bid was higher in real terms than Indiabulls. This in turn made Indiabulls ask their 'aakas' in Delhi (read Sonia Maino & Co.) to do something.

    Hence, the Congress or more precisely Sonia Maino directed the IT dept to go against Lodhas. Man, if you talk about financial irregularities, Indiabulls beats Lodhas hands-down in this.

    The fight is not between Lodhas & Indiabulls but BJP builder Vs Congress builder.

    * PS:- It is then surprising why IT dept is not raiding offices of RE cos of Pawar & Co.!! All know the reason why.
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