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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  • All depends on how long the stock market will hold ...

    Originally Posted by realacres
    Good to see realtors getting hammered. Read on:-

    ]http://www.dnaindia.com/money/report_realtors-feel-debt-vice-tightening_1297852


    The Builders are out on a thin limb. The estimated debt currently held by this segment is in the range of 70000-90000 Crores (depending on various reports). Through QIP they have raised around 11000 Crores (around 16% only). But even with QIPs it was hard not to let go of a significant amount of equity.

    The only option now for Builders is to con the investing public by coming in for huge public issues at ridiculous premiums while keeping the markets high so that investors really feel these premiums are justified. Take the case of Unitech conning the Norwegian company of 6000 crores for a controlling stake in their telecom licence. Now they figure that market is getting hyper-competitive, new connections rate is slowing down and market is maturing rapidly. So, the Norwegians are already talking of brealing even only after 7 years!!!

    1992 saw the Harshad scam. 2000 was Ketan scam. 2008-09 will be the Builder scam combined with the Reliance/Ambani scams (today RelComm was reported to have extensively cooked its books and Mukesh is well known for taking lucrative contracts into his private companies and milking the public ones for 10s of thousands of crores!).

    Deepak Parekh was correct. This is a very high stakes game being played by the builders. A single high-profile PO crashing and the who industry is toast. Alternately, market falling significantly will also sound bankruptcy to many of them. Third is, if the Regulatory Bill is passed and there is strict policy about disclosure, advertising, marketing, etc.

    At this rate it might be better to wait and watch when the builders will buckle under and come to market with much more realistic prices and not just low quality housing!

    cheers, etc.

    At this rate it might be better to wait and watch when the builders will buckle under and come to market with much more realistic prices and not just low quality housing!

    cheers, etc.

    At this rate it might be better to wait and watch when the builders will buckle under and come to market with much more realistic prices and not just low quality housing!

    cheers, etc.

    At this rate it might be better to wait and watch when the builders will buckle under and come to market with much more realistic prices and not just low quality housing!

    cheers
    CommentQuote
  • Originally Posted by realacres
    Very good article of delays of projects & builders apathy. What's more, flats priced at INR 4Cr are down to INR 79L, yet no buyers & hence no work. Sufferers:- Buyers who booked here. Though this news is from Delhi-NCR, it has striking similarities with Pune RE.

    Good info & eye opener for many.

    ]http://epaper.indianexpress.com/IE/IEH/2009/10/10/Article//019/10_10_2009_019_012.jpg

    Thanks Real.

    The article says it is eighth in this weekly series by Indian Express.. It would be nice if someone could give links to all eight and the additional ones to follow.

    VK

    Thanks Real.

    The article says it is eighth in this weekly series by Indian Express.. It would be nice if someone could give links to all eight and the additional ones to follow.

    VK

    Thanks Real.

    The article says it is eighth in this weekly series by Indian Express.. It would be nice if someone could give links to all eight and the additional ones to follow.

    VK

    Thanks Real.

    The article says it is eighth in this weekly series by Indian Express.. It would be nice if someone could give links to all eight and the additional ones to follow.

    VK
    CommentQuote
  • Originally Posted by realacres
    Good to see realtors getting hammered. Read on:-

    ]http://www.dnaindia.com/money/report_realtors-feel-debt-vice-tightening_1297852

    This is scary. I hope this becomes common knowledge soon, and the poor middle class steers clear of this scam in works.

    This is scary. I hope this becomes common knowledge soon, and the poor middle class steers clear of this scam in works.

    This is scary. I hope this becomes common knowledge soon, and the poor middle class steers clear of this scam in works.

    This is scary. I hope this becomes common knowledge soon, and the poor middle class steers clear of this scam in works.
    CommentQuote
  • Originally Posted by veeemkay
    Thanks Real.

    The article says it is eighth in this weekly series by Indian Express.. It would be nice if someone could give links to all eight and the additional ones to follow.

    VK

    Most of the links are already posted above.
    CommentQuote
  • Originally Posted by realacres
    Most of the links are already posted above.


    I some how missed out and the pages are no longer available.

    BTW.. check article of affordable housing.. and some numbers thrown on which price segment the most demand is.....

    ]http://propertybytes.indiaproperty.com/index.php/city-scape/affordable-housing-road-to-realty-revival-part-ii

    Not sure if we can believe in the above... but if it is true... it is important for people investing to read... the highest demand (87%) is in the 13-18 lac bracket. So buy expensive flats only if u are confident of finding a buyer in the remaining (3-5%).

    VK

    Not sure if we can believe in the above... but if it is true... it is important for people investing to read... the highest demand (87%) is in the 13-18 lac bracket. So buy expensive flats only if u are confident of finding a buyer in the remaining (3-5%).

    VK
    CommentQuote
  • Focus on Product not discounts

    A good article from IE about current gimmicks of builders.

    ]http://epaper.indianexpress.com/IE/IEH/2009/10/17/ArticleHtmls/17_10_2009_019_007.shtml?Mode=1
    CommentQuote
  • 'Navin Raheja of Raheja Developers & Anuj Puri of JLLM Sued For Fraud & Conspiracy '

    Posted on Fri Oct 16, 2009 at 02:36:19 AM EST
    "Saket Based Navin Raheja of Raheja Developers & Anuj Puri of JLLM Sued For Fraud & Conspiracy In Mumbai Courts"

    Dear Sir,

    A-1) I am a regular visitor of your websites, and have appreciated the discussion of issues on your websites.

    A-2) I have also talked to you about real estate in Gurgaon and am grateful for all the information you have shared with me.

    B-1) However there is something that I wanted to share with the readers of your websites.

    B-2) I am based in Mumbai, and on the advice of Builders collaborator Mr. Anu Puri of Jones Lang Lasalle Meghraj (JLLM) - through M/s. Sandalwood Residential Consultants Pvt. Ltd. in Mumbai, we invested in a Property by Raheja Developers called VEDAANTA in Sector 108, Gurgaon. Needless to say, we later found out to our grief that we had been subjected to a fraud by all since interalia they knew that they did not have the full permissions, and nor had any intention to construct the project at all or in a timely fashion.

    B-3) We have moved the Mumbai Criminal Courts on this issue, and I am happy to share with you that the Hon'ble Courts have admitted our plea and issued summons in Mumbai against Mr. Anuj Puri, Mr Raminder Grover, Mr Navin Raheja, Mr Nayan Raheja and Others of Raheja Developers Pvt Ltd.

    B-4) The wheels of justice are slow but sure, and we hope to share our updates with you as the case progresses.

    B-5) Brief is the significance of the plea:


    Dear Sir,

    A-1) I am a regular visitor of your websites, and have appreciated the discussion of issues on your websites.

    A-2) I have also talked to you about real estate in Gurgaon and am grateful for all the information you have shared with me.

    B-1) However there is something that I wanted to share with the readers of your websites.

    B-2) I am based in Mumbai, and on the advice of Builders collaborator Mr. Anu Puri of Jones Lang Lasalle Meghraj (JLLM) - through M/s. Sandalwood Residential Consultants Pvt. Ltd. in Mumbai, we invested in a Property by Raheja Developers called VEDAANTA in Sector 108, Gurgaon. Needless to say, we later found out to our grief that we had been subjected to a fraud by all since interalia they knew that they did not have the full permissions, and nor had any intention to construct the project at all or in a timely fashion.

    B-3) We have moved the Mumbai Criminal Courts on this issue, and I am happy to share with you that the Hon'ble Courts have admitted our plea and issued summons in Mumbai against Mr. Anuj Puri, Mr Raminder Grover, Mr Navin Raheja, Mr Nayan Raheja and Others of Raheja Developers Pvt Ltd.

    B-4) The wheels of justice are slow but sure, and we hope to share our updates with you as the case progresses.

    B-5) Brief is the significance of the plea:

    Case against a major collaborator for entering into conspiracy with Builder - generally in India no one goes after the Collaboration as they are mainly small time. By focusing on making the huge international Collaboration JLLM as one of the Accused, we have cast a spotlight on their role and charged with entering into a criminal conspiracy to defraud buyers of large sums of money.


    Practices that may seem normal in Haryana, like selling projects even before getting all the papers and permissions in place, will be seen in sharper light in Mumbai which has its own strong and highly developed Vertical Real Estate Industry.


    Thanks,
    Nitin Goel

    Anjali Building, Ground floor,

    French Bridge, Opera House Jn.,

    Mumbai 400 007

    Off. Nos.: (022) 2386 8255 (3 Lines),

    2386 1050, 6610 8255 (Working hours 9.30 am to 5.30 pm - except Sundays)

    Fax No.: (022) 2387 0904

    E-mail : adminschokhi.com

    FROM MTNL DELHI DIAL LOCAL TO MTNL MUMBAI . PL DIAL 011-2386 8255
    CommentQuote
  • Greed = Loss

    This is what happens when RE purchase is done at illogically high price:-
    Get no buyers later:D

    ]http://economictimes.indiatimes.com/articleshow/5146998.cms

    Some more;

    Office rentals in Mumbai, Delhi slip on oversupply


    ]http://economictimes.indiatimes.com/markets/real-estate/news-/Office-rentals-in-Mumbai-Delhi-slip-on-oversupply/articleshow/5129336.cms
    CommentQuote
  • At a dangerous point now ...

    Folks,

    What I'm about to say may sound not directly relevant to the RE issues today. But bear with me ...

    I have always said that, in my opinion, the speculative bullishness has not yet been beaten out of people enough for the markets to finally find its bottom. So, around the early part of Oct, I had mentioned that the Stock Market (which are always an early indicator of market fundamentals) has reached what looks like a top around 16700 - 17300 and will react depending upon the type of results that Q2 would provide.

    Again, my opinion about Q2 is that it would look better than expected because most companies would be reaping the benefits of serious cost cutting (which would bring up substantial increase in profits simply because of the huge amount of excess flab built up by companies in the 2004-2007 period). So it seems today that, while many companies are showing weak increase in sales/topline, some are showing good increase in bottomline as expected.

    The problem with this is, cost-cutting is a onetime exercise. Next quarter, there will be a surprise drop in profit growth as there would be no additions to bottomline thru cost-cutting.

    As I had mentioned, market has gone to around 17350 on Diwali day (which I say now may be the turning point both psychologically as well as really) and is now showing some serious declines and a inability to boune back seriously. I also maintained that serious declines will start only after the US markets start tanking seriously. Volatility has started looking up and 100+ point swings in Dow and 200+ point swings in Sensx is now quite regular, especially on the downward side.

    To cut it short, RE companies are looking for the anticipated HUGE Public Offers planned (13000 Crores) to bail them out and reduce debt. These must be done at high premiums otherwise managements stand to lose too much equity and value. IF the markets start reacting seriously and in a prolonged manner - I expect markets to go down again for next 4-8 months and reach around 10000 Sensx, while Dow could even go below previous lows due to the terrible economic situation in the US - the RE sector can say goodbye to the scam they are planning to perpetrate on the investing public. Sales too will decline seriously as the market decline takes toll on jobs, retail loans and willingness of people to jump in. And, when RE companies realise that they are in a complete fix with no way out, expect serious price cuts to clear inventory that will be killing them. I continue to keep looking for the 50% to 80% declines in home prices (from the peaks) for me to start looking for bargain buys! :)

    Mid to late 2010 would probably be the most dangerous period for the world economy since, by then, the lie of recovery will be completely exposed and overall weakness (reflected in jobs, incomes and Economic performance will reach their weakest state) will be at its peak. I believe that second half of 2010 will give us the beginning of the best period to start looking for bargain RE buys. Rest assured that, there may be no immediate increase in prices but we may be in the sweet-spot of low prices.

    Let us keep watching the markets for confirmation of the next turn down in stocks which could mean bankruptcy to some of the weaker players in RE.

    cheers
    CommentQuote
  • Here is my view:

    Approach 1: Buy

    Suppose you have 40L worth of sum in your kitty. A 3-BHK in a reputed society in NCR is not going to be less than 60L. So you take a home loan of 20 L and Pay all 40L from your kitty (thus nullifying all your savings in one go). Instead, you now have a liability of 20 K per month to pay back to bank as an EMI towards you HM. 20 * 12 * 20 = 48L on an average (keep in view of fluctuating Interest Rates. Above this you have Maintainance Cost and Miscllaneous taxes to pay as a house owner on an avergae 3 K Per Month. Now your monthly spend is around 23 K towards my Home liability.

    In Approach 1: Advantages:

    1: You have your own home
    2: Hopefully, it only goes up, which i think is little unlikley as demand and supply will keep a cap on the already high price of 60L for this 3 BHK flat. Maximum it can go up in next 20 yrs is 1.2 crs i guess.


    In Approach 1: Disadvantages

    1: All savings lost in the form of 40L downpayment
    2: A huge sum of 23K (Approx) Per Month hanging on your neck which you need to pay for long 20 yrs even being a virtual so called House Owner
    3: Highly non-flexible option to move out whenever there is any need of any kind (Have to literally scratch my head to take a decision)
    4. Always a fear of loosing job in the private sector. As rightly said above, the negotiation skills goes down.
    5. Last but not the least, if anything goes wrong, you still have to repay my loan back and have 23K worth of liability on my head. You have to face bank people and their harrassments for defaulting any payments, if any. (All this still at the cost of being the so called virtual Home Owner)

    Approach 2: Rent

    The other option is to rent a house near office which comes anywhere in the range of 10-12K and earn interest on 40L or you can choose to diversify my investment options to get more returns in long term. Let's assume you keep in traditional FD in bank where you can easily get minimum of 16.5 K Per Month as interest from my bank. (This is calculated 7 P.A. - 30% Taxes as TDS.

    In Approach 2: Advantages

    1: First an foremost, You still have 40L still in your kitty
    2: Always a free bird and flexible to change home anytime you want
    3: No Liabilities of any kind except the rent that is thrown away (You may also relate it to the interest portion of your HM EMI that you give it to bank, which comes out to be the same as your monthly rent. This is also equivalent of throwing your money)
    4. You are living on rent virtually for free as the rent is being paid from Bank's interest.
    5. Above all, no tensions, always relaxed, can enjoy life as you have backup of your kitty in bank.



    In Approach 2: Disadvantages

    1: Landlord hassles (which i believe can be taken care because you still are flexible to change it nearby your current location. Not that difficult to find)
    2: Setup of schools for your kids (this is the only worrisome part but can be taken care by renting a similar house in nearby location in 1-2 months time.

    So the choice is yours, a worrisome life by being a so called virtual Home Owner (the home is still not yours for next 20 yrs) or live a relaxed and flexible life with all options open and a back up of your savings still in your bank. (Remember, these savings will keep increasing as you don't have any loans of any kind.)

    Let me know your views on this now.
    CommentQuote
  • So what will be your worth after 20 years in both cases?

    A1: you own a house worth 1.2Cr

    A2: Interest on 40L + monthly saving you are doing by not paying EMI(although that is lesser as you spend more) + interest on Saving - Rent paid

    Am I correct Mr. Sanjeev
    Put that info too...
    CommentQuote
  • Let us see if we can fill up the blanks ...

    Originally Posted by frugality
    So what will be your worth after 20 years in both cases?

    A1: you own a house worth 1.2Cr

    A2: Interest on 40L + monthly saving you are doing by not paying EMI(although that is lesser as you spend more) + interest on Saving - Rent paid

    Am I correct Mr. Sanjeev
    Put that info too...



    Frugality and Sanjeev,

    Nice comparison. But I have slightly different amounts ...

    First, I think that price appreciation will be more than 100% in 20 years (thats too long a period). Lets say it is 10 years. Therefore, in 20 years, price could very well be 2.4 Crores (60L *2 *2). Again much of this appreciation is only the value of rupee going down and is therefore relativity in action, can not really be called inflation-adjusted price appreciation!

    There is more ...

    Assuming that your will compensate for the rent you pay in case you don't own the house, let us say that these 2 are matched so, no surplus either way in this regard.

    Then, assuming that your 40L in hand grows at a net of 10% per annum (not an unreasonable factor), the compound result in 20 years is a figure of around Rs.2.70 crores (as compared to the house value of Rs.2.40 crores).

    The only thing is this. House price appreciation over the last few years was an aberration and excessive. People seem to think that this growth rate will continue forever (20% per annum for ever which will mean that this 60L house in 20 years will be 15.35 Crores!!!).

    There is one other thing. Sometime in this 20 years (maybe more than once), there will be a golden opportunity when house prices will actually decline, thereby giving a wonderful opportunity to buy at an ultra-low cost as well as have some money in savings left over!!!

    Having cash in hand will enable you to take advantage of this and "have you cake and eat it too"! I believe this opportunity may be around the corner in the next couple of years.

    But then again, there may also be an opportunity over the next 20 years that there will be a runaway boom and the house you boght for 60L may go up to 5 Crores!!!

    Who knows?

    cheers"! I believe this opportunity may be around the corner in the next couple of years.

    But then again, there may also be an opportunity over the next 20 years that there will be a runaway boom and the house you boght for 60L may go up to 5 Crores!!!

    Who knows?

    cheers
    CommentQuote
  • Good Wiseman good ...
    :)


    for best case...
    For house to be worth 5 corores each and every house around there has to be worth 5cr. And new ones to be 6 cr as this being a old place in 20 yr .... so the new posh area flat being 7cr
    like Peth area and Kalyani Ngr. today

    and similarly for worst case...

    Who knows what will happen in 20 yrs. your home will become office and so you can even live and work 500 km from pune ?
    Then what about the property prices.
    Probably some area around Mahableshwar or remote villages in Suttarwadi be the prime destination where you live in Villa coloney?

    I am saying 20 yrs because you are locking yourself by buying your house for that period.

    One who hasn't bought it is free to invest at right places at right time.

    All CNBC ads. says Timing is everything.
    Why I took this future picture is because that's bound to happen. Fossil fuels issue.

    So many things changed.
    In year 1989 ... you heard of internet?
    Today even villages are getting connected.
    1989 you or me had or even used a cell?
    Today who doesn't carry a cell?

    2029 builders will ask you to live in submarine equivalent living rooms.(The rooms in submarine 6 x 3.5 :) )
    CommentQuote
  • 20 Years & A Generation

    Nice thoughts wiseman, frugality & sanjeev.

    20 years is a long period, almost a generation. So, I can't say what it (Pune RE) would be at that time. Maybe as said by some, house will cost INR 1.2Cr,2.4Cr or whatever but what needs to be seen is whether there will be indeed demand for houses in Pune like today at that time. If better green pastures are available elsewhere, why would one come to Pune? What was Pune when I was in primary school 15-17 years ago? It is smaller than even current tier3 cities like Indore. The sudden boom came only due to IT & IT alone. Else why would one pay 2.5k/sq ft for areas like Wakad where the land used to cost INR 20k/acre in late 80s,early 90s?

    There may be even negative population growth (due to awareness about population explosion in current generation &/or due to Govt. policies similar to that of China's) like that seen in Russia & Japan which means that the demand will automatically go down & resales would become more difficult. What's more, if other cities like Nashik, Nagpur become stronger & create better opportunities, it will take the sheen off Pune RE to some extent. The PMC may again be divided soon & new corporation may be formed to manage bigger metropolis:).
    Eg. Look at Lavasa City. Some others like these too may prop up & people would prefer small-large scale townships with good infra or maybe Pune will have worldclass infra by that time too:).

    As rightly said above, due to video conferencing etc., the time spend in office may get reduced & work can be done even in cars for that matter.
    Some flying cars may come up (helicopter + car) which will make distance least priority while buying house. Children may not go to school but learn from home & exams conducted online, so no worry about school's distance either. You can admit your kid in some school at Tokyo & s/he studies from Pune.

    My bottomline is this (atleast for myself):-

    Will I be alive after 20 years? If there is no guarantee about that, I would go with what the short-medium indicators are rather than calculating the interest gained on FD or EMIs paid to the bank. But one thing is for sure, at this time, it is better to get your money parked in banks rather than invest in RE as the money value will only go up but the same cannot be guaranteed for RE as it may fall by 80% after 10-20 years, who knows!!
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  • Affordable housing sector faces threat of inventory pile-up

    A very good article along with a video which discusses current RE scenario including Pune as well. Note that it has been mentioned here too that Pune has max. no. of unsold flats in entire country.

    http://www.indianrealestateforum.com/newreply.php?do=newreply&noquote=1&p=39934
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