Hereby I will prove how the realty boomers arguments are false.

What are the boomers arguments?

1.) Buy today, houses always increase in value in the long run.
WRONG. House prices cannot increase more than incomes in the long run. This is obvious if you think about it. If house prices go up more than people can afford to pay, buying stops, like it has stopped now.
Even Warren Buffett have pointed out that houses don't increase in intrinsic value. Unless there's a bubble or a crash, house prices simply reflect current salaries and interest rates. If a house is 100 years old, it's value in sheltering you is exactly the same as it was 100 years ago. Then came the maintenance as the house didn't renovate itself. It also has taxes, and insurance - costs that always increase and never go away. The price of the house went up about as much as salaries went up.
To put this is simple perspective, vegetable were costing Rs.5-6/kg when 5 digit salary was a rarity.
Today, the prices have gone up by about 4 times but so have the salaries. So, sounds very much like the reasoning people use now when they talk about how much their father's house appreciated "in the long run" without considering that salaries rose a proportional amount.

2.) Renting is just wastage of money.
WRONG. As said before renting is now much cheaper per month than owning. If you don't rent, you either:

* Have a mortgage, in which case you are throwing away money on interest, tax, insurance, maintenance, costs that increase forever.
* Own outright, in which case you are throwing away the extra income you could get by converting your house to cash, investing in bonds, and renting a similar place to live for much less money. This extra income is sufficient for emergency expenses,retirement etc.

Either way, owners lose much more money every month than renters and that's assuming prices don't correct to very high level & everything is smooth in the economy.

3.) As a renter, you won't have any money left as you will spend them on vacations,cars & hence won't have equity/savings etc.
WRONG. Equity is just money. Renters are actually in a better position to build equity/savings through investing in anything but housing. Renters can get rich much faster than owners, just by investing in conservative stocks & bonds.

* Owners are losing every month by paying much more for interest than they would pay for rent. The tax deduction does not come close to making owing competitive with renting.
* Owners must pay taxes simply to own a house. That is not true of stocks, bonds, or any other asset that can build equity/savings. Only houses are such a guaranteed drain on cash.
* Owners must insure a house, but not most other investments.
* Owners must pay to repair a house, but not a stock or a bond.
* Owners lose their money as house prices reduce. The EMI's remain constant in spite of reduction in rates. At the end of loan tenure, they would have paid almost twice than that of current renters who will buy at logical rates. Keep interest rates in mind. Most of the EMI is not principal amount but interest.

4.) There are great tax advantages to owning a house.
WRONG. Many people believe you can just reduce your income tax by the amount you pay in interest, but they are wrong. Buyers may not deduct interest from income tax; they deduct interest from taxable income. And even then, the tax advantage is not significant compared to the large monthly loss from owning.

If you don't own a house but want to live in one, your choice is to rent a house or rent money to buy a house. To rent money is to take out a loan. A mortgage is a money-rental agreement. House renters take no risk at all, but money-renting owners take on the huge risk of falling house prices, as well as all the costs of repairs, insurance, property taxes, etc.

5.) RE is based on local factors, it's not a national phenomenon. RE of Delhi-NCR,Bangalore & rest of the cities has nothing to do with Pune RE.
WRONG. Lending rates remain the same throughout the country. ALL loans are harder to get. This will drive prices down everywhere.

6.) A rental house provides good income. So, you can rent if you have purchased as investment.
WRONG. Rental houses provide very poor income in hyped areas and certainly cannot cover mortgage payments. Remember there is almost 300% difference between EMIs & rent for the same house.

It's pointless to do the work of being a landlord if you can make more money with no risk, no work, and no state income tax by investing in assured good returns bond.

7.) If owning is a loss in monthly cash flow, but appreciation will make up for it.
WRONG. Appreciation is negative. Prices are going down. It only adds to the injury of already high EMI's.

8.) As soon as prices drop a little, the number of buyers on the sidelines willing to jump back in increases.
WRONG. There are very few buyers left, and those who do want to buy will be limited by increasing difficulty of borrowing now that many house owners are near bankrupt as they don't save anything at the end of the month due to high EMI's.
No one has to buy, but there will be more and more people who have no choice but to sell as their payments rise. That will keep driving prices downward for a long time.

9.) House prices never fall atleast in Pune.
WRONG. If you see the RE scenario of 1996, prices crashed by 50% & took a whole 7+ years to recover.
Exact 1996 scenario may not be there today but strong correction is inevitable across the city.

10.) House prices don't fall to zero like stock prices, so it's safer to invest in real estate.
WRONG. House prices won't be zero, but the equity or the principal amount you paid can be zero or even negative. What you will pay as EMIs later in actual terms is not for the principal amount but only the interest as house prices dip. So, you will be only serving the bank.

11.) Prices will soften gradually, won't crash immediately.
WRONG. Prices are falling off a cliff. No one knows exactly what will happen, but it looks like prices will continue to fall for long time. These are just more manipulation of buyer emotions, to get them to buy even while prices are falling.

12.) The bubble prices were driven by supply and demand alone.
WRONG. Prices were driven by low interest rates and risky loans & good returns for investors in initial phases of boom in 2004-05.
Prices went up, interest rates went up & buyers savings went down. So prices are violating the most basic assumptions about supply and demand.

13.) There is lack of land.
WRONG. Ample of land is available & continue to be even in future in Pune. Sales volume are down. Even in Japan (small country with less land), prices went down. Current prices here are the same as that of 23 years ago. If we really had a housing shortage, there would not be so many vacant rentals.

14.) If you don't own, you'll live in a cheap neighborhood later.
WRONG. For the any given monthly payment, you can rent a much better house than you can buy. Renters live better, not worse. There are downsides to renting, such as being told to move at the end of your lease, or having your rent raised, but since there are thousands of vacant rentals, you can take your pick and be quite happy renting during the crash. There are similar but worse problems for owners anyway, such as being fired and losing your house, or having your interest rate and property taxes adjust upward. Remember, property taxes are forever.

15.) There's always someone predicting a real estate crash.
TRUE, yet irrelevant. There are very real crashes every decade or so. Even a broken clock is right twice a day.

16.) Local incomes justify the high prices.
WRONG. The mortgage should be more than your 3 years earning. It is much higher today. Most are already in danger/red zone.

17.) You have to live somewhere.
CORRECT. But that doesn't mean you should waste your life savings on a bad investment. You can live in a better house for much less money by renting during the down slide in RE.

18.) It's not a house, it's a home.
WRONG. Wherever one lives in it is home, be it apartment, condo, bungalow , mansion or house. Calling a house a "home" is a manipulation of your emotions for profit.

19.) If you don't buy now, you'll never get another chance.
WRONG. History proves otherwise.
Here's a beautiful quote from a analyst:-
"The real issue isn't whether you will be stuck being a renter all your life, she says. Its whether you'll get so scared about being shut out that you'll buy at the market's peak and be stuck in a property you can't afford or sell."

20.) It would take major economic recession or a major earthquake that wipes out this area in order for the price to fall by over 50%.
WRONG. Even today, if the prices fall by 50%, there will still be very few people who can buy at this levels due to uncertainty in jobs & most importantly high EMIs. Also, look at the rental rates for equivalent houses. Which loss per month is larger? EMI or rent?

contd....
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  • Originally Posted by Venkytalks
    If you look at RE market in last 3 years, it has been following the textbook pattern of a 7-8 year cycle.

    2007 flat prices peaked (previous cycle). Assume imaginary index for RE(IMex)=100

    2008 prices crashed IMex =80 (Bears scream crash crash)

    2009 RE firms got into debt trouble and there were distress sale of plots (Vatika plots GGN) and flats (Unitech Uniworld gardens 2 GGN). Many affordable flats were released. Imex = 70. (Bears keep screaming crash crash although crash is already over)

    2010 Prices stabilised and went back to peak 2008 levels. IMex=100
    (Bears scream crash crash - since prices are rising, they say crash is imminent)

    2011 Prices stabilised, fresh inventory being continuously sold. Imex = 130
    (Bears scream crash crash - just more imminent)
    If we have a normal cycle, then we can expect:

    2011: stable prices for rest of the year, rates reach peak of BAse rate 10%. IMex=130 (Bears scream crash crash continuously, always around the corner)

    2012: Decline in sales, end of industrial cycle upmove, poor economic performance. Lowering of rates by end of 2012, Bank base rates 8%. IMex= 100(Bears scream crash crash and say - I told you so!!!!)

    2013: Delivery of inventory initial pipeline coincides with lower rates, good resale with loan possibility, industrial cycle starts upmove. Base rate 7%, IMEX= 140. (Bears scream crash crash - prices are not sustainable)

    2014: Good stock market performance, good economic performance and good RE price upmove coincides (for residential and commercial and real estate RE). Nifty 10,000, IMEx 250, Base Rate 6%. (Bears scream crash crash - more imminent)

    2015: Massive performance by nifty and real estate. Nifty 14000, IMEx 400, Base Rate 6% (Bears scream crash crash - but many people start to doubt the bears - they have cried wolf for 7 long years. By end of 2015 everyone decides it is stupid to stay out of RE market, because it keeps rising - so they all go and buy. Bears scream crash crash but no-one listened because they have been screaming this always)

    2016: Continued delivery of flats results in massive oversupply, Real estate crashes. Massive inflation causes Rates jacked up to Base rate 12%. Currency crashes. Nifty Crashes to 9000 levels from 15000. IMEX crashes to 250 levels from 500. (Bears scream crash crash - I told you so!!!!!! - but poor suckers lose all their money, having timed their entry all wrong - they swear off real estate and stocks for ever

    2017: Indistrial and RE cycle starts all over again.

    Thats how things happen over and over again. Always has and always will.

    Guy buying Nifty 5000 and exiting at 15000 makes massive profits. Guy buying at Nifty 6000 and remaining invested makes 50% in 2016 when markets crash to 9000 levels.

    Guy buying IMEX 70 and exiting IMEX 500 makes massive profits. Guy buying IMEX 100 and remaining invested, makes 150% when IMEX crashes to 250 levels.

    That is the way of this world. Those who understand cycles time entry and exit properly.

    Kharibal, as I said before, Delhi has massive vacant flats of ` 20,000 flats in Dwarka and Sohna Road Gurgaon. These are hoarded flats. VAsant Kunj is vacant because there is no water - not by choice.



    what you are doing VENKY is to explain price rise .....
    it is just that this thing increased from INR 2 TO INR 4...TO INR 6....TO INR 8...
    and these are the reasons ..............


    but in reality.......your 7-8 years cycle theory hold good only when there has been no tweaking in the cycle parameters but there has been continuous tweaking in the cycle parameters which is still going on...and because of this tweaking cycle is getting prolonged........
    you will also see this in due course......

    :bab (6):
    CommentQuote
  • The foolishness of crowds

    IF YOU see a crowd outside a department store it is reasonable to assume that there is a sale. If you see a queue outside a bank there is a good chance that nervous depositors are trying to withdraw funds. In both cases the actions of other people send a signal that may be useful for others to follow


    But does the wisdom of crowds apply to investment? At the peaks it certainly pays to head in the opposite direction from the masses. Bubbles occur when the population develops an enthusiasm for a particular asset class, whether it be technology stocks in the late 1990s or houses in the mid-2000s. The story goes that in 1929 Joseph Kennedy liquidated his portfolio when he heard that a hine boy (in some versions, an elevator boy) was giving stock tips.


    Bubbles are relatively rare, however. In the normal course of events, following the crowd may be more profitable. After all, bond-market vigilantes are supposed to keep a wary eye out for inflation, while the stockmarket ought to give an early indication of coming recessions.
    To investigate the investment success of crowds, The Economist asked Morningstar, an investment-research firm, to send us fund-flow data and performance statistics for its American mutual-fund range. We then applied some simple tests. Did investors plonk their money into an asset class that had been performing strongly over the previous 12 months? And was their judgment borne out over the subsequent 12 months?
    The chart shows that the crowd was more foolish than wise. The most popular sector, measured by the net inflow of money, had generally performed well in the previous year, beating the average sector by more than two percentage points. Investors were clearly chasing the trend. Alas, over the next 12 months that most popular sector lagged behind the average by just under three percentage points. On around 60% of occasions, the return of the most popular sector was much lower after investors bought it than before.
    The mob’s behaviour might still be useful if it acted as a contrarian indicator. Here there is good news and bad news. So-called “pariah funds” did beat the most popular sectors, but they also failed to beat the average.
    There is another test of how psychic investors have been, which is to see how good they were at picking the best-performing sectors and avoiding the worst ones over any given 12-month period. Because the star performers tend to be fairly speed, covering areas like China, property or Latin America, they are never likely to receive the biggest fund flows. Most American investors opt for broad equity or government-bond portfolios. Again, investors were more Nostradumbus than Nostradamus. The average fund flow into what turned out to be the worst-performing sector over the subsequent 12-month period was $166m; the average flow into the best was only $72m.
    Perhaps investors get led astray by the advice they receive. The earnings forecasts compiled by investment-bank analysts and stockbrokers are often used as a basis for valuing shares and for predicting long-term earnings. But in the past quarter of a century the consensus forecast for the long-term annual earnings growth of American companies has never dipped significantly below 10%.
    Such a rate was not achieved, of course. It was far faster than the annual growth rate of the American economy, which made the forecasts implausible to begin with. The long-term growth rate of earnings per share on the stockmarket has lagged behind that of American GDP because many of the fastest-growing companies are not quoted. Worse, earnings forecasts peaked in 2000 just as the stockmarket was about to fall. The experts were no wiser than those they advised.
    The wisdom of crowds only really applies when forecasts are genuinely independent, as when farmers are guessing the weight of a bull at a country fair. Once you know what others are thinking, their views lead you into error.
    Perhaps people are congenitally programmed to follow the herd. Warren Buffett retells the story of the dead oil prospector who gets stopped at the pearly gates and is told by St Peter that Heaven’s allocation of miners is full up. The speculator leans through the gates and yells “Hey, boys! Oil discovered in Hell.” A stampede of men with picks and shovels duly streams out of Heaven and an impressed St Peter waves the speculator through. “No thanks,” says the sage. “I’m going to check out that Hell rumour. Maybe there is some truth in it after all.”
    CommentQuote
  • Originally Posted by vatsalbajpai
    what you are doing VENKY is to explain price rise .....
    it is just that this thing increased from INR 2 TO INR 4...TO INR 6....TO INR 8...
    and these are the reasons ..............


    but in reality.......your 7-8 years cycle theory hold good only when there has been no tweaking in the cycle parameters but there has been continuous tweaking in the cycle parameters which is still going on...and because of this tweaking cycle is getting prolonged........
    you will also see this in due course......

    :bab (6):



    adding to your points .....

    I just Google for "can down the road" see the results for yourself.....


    (by the way Can word is not equal to BEAR/Depression/Recession/Debt even then all US and Europe Debt etc results ....)

    can down the road - Google Search

    Now if the top results point to US Obama's steps and Europe's ....
    You need to wonder ... the Indian growth theory holding ?

    ya of course Domestic demand ....
    So the most frugal savers are now spending the most .....

    A big reason to worry ......

    As all spendthrift nations are already extinguished with their savings ...
    CommentQuote
  • Originally Posted by frugality
    whatever you said holds good in a normal economic cycle.......
    Whatever name you call it

      Super Cycle
      Peak oil production behind
      Debt cycle of Developed countries
      Nature at tipping point
      New world order

      Some call it rubbish ... some add this in their possibilities....
      These all aspects are never before in our living history.

      Things ARE/going to be different this time .......
      So usual charts, stats will not hold good ......

      And you know who is walking on the Plastic(debt) money Minefield?
      the path earlier taken by US ?

      There are too many variables now......:o
      Right frugality.
      It doesn't hit me when Venky claims that RE has recovered and prices going up.
      When some listed RE-stocks like Ackruti, DLF has fallen by 80% and I am not even talking about companies involved in 2G scam :)
      Right frugality.
      It doesn't hit me when Venky claims that RE has recovered and prices going up.
      When some listed RE-stocks like Ackruti, DLF has fallen by 80% and I am not even talking about companies involved in 2G scam :)
      Right frugality.
      It doesn't hit me when Venky claims that RE has recovered and prices going up.
      When some listed RE-stocks like Ackruti, DLF has fallen by 80% and I am not even talking about companies involved in 2G scam :)
      Right frugality.
      It doesn't hit me when Venky claims that RE has recovered and prices going up.
      When some listed RE-stocks like Ackruti, DLF has fallen by 80% and I am not even talking about companies involved in 2G scam :)
      Right frugality.
      It doesn't hit me when Venky claims that RE has recovered and prices going up.
      When some listed RE-stocks like Ackruti, DLF has fallen by 80% and I am not even talking about companies involved in 2G scam :)
      Right frugality.
      It doesn't hit me when Venky claims that RE has recovered and prices going up.
      When some listed RE-stocks like Ackruti, DLF has fallen by 80% and I am not even talking about companies involved in 2G scam :)
      Right frugality.
      It doesn't hit me when Venky claims that RE has recovered and prices going up.
      When some listed RE-stocks like Ackruti, DLF has fallen by 80% and I am not even talking about companies involved in 2G scam :)
      Right frugality.
      It doesn't hit me when Venky claims that RE has recovered and prices going up.
      When some listed RE-stocks like Ackruti, DLF has fallen by 80% and I am not even talking about companies involved in 2G scam :)
      Right frugality.
      It doesn't hit me when Venky claims that RE has recovered and prices going up.
      When some listed RE-stocks like Ackruti, DLF has fallen by 80% and I am not even talking about companies involved in 2G scam :)
      Right frugality.
      It doesn't hit me when Venky claims that RE has recovered and prices going up.
      When some listed RE-stocks like Ackruti, DLF has fallen by 80% and I am not even talking about companies involved in 2G scam :)
    CommentQuote
  • Long term slump ahead......

    As mentioned previously, as prices are not correcting meaningfully, long term slump ahead. It may not be a complete slowdown but slow correction & lower volumes, for next 2 years.


    India's real estate stocks have attractive valuations after plunging 83% from their peak and are likely to rebound within two years, according to Macquarie Group.


    http://economictimes.indiatimes.com/markets/stocks/stocks-in-news/realty-stocks-will-rebound-in-two-years-macquarie/articleshow/8104674.cms


    “This clearly shows the inefficiency in the market, that at higher prices there are no buyers,” Kapoor said in an interview yesterday. “Either prices need to correct or the situation could get worse.” Mumbai’s residential property market will stagnate over the next couple of years until prices decline to match affordability and income levels rise, he said.



    http://www.bloomberg.com/news/2011-04-27/mumbai-s-home-sales-drop-to-two-year-low-as-unsold-units-climb-to-a-record.html
    CommentQuote
  • If you can afford it (not taking a huge loan).. and you are buying for your own use.. maybe it is okay and no reason to time the market...

    If you are an investor stay away..

    Be patient.. If you are buying a under construction if the market continues to be a slack.. your project might get delayed for some time.. so tread carefully..

    Cheers

    Originally Posted by kumars_99
    Hello,
    I too think there will not be any sudden drop in prices , at least in pune, but prices are now moving towards stagnation.

    From last few months prices are not moving up , like they did in 2010.
    Can anybody please tell me , is it right time to buy property in Pune ?
    Or shall I wait for correction??

    Thanks.
    CommentQuote
  • CommentQuote
  • (My post from another forum)

    Shayna

    You are the first person I have come across who is riding the gold wave, despite the firm conviction that after this fiat currency bubble deflates, gold will go firmly out of favour.

    I have been a firm believer in this - that this gold upmove will probably last a few more years until economies stabilise and the income/productivity inequalities between big emerging markets and developed markets equalise. Once the global imbalances decrease to insignificance and global economies stabilise, gold will end its run, drop like a rock and will never again be an investors target for the remainder of the century (or until they find a use for it other than jewelery)

    I think gold will collapse after one big inflation event of mammoth global proportions, when gold prices will go to ridiculous levels. Once this event, which will cause global economic disruption for a couple of years gets over, stability will come and gold will fall like a stone. Probably around 2016 is my guess-estimate.

    Skeptic Optimist is right about Indian RE being different from US RE - or generally, RE in developing markets vs. mature economies.

    US housing is in decline for the next 10-15 years, until you encourage more immigration. Same with US stock market.

    India is a structural bull market on which a cyclical pattern is super-imposed. As Skeptic says, there is going to be rapid urbanisation in India and so if you are comparing US RE to Indian RE you should compare US RE of 1945-2000 to Indian RE of 2011-2060.

    Perhaps, even better would be to compare British RE of Victorian times (1860-1914) to Indian RE of 2011-2060 for a more meaningful comparison (both high density populations, both getting rapidly educated, both urbanising rapidly)

    Sociologically and economically, India probably comes closest to Victorian England, Japan in Meiji Era, China from 1970-2011, South Korea from 1945-2011.

    Probably south korea comes closest in terms of both India and Korea being slave nations, both partitioned, both illiterate to start with.

    Korea from 1945-2011 saw per capita income in real terms go from 500 to 35000 (ball park figure)

    India will go from 500 to 35000 per capita from 2011 to 2060. If you want to see India's future in 2060, visit Seoul.

    ================================================




    PS: Are we in a normal cycle?

    Every cycle is normal and every claim that "this time its different" is typical crowd behavour.

    Should you buy in Pune?

    Probably not - everything points to a stagnation in nominal term and correction in real terms (time or actual correction) from 2011-2012.

    Which means 2012 prices will be same as 2011 prices. So why buy now?

    On the other hand - WHENEVER A 15% correction comes (whether in 2011 or 2011) - you should buy into the correction.

    Waiting for more price decline after price has already declined - that is just silly.

    It was silly in 2009 and it will be silly in 2012.
    CommentQuote
  • Originally Posted by khbarilal
    As mentioned previously, as prices are not correcting meaningfully, long term slump ahead. It may not be a complete slowdown but slow correction & lower volumes, for next 2 years.


    India's real estate stocks have attractive valuations after plunging 83% from their peak and are likely to rebound within two years, according to Macquarie Group.


    http://economictimes.indiatimes.com/markets/stocks/stocks-in-news/realty-stocks-will-rebound-in-two-years-macquarie/articleshow/8104674.cms


    “This clearly shows the inefficiency in the market, that at higher prices there are no buyers,” Kapoor said in an interview yesterday. “Either prices need to correct or the situation could get worse.” Mumbai’s residential property market will stagnate over the next couple of years until prices decline to match affordability and income levels rise, he said.



    http://www.bloomberg.com/news/2011-04-27/mumbai-s-home-sales-drop-to-two-year-low-as-unsold-units-climb-to-a-record.html


    LARGE SCALE DISTRESS OF BUILDERS-

    MCHI Property exhibition Mumbai- MMRDA Grounds- 14 to 17 April 2011
    MCHI Property online exhibition Mumbai- 14 to 30 April 2011
    MCHI Property exhibition Thane - 29 April 2011 to 2 May 2011

    See, builders are engaged in the race to sale the flats, existing inventory,existing stocks to clear..somebody said it as LARGE SCALE DISTRESS..happening due to short of finance, and declining sales volume.
    CommentQuote
  • Funding getting tougher….

    Due to crowding out effect, now funding will get much more difficult. Thanks to govt. for spending spree & giving tough competition to private sectors!!! .
    Nicely balanced budget. :bab (59):



    The government is facing a temporary cash crunch on account of tax refunds of nearly Rs 45,000 crore during April and May, prompting it to resort to short-term borrowing.:D



    Govt faces cash crunch on tax refunds - The Times of India
    CommentQuote
  • Wait for a correction......

    Real estate is under stress with two years worth of inventories in NCR and Mumbai. There could be a collapse if the stock market falls and interest rates rise.

    If you are prepared to short selectively, you may make a lot of money, as and when the market breaks. If you aren’t prepared to short, perhaps you should park spare cash in short-term deposits until such time as there’s a cooling off. Short-term deposits lose less value in a rising rate regime and at least, capital is preserved.
    This is not an imaginative or ambitious way to handle your investments but it is common-sense. Preserve your ammunition and wait for a correction. Average down when it comes.


    Wait for a correction
    CommentQuote
  • Originally Posted by khbarilal
    Due to crowding out effect, now funding will get much more difficult. Thanks to govt. for spending spree & giving tough competition to private sectors!!! .
    Nicely balanced budget. :bab (59):



    The government is facing a temporary cash crunch on account of tax refunds of nearly Rs 45,000 crore during April and May, prompting it to resort to short-term borrowing.:D



    Govt faces cash crunch on tax refunds - The Times of India



    kblal

    all this news will have a minimal impact on RE ,RE will be impacted hard only when stock market crashes to a much saner levels of 12000-13000 and india starts facing job losses ,in short when recession in india will officially start.
    even though india is in recession now also,but that is not official.....

    yesterday was having a small get together with a couple of friends ,which are all mostly from top rung MBA colleges and thus are expected to be aware about economic scenario in india ,but instead they were discussing some place located 30-40 km from jaipur ,because somebody is selling plots there at 600 INR/sq yard, coupled with payments deferred into 5 years.
    and they want it to get done without going there physically......

    this is what i call intelligent fools....as they buy potato by looking into every piece but are going to buy land just on hearsay.......because of belief that RE can only go up ...........seems to me even india is on a verge of a severe RE crash....however only time will tell.
    CommentQuote
  • Mistake in assumption...

    Originally Posted by vatsalbajpai
    kblal

    all this news will have a minimal impact on RE ,RE will be impacted hard only when stock market crashes to a much saner levels of 12000-13000 and india starts facing job losses ,in short when recession in india will officially start.
    even though india is in recession now also,but that is not official.....

    yesterday was having a small get together with a couple of friends ,which are all mostly from top rung MBA colleges and thus are expected to be aware about economic scenario in india ,but instead they were discussing some place located 30-40 km from jaipur ,because somebody is selling plots there at 600 INR/sq yard, coupled with payments deferred into 5 years.
    and they want it to get done without going there physically......

    this is what i call intelligent fools....as they buy potato by looking into every piece but are going to buy land just on hearsay.......because of belief that RE can only go up ...........seems to me even india is on a verge of a severe RE crash....however only time will tell.



    Assuming that people from top rung MBA Institutes and "thus are expected to be aware about economic scenario in india" is a big mistake.

    Largely they are of some intelligence and have been tutored in the traditional subjects like marketing, finance, production and so on. In fact economics is a subject treated at par with statistics - a bitter medicine to be quickly dealt with in the exams and forgotten.

    Besides, they mostly make good managers and their lateral thinking (or any kind of thinking) is mostly restricted to the sandbox hey work in. Mostly, even the expert economists were blindsided by the 2008 crash and the coming crash.

    In fact the most bullish time with companies projecting large growth figures happened right around early 2008 after the huge credit-fueled boom, which happened to be the mistake of multiple decades.

    A bigger mistake is just around the corner when companies are projecting even bigger growth figures. Most of them have no clue about the real drivers of growth. Political expediency which drives mal investments and excessive credit on too easy terms to borrowere who find they cannot pay when they lose their earning power. Inflation - which goes hand-in-hand with excess money in the economy - only worsens it and impoverishes you in real terms.

    cheers
    CommentQuote
  • Originally Posted by wiseman
    Assuming that people from top rung MBA Institutes and "thus are expected to be aware about economic scenario in india" is a big mistake.

    Largely they are of some intelligence and have been tutored in the traditional subjects like marketing, finance, production and so on. In fact economics is a subject treated at par with statistics - a bitter medicine to be quickly dealt with in the exams and forgotten.

    Besides, they mostly make good managers and their lateral thinking (or any kind of thinking) is mostly restricted to the sandbox hey work in. Mostly, even the expert economists were blindsided by the 2008 crash and the coming crash.

    In fact the most bullish time with companies projecting large growth figures happened right around early 2008 after the huge credit-fueled boom, which happened to be the mistake of multiple decades.

    A bigger mistake is just around the corner when companies are projecting even bigger growth figures. Most of them have no clue about the real drivers of growth. Political expediency which drives mal investments and excessive credit on too easy terms to borrowere who find they cannot pay when they lose their earning power. Inflation - which goes hand-in-hand with excess money in the economy - only worsens it and impoverishes you in real terms.

    cheers



    wiseman

    it is not a mistake if i expect them to be aware about economic reality in india, may be not as an MBA but as a qualified individual who needs to have a common sense ,some basic funda in economics, reading various newspaper and articles..........
    well i could not expect a auto driver to be aware about economic scenario in india ....if he is aware then it is a pleasant surprise...
    CommentQuote
  • Exactly ... any graduate, with a basic thirst for knowledge should be aware of money and general things around.


    Originally Posted by vatsalbajpai
    wiseman

    it is not a mistake if i expect them to be aware about economic reality in india, may be not as an MBA but as a qualified individual who needs to have a common sense ,some basic funda in economics, reading various newspaper and articles..........
    well i could not expect a auto driver to be aware about economic scenario in india ....if he is aware then it is a pleasant surprise...
    CommentQuote