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?

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  • Runwal’s plea for discharge in sale deed case rejected

    Posted: May 10, 2012 at 0205 hrs IST

    Pune Additional sessions judge V K Shewale recently rejected the revision petition filed by Amrutlal Runwal (47), managing director, Amrut-Runwal Multi Housing Private Limited seeking discharge from the allegations of forgery of 95 sale deeds of 68 acres of farmers land and using it as collateral security for Rs 450-crore loan taken from Deutsche Bank. The court also ordered the trial court to proceed with the case expeditiously on a day-to-day basis.

    Runwal told the court that on the basis of a complaint filed by Sanjay Raisoni on October 10, 2007, Shivaji Chougule was arrested. Chougule, in his statement had revealed that the documents were forged as per Runwal’s instructions. In his defence, Runwal said that the cost of 68 acres is hardly Rs 37 crore, while the loan taken was Rs 450 crore.

    Read complete news :-

    Runwal’s plea for discharge in sale deed case rejected - Express India
  • Crisis may be at Door step ???????

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    Indian banks sought to restructure $12 billion in corporate loans in the fiscal year that ended in March, up 156 percent from a year earlier, industry data showed, as slowing economic growth proved a drag on borrowers' ability to repay their debts.
    Debt restructuring through the Corporate Debt Restructuring Cell (CDR) in fiscal year 2012 was the highest since the forum was launched in 2001, according to data obtained from a CDR source. The number of CDR cases jumped to 84 during the year, compared with 49 a year earlier.

    UPDATE 1-India corp debt restructuring hits record high | Reuters
  • China factory output growth slowest in 3 years

    China's economy stuttered unexpectedly in April with lower than expected output data, softening retail sales and easing prices suggesting economic headwinds might be stiffer than thought, requiring more robust policy responses to counter them.
    Industrial output expanded at its slowest annual pace in April in nearly three years, while fixed asset investment growth dipped to its lowest in almost a decade.

    The weak growth in fixed asset investment signalled the impact of a prolonged credit crunch in China's real estate sector, and of flagging demand from export markets, was more severe than first thought. New loans in April were well below what most market observers had expected, helping to explain continued tight conditions for businesses and developers despite the gentle easing espoused by Beijing

    China factory output growth slowest in 3 years
  • Global Economy : Update ..

    MUMBAI, India — India’s March industrial output fell 3.5 percent from a year ago, the government said, worse than expected on weak manufacturing and investment

    SHANGHAI — China’s economy is slowing further, challenging hopes that it may have “bottomed out.” Data for April show sharper than expected declines in investment and industrial production.
    A look at economic developments and activity in major stock markets around the world - The Washington Post

    But Pune RE is out of the world. It will only appriciate & appriciate & ......:bab (59):
  • Another RE Exhibi

    There is exibi going to be held in coming week.
    Hell, so many exhibis with same builders & projects. :bab (3):
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    Many economists expect Eurostat to show on Tuesday that the euro zone entered its second recession in just three years at the end of March, with households suffering the effects of austerity programmes aimed at cutting debt and deficits.

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  • Negative Growth in Mumbai RE

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    Most of the prospective home buyers in Mumbai are on waiting for an anticipated price correction in the backdrop of oversupply scenario in some of the areas of the city and rising inventory level of nearly 120 million sq ft being under construction.

    'Mumbai home prices down 9.1% in the year ended March '12' - The Economic Times
  • Not much worried about Mumbai RE ... Whats up with Pune RE growth? ;)

    Originally Posted by realacres
    MUMBAI: Mumbai's residential property market has shown a negative growth of -9.1% during the year ended March 2012.

    Most of the prospective home buyers in Mumbai are on waiting for an anticipated price correction in the backdrop of oversupply scenario in some of the areas of the city and rising inventory level of nearly 120 million sq ft being under construction.

    'Mumbai home prices down 9.1% in the year ended March '12' - The Economic Times
  • Originally Posted by mangopeople
    Not much worried about Mumbai RE ... Whats up with Pune RE growth? ;)

    Trying to catch up with Mumbai ;) (its lagging by few years and hence will still see price appreciation/sutainance).
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    East Pune has the majority of the city's IT industry .......

    Private Equity Likes Real Estate Investing in Pune, India's Other Growth City - WORLD PROPERTY CHANNEL Global News Center

    East is major IT hub compared to West ? This tells us the truth about the advertisement.

    Now let's see the real return.....
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    Will Pune compete ???
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  • --cross post from other thread--

    In other news,
    Home prices crash in Ahmedabad, panic grips builders - Express India
  • Hope you read my reply in that thread ;) Anyways good attempt to spread negativity.

    Originally Posted by aditi sharma
    --cross post from other thread--

    In other news,
    Home prices crash in Ahmedabad, panic grips builders - Express India