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Builders & Real Estate Bulls Theory Proved Wrong

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Builders & Real Estate Bulls Theory Proved Wrong

Last updated: November 1 2016
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  • Re : Builders & Real Estate Bulls Theory Proved Wrong

    Originally posted by wiseman View Post
    You are factually correct. But unnatural things are happening today.

    First of all the RE bubble is being kept intact and even being blown bigger due to the immense bailouts and stimuli all over the world. India has its own version. If you remove the bailouts, you would have found instant recession, deep job losses and inevitably home prices wold have come down rather sharply. Many builders would have gone broke and things would have gone ugly.

    But this very bailout will make things worse in future since one day confidence of lenders would end and when borrowing is no longer possible (or too expensive), the crash will come with added intensity.

    Simply means that many people (who could have otherwise avoided pain by not being able to buy a home at the wrong time) would now not only have bought at very high prices with large debts but also have paid several years of very high interest (and very low principal payback in the initial years).

    When your equity in the home is 20% and pricex cme down 25% and you lose your income or ability to pay, you lose everything.

    And many people save 10, 15, 20 years to pay up the down payment. And they gamble with losing all of it Just because it has not come by so far does not mean it will not eventually.

    People must never forget that Real Estate is the largest Govt-sponsored g,ambling / ponzi game in the world. If the Govt did not configure laws to allow such massive borrowing by private individuals with no other independent collateral (you can't say the home is the collateral since its being borrowed against) and provide tax sops and create a belief that homes are actually worth what they are and will never go down, this kind of bubble would never have been blown. Why is Govt not giving tax sops to buy stocks on borrowed funds (after all its productive investments, right?). Its rigging and all rigged games ultimately blow up because too many people enter it at unsustainable levels and it collapses under its own weight.

    If the same rigging (buyer financial support) was done in stocks or bullion (low interest loans and tax breaks for interest payment), imagine where stock prices and gold prices would be by now!

    cheers
    +1. Very good post wisey, agree completely.
    If you are happy, you are successful.

    Comment


    • Re : Builders & Real Estate Bulls Theory Proved Wrong

      Originally posted by stoxxx View Post
      How does one know as a matter of certainty that RE buyers are over leveraging. What if they miss the boat again and again with runaway inflation which is what have happened continuously over last decade.
      When majority of buyers are taking loan for 10+ yrs with 60% or more take home salary going in servicing home loan EMIs with negligible savings, it means over-leverage. I have myself seen people who could not even afford to buy a sofa or do the bedroom (1.5L) after they bought the house. Isn't this a classic case of over-leverage. I have even seen a person who kept his TV on a stool in his new flat!! Just tell me how many people can pay their EMIs for 6 months if they are jobless?? This tells you the real story.

      I dont support high prices or RE bulls or builders. But life is short. One may not want to wait forever and cause oneself heartburn thinking 'if only I had bought then'. Going by some boarder's history they have been calling RE crash since 2004 and since then prices have only gone up multiple times. These are facts. Even a broken clock is correct twice a day.
      Read page 1 of this thread.
      If you are happy, you are successful.

      Comment


      • Re : Builders & Real Estate Bulls Theory Proved Wrong

        Originally posted by stoxxx View Post
        You are missing the capital appreciation on RE. No one invests in RE for rental income alone - not only in India but in many other countries.

        A stock may not give dividend but if it appreciates then you are happy aren't you.

        Also RE is the only investment where you can get the gearing. if you had 1 million dollars you could invest that in MF / Stocks. But with the same 1 million dollars you could buy a house worth 4 million. If it is a very long term purchase you are bound to come out good - except if bought at unaffordable gearing or to flip it in a couple of years.

        Also a major crash in housing most likely would lead to a crash in stock market in India where the GDP growth is based on real estate boom and domestic consumption.
        One should not compare stocks with RE for the simple reason that you have diversified portfolio in stocks unlike RE. Also, you can take short term + long term calls in stocks, in RE, who knows what the situation maybe when you get the possession, if at all you get one in time.

        To translate RE into reality, you require 3+ yrs, stocks you can buy in secs. There is also the option of stop loss in stocks, nothing in RE.

        Last but not the least, the stock market has zoomed in past 6 months, while RE cos shares have fallen by 50+%....tells you the real story.
        If you are happy, you are successful.

        Comment


        • Re : Builders & Real Estate Bulls Theory Proved Wrong

          Originally posted by wiseman View Post
          Folks,

          All you well-informed people, what do you make of the articles I read in the EcoTimes today about Govt wanting to register every RE transaction centrally and track them for identifying Black Money involvement?

          Real. Whats the scope of this? Will it work?

          cheers
          Yes this will work & is very useful as:-

          > It will stop the unethical & illegal things like selling of same house/land to multiple people,

          > The no. of houses a particular person holds across the country will be seen & then compared with his income tax,

          > Benaami transactions will become difficult,

          > People who earn more than their known income sources could be found easily as RE is the best place for them to park their money in.

          This is also being done to secure the country as lots of property was acquired by Russian mob & KGB (now FSB) in Goa (now foreigner can't buy property in Goa), money of ISI being pumped in Mumbai market through people like Dawood & politicos like Abu Azmi.

          All in all, this is good for buyers, good builders & safety of the country.

          Btw, here is one link for the same:-

          http://economictimes.indiatimes.com/...ow/7940182.cms
          Last edited by realacres; April 12 2011, 02:37 AM.
          If you are happy, you are successful.

          Comment


          • Re : Builders & Real Estate Bulls Theory Proved Wrong

            Originally posted by Venkytalks View Post
            In this situation, PRICES CAN NEVER EVER DROP.
            THEY HAVE TREMENDOUS HOLDING POWER.
            In 2009 recession, prices had dropped around 30-40% from 3rdQ of 2008 till 3rd Q-2009. And even in past similar kind of correction has happened.
            Irate customers start filing cases against real estate developers - Corporate News - livemint.com
            Real estate companies face ire as homebuyers band together - Corporate News - livemint.com

            As far as rich peoples are concerned, they are not fool at least in terms of investing else they would be middle class like us.
            Wealthy Indians Look to Purchase Overseas Property
            Still searching for 20 year old unused investor apartment.

            The demographic BS is a typical story given by investment banks to fool investors. The fact is that the slum population went up in all cities but the prospective Chimpanzees never turned to purchase real estate. May be they are much more intelligent than speculators. They are only interested in free houses, once rehabilitation project happens they will get it free.
            NOTE: Mumbai slum population went up 60% , Pune-35%.

            Theory is good but wrong application. RE is a cyclical business. All cyclical businesses go through boom & burst & current cycle is a correction cycle.

            Comment


            • Re : Builders & Real Estate Bulls Theory Proved Wrong

              Indian Speculative property purchases in Mumbai are over

              Mr Nair said: "The past six months have seen the return of negotiability in asking prices, and saw the return from a sellers' to a buyers' market. Both registration data and home loan disbursals are indicating a distinct slowdown. The number of apartments being sold in the first quarter of 2011 is considerably lower than in the corresponding period of 2010. Developers who were selling their entire projects in a few weeks are now taking months to sell their unsold stock.”
              Investors expecting a further property price correction in Mumbai

              Overseas Property News | Indian Speculative property purchases in Mumbai are over | HomesGoFast.com

              Comment


              • Re : Builders & Real Estate Bulls Theory Proved Wrong

                Khabrilal

                All such reports have been published since 2004 with no / minimal actual impact on RE prices. That is where main street media and so called analysts go wrong.

                You can be frustrated, get angry but market is a big force that no one can accurately predict - certainly not main street media.
                When the facts change, I change my mind. What do you do, sir? - John Maynard Keynes

                Comment


                • Re : Builders & Real Estate Bulls Theory Proved Wrong

                  Originally posted by khbarilal View Post
                  Mr Nair said: "The past six months have seen the return of negotiability in asking prices, and saw the return from a sellers' to a buyers' market. Both registration data and home loan disbursals are indicating a distinct slowdown. The number of apartments being sold in the first quarter of 2011 is considerably lower than in the corresponding period of 2010. Developers who were selling their entire projects in a few weeks are now taking months to sell their unsold stock.”
                  Investors expecting a further property price correction in Mumbai

                  Overseas Property News | Indian Speculative property purchases in Mumbai are over | HomesGoFast.com

                  Dear NewsMan....
                  like superman, spiderman and latest Ironman....

                  very interesting analysis and seems you have put a lot time in searching news and all....thanks for that pretty gud....

                  but as news says...can you atleast mention 1 project in pune for the god shake which has reduced rate? let say from 3500/psqft to 3400/psqft!!!!

                  I too hoping for prices to reduce...but it seems, the people in my office are right and prices are never going to drop!!! and only bound to increase.....

                  Comment


                  • Re : Builders & Real Estate Bulls Theory Proved Wrong

                    Originally posted by rajtjrll View Post
                    Dear NewsMan....

                    but as news says...can you atleast mention 1 project in pune for the god shake which has reduced rate? let say from 3500/psqft to 3400/psqft!!!!
                    Bas aise project kaa pata chalte hee aapko khabar kar denge (Jaya to Mausi ... from Sholay)

                    Comment


                    • Re : Builders & Real Estate Bulls Theory Proved Wrong

                      Originally posted by rajtjrll View Post
                      Dear NewsMan....
                      like superman, spiderman and latest Ironman....

                      very interesting analysis and seems you have put a lot time in searching news and all....thanks for that pretty gud....

                      but as news says...can you atleast mention 1 project in pune for the god shake which has reduced rate? let say from 3500/psqft to 3400/psqft!!!!

                      I too hoping for prices to reduce...but it seems, the people in my office are right and prices are never going to drop!!! and only bound to increase.....
                      They are not selling parleG biscuits where they would advertise on television that we have reduced rates, with less number of sales they are under pressure.

                      Select a property that you love, show interest to the builder and negotiate.

                      The last recession was when builders were short on funds and also people were losing Jobs, thats when you would see a drastic fall in prices like 2009.

                      Comment

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