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....
Read more
Reply
12597 Replies
Sort by :Filter by :
  • Originally Posted by StraightDriv
    I beg pardon from all of the worlds' dogs and donkeys to have compared them with greedy and foolish people in this country.

    Secondly, protecting genuine buyers is the core issue. Bechaare do wakt ki roti kaamane mein hi pis jaate hai zindagi bhar uspe ye ghar ka anaab-shanaab karz.

    Abhi ghar nahi liya toh kabhi nahi aisi galatfahmi paida karke aap log unko loot rahe hai / loot jaane pey majboor kar rahe hai.

    That too without any logical explanation as to why the rates should rocket.

    Pehle hua aaage bhi hoga!

    What non-sense!

    Jisne duniya dekhi hai, service ki hai aur business dekha hai sirf usko maloom hai ki aage ka kya haal hai..saale analyst toh roz naye naye funde pilate hai...mere dost hai... mujhe sub batate hai ki aam aadmi ko kaise ullu banaya jaata hai....aam aadmi ko loss ho ya profit per inka hamesha profit

    India ka bura haal hona tai hai.

    No ones bashing IT. India is what it is today bcoz of IT. So if there is no IT then what happens to India? This is the basic logic.
    Every one is bashing idiots who are wasting their gains (money) from IT on RE especially post 2008 even as the outsourcing nations are turning the tap off slowly. In few years IT will be less than 50% of what it is today or may be disappear to low cost countries.

    And for what? give me an area in India which justifies the psf vis-a-vis water, electricity, good roads, healthy lifestyle i.e basics of decent life.

    Bus, faltu ke sapne dikhane ke aur jab bunda aasman mein dekhen toh niche se uski chaddi nikaal deni ki! Yehi dhanda hai sab brokers aur builders ka.

    And its easy to spot broker and builder.

    Genuine buyers will get their home eventually if not now may be later but cheaper than now for damn sure!

    ;)

    Your drive is indeed straight - and on the road, but people driving in fields, footpaths and uneven ground like to laugh at you for being different - and being funny.

    Education only teaches how to calibrate the greed, it does not teach human values. Nor does it teach the sense of discrimination between good and bad, right and wrong, pleasant and painful.

    The RE scenario in India is a burgeoning example of this. Every body thinks vertically, no lateral thought. Prices were 3000 last year, 4000 this year, so obviously 5000 next year. Why ? it is a stupid question.

    RE is currently heavily over bought, and the longer this scene prevails the more disastrous the consequence will be.
    CommentQuote
  • Originally Posted by StraightDriv
    There are many restaurants in a city but these idiots will go to one restaurant only even if it means queuing for 40-50 minutes (even 1 hour) because seats are full. Yeh nahi ki koi dusra hotel dekhen.

    Quality and tasty food chahiye iska matlab yeh nahi ki aap apna samay queue mein barbaad kare! Sab chut*ye hotel ke bahar kursi per baithenge jaise koi royal lunch/dinner honewaala hai!


    That's a crap analogy.
    When choice is between quality & tasty food vs okish food, its obvious that one will choose to wait. While waiting you can still enjoy with your friends, family. You are talking as if by saving this one hour he would do some Noble prize winning research.
    CommentQuote
  • Originally Posted by tushart
    You have no right to insult genuine buyers who aspire to own a house to call them dogs or donkeys. Most of them work hard and are ready to go through hardships for their children to have a shelter on their head.

    tushart,
    they only know to work hard but DO NOT RESPECT own hard work and hard earned money. They go and fill the pockets of the builders on his false promises...
    now, what is the difference between donkey and these buyers...
    CommentQuote
  • Originally Posted by StraightDriv


    No ones bashing IT. India is what it is today bcoz of IT. So if there is no IT then what happens to India? This is the basic logic.
    Every one is bashing idiots who are wasting their gains (money) from IT on RE especially post 2008 even as the outsourcing nations are turning the tap off slowly. In few years IT will be less than 50% of what it is today or may be disappear to low cost countries.

    ;)


    I trust that you have seen more IT than other fellow members on this forum, but please ... please... in the name of IT Gods, stop posting that IT will be less than 50% of what it is today...

    Some simple readers on this forum might actually believe you... and if that happens you will cause more damage than 'dirty' bombs or the latest weapons of mass destruction....

    Please See: I hope you really go back and EDIT your post (no pun intended)
    CommentQuote
  • Originally Posted by StraightDriv
    Imagine the stupidity of people who believe this drama!

    Even if it were to be true then just think of the poor donkeys queuing up for booking a non-existent bhk .

    Indian masses (even your so called IT professionals incl.) are basically people who could be trained do to things just like dogs are trained to do things. Either by (im)proper school education, by satsang, by tv commercials, by blogs, by forums, by word of mouth each exploiting the poor psychology of Indians. India has people with extremely poor reasoning capabilities in REAL life. Give them an exam paper they will pass with flying colors thanx to ratta, but in real life?

    The only difference is that dogs will bark and bite if abused.

    But Indian janta will only growl and scratch themselves after being abused for years, arey 2012 mein possession tha abhi saale 2015 bol rahe hai....per karenge kuch nahi.

    There are many restaurants in a city but these idiots will go to one restaurant only even if it means queuing for 40-50 minutes (even 1 hour) because seats are full. Yeh nahi ki koi dusra hotel dekhen.

    Quality and tasty food chahiye iska matlab yeh nahi ki aap apna samay queue mein barbaad kare! Sab chut*ye hotel ke bahar kursi per baithenge jaise koi royal lunch/dinner honewaala hai!

    The same situation is RE. Sab site ke baaher kursi per baithen hai.

    Mere 2bhk ke aayenge, woh zaroor aayenge! Aur phir rate 4 guna ho jayega!

    Sabka haal rakhi jaisa hoga (karan-arjun wali)

    I would rather put it more as the herd mentality that we Indians have, coupled with social pressure trying to fit into the group and how almost anyone who has any extra money wants to become an investor, invest in RE (no problem with that )to book large profits in short amount of time at any cost .To give you an example my cousin brother is one of those lucky kids who does not have to worry much financially , my uncle has 2 flats in Pune,one on law college road and one in Shivaji Nagar (both taken 10-15 years back), 1 in Mumbai-Goregaon which is their primary residence,
    so my cousin completed his BE from pune I think from VIT 5 years back,when i had a talk with him that time I remember him telling me he had enough of the studies and just wanted to sit back enjoy a little, but everyone forced him to go do Masters in US or UK as according to them Study now majja karne ke liye baaki poori zindagi hain , what the hell he went to UK to do MS, 2 years back he completed his MS and has been working for some time now.But now everyone wants him to invest in RE since he has money, and he just does not get the logic behind it , he says let explore new places enjoy some vacation time every year but no that is waste of money.
    Since most of his friends are booking new flats he should also do the same and he should invest in RE , vacation he can take later again. He knows if he decides to settle in Pune he has 2 flats there but still everyone in the family wants him to invest now, so my uncle keeps on sending him links of new projects and he keeps on rejecting it.I get what he is trying to say but our social pressure is just so much we want to save so much for the future that we somewhere forget to enjoy our present, yes having a house is important but is it necessary to have 2-3 houses so that maybe sometime in the future you can enjoy it.No one is saying to go bankrupt having fun or enjoying the present, but atleast let us not be obsessed with this RE so much that we just become bitter at the end of everything
    CommentQuote
  • GET 50% DISCOUNT ON FLATS - Pune

    GET 50% DISCOUNT ON FLATS - Pune
    Seeing these kind of ads on classified, not sure is this to lure more bakras or is this the start of fall from the cliff.
    CommentQuote
  • Originally Posted by vivek.cap
    GET 50% DISCOUNT ON FLATS - Pune
    Seeing these kind of ads on classified, not sure is this to lure more bakras or is this the start of fall from the cliff.



    Did you call the guy ? I would want to know what he says. If it is ready possession, legal NA and really in Baner Pashan and not in Sus/pirungut somewhere..
    CommentQuote
  • I don't agree that Indians are different than any other people. People are people and we all have instincts to follow the herd. Immaterial of our education, race, religion and nationality.

    We all do what others are doing...whether its selection of educational course, favorite actor, favorite player, favorite food, selection of clothes, habits of smoking and drinking....most have habits that are influenced by our friends and neighbors.

    Real estate purchasing decisions are also influenced by people around you. Nothing exceptional about it. Nor it is limited to Indians. ANd its evident in all spheres of life, not just RE.

    Emotions rule people. Fear and Greed drive us. When stock market is at high, greed drives more people to it even when risk is very high. When stock market is falling, everybody runs away from it ignoring the opportunity. Very similarly, RE will continue to attract people when the risk is very high and if and when RE crashes?????
    Nobody will want it. Just don't develop cold feet then.
    CommentQuote
  • pretty much agree to you bro
    CommentQuote
  • Originally Posted by msp1976
    Did you call the guy ? I would want to know what he says. If it is ready possession, legal NA and really in Baner Pashan and not in Sus/pirungut somewhere..


    no i haven't called yet, will update if i call.
    CommentQuote
  • Originally Posted by StraightDriv
    That explains the density of the grey matter you used to understand my post!

    I agree with you it is indeed crap! Just like the crap mentality of masses who neither value time nor understand quality. And then complain about the same elsewhere.

    For those with less dense grey matter: Masses must learn to put high value on their time and money. It is not to be wasted nor plundered!

    Instead of wasting that hour (which may not reward you a Noble-but then you don't get one for Queuing up either) you may as well cook great food (or attempt to) at home for your family and friends. What is more enjoyable now? Any guess? Ever tried that? This is putting incredible value to your time and feelings.

    Hope the analogy is now clear!

    Still not? Then queue up and enjoy your food.


    There is no need to use grep matter to understand your post. You are calling others masses and yourself behaving no differently. From your initial post I get that you has sense of VFM but other than that you are suffering from mass mentality which thinks others are all fools. You cannot think beyond that people may be bored of cooking and for a change they are coming out. In this case eating out is more enjoyable, and yes I have tried cooking. And what should people do with the time they saved? Watch TV at home??

    May be your analogy is because of frustration of not getting place in your fav. restaurant on weekends. Almost everyone comment like you did in such scenario, and that's a mass mentality as well.
    CommentQuote
  • Originally Posted by iSpoke
    Buddy, what made you to go to the flashback (2006-07) when the context was about the photographs in RK's blog? Shall I argue with a situation from 2001? wait.. why not 1937?


    Because I was alive and adult in 2006-2007. I wasn't born in 1937. and what about 2001? even in 2001 real estate was costly for people. i have SEEN people FLOCKING and QUEUING to builder's office to BOOK a flat in a project whose foundation is also not dug. That's why its easy to believe the same than otherwise.

    Originally Posted by iSpoke

    Are you a lawyer? ;)
    Sorry, my loard I don't have proof even for any of the other two points I made in that post. Coz for that I've to request my collegue/friend to get an appointment with you and confirm its authenticity!


    I am not lawyer nor do I need confirmation from your colleague/friend. all I am saying is that instead of drawing conclusions or observations based on YOUR IMAGINATIONS rely on what is visible and audible. Visit any builder's office and see their rate cards, that is REAL. there are people who have bought flats or properties at unbelievably high prices. saying that "this buyer is phony" is speculation. thats all i want to say.


    Originally Posted by iSpoke

    Looks you haven't read that post from start to end, I myself quoted the same words
    Anyways, my point was to not to get afraid of the crowd we usually see on every launch party. All may not be the serious buyers, many may be their old customers present there because of the invitation and a good will.


    i am not afraid of the crowd. all i am saying is why will prices correct if there is so much interest shown by buyers. you, me and 50 other folks on forum - in fact many be 80% of people in this city find the prices obscenely and offensively high but then why will builder reduce the price if buyers are flocking at his door and rushing to book on the launch date?
    CommentQuote
  • Originally Posted by puser
    Because I was alive and adult in 2006-2007. I wasn't born in 1937. and what about 2001? even in 2001 real estate was costly for people. i have SEEN people FLOCKING and QUEUING to builder's office to BOOK a flat in a project whose foundation is also not dug. That's why its easy to believe the same than otherwise.



    I am not lawyer nor do I need confirmation from your colleague/friend. all I am saying is that instead of drawing conclusions or observations based on YOUR IMAGINATIONS rely on what is visible and audible. Visit any builder's office and see their rate cards, that is REAL. there are people who have bought flats or properties at unbelievably high prices. saying that "this buyer is phony" is speculation. thats all i want to say.




    i am not afraid of the crowd. all i am saying is why will prices correct if there is so much interest shown by buyers. you, me and 50 other folks on forum - in fact many be 80% of people in this city find the prices obscenely and offensively high but then why will builder reduce the price if buyers are flocking at his door and rushing to book on the launch date?


    This is an interesting perspective..
    CommentQuote
  • Sight, Hearing without using brain mean nothing!

    Interesting?

    Yep. He only uses 2 senses i.e seeing and hearing. He does not use brain to collect data from all the senses (incl. imagination) to come to a conclusion. Imagination is a powerful tool.

    Have you seen some photos where you cannot tell which lines are parallel and which are not?

    Or the high contrast photo of Jesus/any god? If you stare for 30 seconds and look at walls you will see a bigger image of the intended god?

    Senses can be deceived. This is the basic premise / definition of marketing. :D Very well used in India. It is very easy to fool Indians.

    Just count how many people use Fair and lovely/handsome! That will give you a huge part of idiots in our country!

    Intelligence cannot be deceived so easily.



    Originally Posted by msp1976
    This is an interesting perspective..
    CommentQuote
  • Originally Posted by StraightDriv
    Interesting?

    Yep. He only uses 2 senses i.e seeing and hearing. He does not use brain to collect data from all the senses (incl. imagination) to come to a conclusion. Imagination is a powerful tool.

    Have you seen some photos where you cannot tell which lines are parallel and which are not?

    Or the high contrast photo of Jesus/any god? If you stare for 30 seconds and look at walls you will see a bigger image of the intended god?

    Senses can be deceived. This is the basic premise / definition of marketing. :D Very well used in India. It is very easy to fool Indians.

    Just count how many people use Fair and lovely/handsome! That will give you a huge part of idiots in our country!

    Intelligence cannot be deceived so easily.


    genius reply! don't trust what you see or hear! trust your imagination! more unreal is your imagination, more intelligent you are!

    great! i am imagining myself as rowdy rathore now! :D:D if you dont think i am rowdy rathore your are "deceived" :D:D:D "dont angry me!":bab (59):
    CommentQuote