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
    We are equally far far faaaaaaaar behind most of the countries you name. All of them have spanking clean cities with every modern amenity. Mean annual income is about 10,000 dollars per capita or more in most South American and East/SEast Asian countries as well as East European and Russia.

    Even China is 3500$ on their massive base and have fantastic cities.

    India is the dirtiest and the poorest. Only Bangladesh is behind us.

    The filth in our country is unbelievable. Its a shame that we are calling ourselves incredible - outsiders will say - Incredibly dirty India.

    Now we are calling them for Commonwealth games and showcasing our filth.

    Bula ke dikha ne ki kya jaroorat thi?


    You, sir, are quite disillusioned with our country! :)

    Based on purchasing power parity, India has a per capita GDP of about $3000 USD. Yes, we are at the bottom of the pile, although China is only at about $6500.

    (Source: http://en.wikipedia.org/wiki/List_of_countries_by_GDP_%28PPP%29_per_capita)

    Indonesia, Phillippines, and Pakistan are some of the other populous countries with similar GDP figures.

    Where things get really interesting is if you look at the GDP figures of world cities.
    Reference: http://en.wikipedia.org/wiki/List_of_cities_by_GDP#Asia.2C_Central_.26_South

    Mumbai and Delhi have GDP figures comparable to many other cities in developing AND developed countries.

    I'm not a financial analyst or economic expert, but it does look like our cities are hugely richer compared to our rural areas. Hence, the national level statistics and fundas that we apply are really not valid.

    Shanghai, as an example, produces $233 billion revenues vs $208 billion produced by Mumbai. Plus, we are only talking about white money. So, Mumbai may be dirty and crumbling but sure does know how to make money! Mumbai and Delhi's per capita income is almost $11000, which is way higher than the national average of $3000.

    Compare to Shanghai with a per capita income of $15500, Cairo at $12000, Manila at $13000, Bangkok at $17700. We are really not doing too bad!
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  • Originally Posted by asliarun
    You, sir, are quite disillusioned with our country! :)

    Based on purchasing power parity, India has a per capita GDP of about $3000 USD. Yes, we are at the bottom of the pile, although China is only at about $6500.

    (Source: ]http://en.wikipedia.org/wiki/List_of_countries_by_GDP_%28PPP%29_per_capita)

    Indonesia, Phillippines, and Pakistan are some of the other populous countries with similar GDP figures.

    Where things get really interesting is if you look at the GDP figures of world cities.
    Reference: ]http://en.wikipedia.org/wiki/List_of_cities_by_GDP#Asia.2C_Central_.26_South

    Mumbai and Delhi have GDP figures comparable to many other cities in developing AND developed countries.

    I'm not a financial analyst or economic expert, but it does look like our cities are hugely richer compared to our rural areas. Hence, the national level statistics and fundas that we apply are really not valid.

    Shanghai, as an example, produces $233 billion revenues vs $208 billion produced by Mumbai. Plus, we are only talking about white money. So, Mumbai may be dirty and crumbling but sure does know how to make money! Mumbai and Delhi's per capita income is almost $11000, which is way higher than the national average of $3000.

    Compare to Shanghai with a per capita income of $15500, Cairo at $12000, Manila at $13000, Bangkok at $17700. We are really not doing too bad!

    Arun, You are really Good at numbers & I think with Google as well!!!

    If we have so much money, then why we always looks Poor,Dirty, Depressed??? If Mumbai has produces equal to shanghai then why we have old & crumbling transport system & why shanghai has 400 Km/hr train???

    Every time Congress come to Power in maharshtra, why they always says that we will make Mumabi next shanghai...Actually reality is that, how much money Indian cities has, but all indians cities are over populated with Most Corrupt Municipal Corporations of the WORLD....So, we TOP at least one thing in the WORLD & that is Corruption...So No point quoting such figures, until this money reaches out to everybody, who is living in Mumbai, Delhi & other Indian Metros.

    Arun, You are really Good at numbers & I think with Google as well!!!

    If we have so much money, then why we always looks Poor,Dirty, Depressed??? If Mumbai has produces equal to shanghai then why we have old & crumbling transport system & why shanghai has 400 Km/hr train???

    Every time Congress come to Power in maharshtra, why they always says that we will make Mumabi next shanghai...Actually reality is that, how much money Indian cities has, but all indians cities are over populated with Most Corrupt Municipal Corporations of the WORLD....So, we TOP at least one thing in the WORLD & that is Corruption...So No point quoting such figures, until this money reaches out to everybody, who is living in Mumbai, Delhi & other Indian Metros.

    Arun, You are really Good at numbers & I think with Google as well!!!

    If we have so much money, then why we always looks Poor,Dirty, Depressed??? If Mumbai has produces equal to shanghai then why we have old & crumbling transport system & why shanghai has 400 Km/hr train???

    Every time Congress come to Power in maharshtra, why they always says that we will make Mumabi next shanghai...Actually reality is that, how much money Indian cities has, but all indians cities are over populated with Most Corrupt Municipal Corporations of the WORLD....So, we TOP at least one thing in the WORLD & that is Corruption...So No point quoting such figures, until this money reaches out to everybody, who is living in Mumbai, Delhi & other Indian Metros.

    Arun, You are really Good at numbers & I think with Google as well!!!

    If we have so much money, then why we always looks Poor,Dirty, Depressed??? If Mumbai has produces equal to shanghai then why we have old & crumbling transport system & why shanghai has 400 Km/hr train???

    Every time Congress come to Power in maharshtra, why they always says that we will make Mumabi next shanghai...Actually reality is that, how much money Indian cities has, but all indians cities are over populated with Most Corrupt Municipal Corporations of the WORLD....So, we TOP at least one thing in the WORLD & that is Corruption...So No point quoting such figures, until this money reaches out to everybody, who is living in Mumbai, Delhi & other Indian Metros.

    Arun, You are really Good at numbers & I think with Google as well!!!

    If we have so much money, then why we always looks Poor,Dirty, Depressed??? If Mumbai has produces equal to shanghai then why we have old & crumbling transport system & why shanghai has 400 Km/hr train???

    Every time Congress come to Power in maharshtra, why they always says that we will make Mumabi next shanghai...Actually reality is that, how much money Indian cities has, but all indians cities are over populated with Most Corrupt Municipal Corporations of the WORLD....So, we TOP at least one thing in the WORLD & that is Corruption...So No point quoting such figures, until this money reaches out to everybody, who is living in Mumbai, Delhi & other Indian Metros.
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  • Originally Posted by aaj123
    Absolutely agree! I reside in the UK and the wage differences here between different classes of work are a lot lower than in India (and that is what I believe is right). And yet we have some people on this forum complaining about quality of life in India going down because maids and rickshawallahs are asking for too much.


    aaj, are you the same aaj of R2iclubforum? Your writing looks similar.
    Now coming to rickwalas:- Tell me where in UK they charge you anything as per their wish? How many cab drivers refuse to take ride? How many cab drivers go on strike? How many times you had to argue with the meter running fast?

    Sitting in UK, getting good infra & then lecturing us in India is like making decision of war sitting in drawing room. Better you come down to Pune, spent 3 months using public transport & then comment.

    And why maids? Take eg of drivers too. You get a good one here for 6k/month, what are the rates in UK? Tomorrow you will ask us to pay for Biryani in India at the rate of UK too:p. So, stop comparing UK & India. If there would not have been any difference between the 2 (good or bad) you would not have been in UK at first place:D.
    This trickledown effect of better paid people being willing to pay more to get services is what drives down benefits to different parts of the society. I see nothing negative about people willing to pay more for T-shirts or or maids or for cup of tea or coconut water, etc..

    Man, you left builders out!! Buy a flat from builder at GBP 10k/sq ft at Wakad else how will the laborer get rich (trickling effect)? Spending & throwing money are 2 different things.
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  • Originally Posted by realacres
    aaj, are you the same aaj of R2iclubforum? Your writing looks similar.


    Yes. I am.
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  • Originally Posted by ash7979
    If we have so much money, then why we always looks Poor,Dirty, Depressed??? If Mumbai has produces equal to shanghai then why we have old & crumbling transport system & why shanghai has 400 Km/hr train???

    The money produced by Shanghai is more or less spent on Shanghai. The money produced by Mumbai goes to Delhi, Up & Bihar or the Bimaru states. Again, Shanghai has work permit whereas in Mumbai anyone can come & sleep on footpaths. Add to it the huge population of illegal migrant of Bangus & the vote bank politics around it. Hence, Mumbai earns & rest merry doing nothing. You move Mumbai & Gujarat out of India, & the Indian economy collapses the next moment.

    Originally Posted by sanav3
    And realacres the number speaks for itself - 25 ITGs out of 50K... that is you are making statements about a whole community based on 0.0005% of people you know

    Yes, I know the number is small, but then we too abuse entire PBAP based on the experience with some builders & not all, isn't it. Fact remains the same in most of the ITG cases.

    Originally Posted by enduser
    But we are far ahead w.r.t to RE prices and may be Pune RE players could be one amongst the richest in the world



    LoL:D. And one doesn't need to compare Pune with other global cities. Compare Pune with Ahmedabad.....you get in Ahmedabad what you don't get in Pune (except IT), the income levels there are much higher than Pune (will be even higher than real terms as there is large biz community & most of the earnings are in B-money) yet the RE rates are lower than Wakad for some of the best areas in Ahmedabad. Reasons:-

      People are business minded, hence won't throw money around,
      No Pawar:D.
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  • Originally Posted by aaj123
    Yes. I am.

    Welcome man:). So, how come you came here? The r2i is almost dead now:D.
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  • Originally Posted by realacres
    The money produced by Shanghai is more or less spent on Shanghai. The money produced by Mumbai goes to Delhi, Up & Bihar or the Bimaru states.
    Oops watch out, Ashok Rao is listening, Rahul's mamma wants peace as elections are cmng in Bihar, and they want to perform better in North belt UP and Bihar. Oops watch out, Ashok Rao is listening, Rahul's mamma wants peace as elections are cmng in Bihar, and they want to perform better in North belt UP and Bihar. Oops watch out, Ashok Rao is listening, Rahul's mamma wants peace as elections are cmng in Bihar, and they want to perform better in North belt UP and Bihar. Oops watch out, Ashok Rao is listening, Rahul's mamma wants peace as elections are cmng in Bihar, and they want to perform better in North belt UP and Bihar.
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  • Originally Posted by informsantosh
    Oops watch out, Ashok Rao is listening, Rahul's mamma wants peace as elections are cmng in Bihar, and they want to perform better in North belt UP and Bihar.

    Ashok can't even sit in his chair properly, his own MLAs don't listen to him, what the heck this chap will do? He is nothing but tail wagging dog of Gandhi family.

    Coming to Rahuls mamma, well she should now fight against Silvio Berlussconi as Italian elections too are approaching:D.
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  • Project at Hinjewadi

    I recieved an email today from the same people who about a month or 2 before gave the offer of 2700/sq ft for Titanium Park, Parkstreet. They are now offering good deal at Hinjewadi. However, besides price (3k/sq ft) & layout, nothing is known about the project. Has anybody else got this email as well? Man, what is happening? Getting emails without enquiries!!:p
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  • Originally Posted by realacres
    Welcome man:). So, how come you came here? The r2i is almost dead now:D.


    Yes...that's a fact, and we all killed it:D:D:D as we don't write there...
    The same will happen with this forum after 5-6 months:), by that time, Pune RE will be dead.
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  • Ahem. though sen esx did fall under 16000 yest, the Pune forum posts have crossed 16000. Wat a coincidence. Soon it would be twice of Chennai posts.
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  • Originally Posted by monds
    Yes...that's a fact, and we all killed it:D:D:D as we don't write there...
    The same will happen with this forum after 5-6 months:), by that time, Pune RE will be dead.


    Yes, and then we all will come out live and kicking.
    Buying RE, Staying RE, Drinking RE, Sleeping RE, ....

    Why? Because it would be so affordable then ....
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  • Wakad booking at 3k Psf

    One of my close friend booked 2 BHK at MontVert Seville at the rate of 3k/psf. Her flat booking experience in her words: “The builder quoted 3200 psf but we bargained hard and booked at 3k psf. We were planning to wait more to book a flat but you know flat rates are increasing day-by-day in Pune. My in-laws and my parents as well saying that book a flat ASAP rather than wasting money in rent.”
    I asked why Wakad? Her reply: “I am working in Hinjewadi and my husband works in Pimpri (TATA Motors). We searched a flat in PS but it was out of our budget so we choose Wakad.”
    Seems even Wakad will become so unaffordable
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  • News

    ]http://business.rediff.com/report/2010/feb/11/bcrisis-home-market-shrinks-again.htm

    Home market is shrinking slowly

    Home market is shrinking slowly
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  • Originally Posted by Dipti

    I asked why Wakad? Her reply: “I am working in Hinjewadi and my husband works in Pimpri (TATA Motors). We searched a flat in PS but it was out of our budget so we choose Wakad.”
    Seems even Wakad will become so unaffordable


    Whom will u blame now..ITG or nonITG.
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