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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  • >I would agree with you if some owner legally can rent me his home for 20 years with fixed rent amount. Or you will you manage shifting every year dong new rent agreement with "better cash flow" ?
    Your FD (personally I prefer liquid funds) is getting compounded as well. So it too will throw off more cash over time.
    Also factor in the benefits of HRA.

    The myth that rents pay the owner whereas buying pays oneself is widespread.
    Thodisizamin and Wiseman made good posts about how if you take a loan, you are 'renting' capital from the bank.

    Personally it seems to me that most folks here on IREF are in their early 30s or thereabouts. (no data to back it up ofcourse). The last crash of 1996-2002 is just a distant memory (if at all). It has been replaced by theories about black money, investors, builder mafia etc, india shining, etc.
    CommentQuote
  • While I agree with what u say

    but any amount of statistical theorems cant mimic human emotions

    Like wise abstract human behaviour cant keep RE float through out.
    CommentQuote
  • People are still going to want to buy own flat.

    But not at these prices. Those who are young can afford to wait a few years. They have time on their side.
    CommentQuote
  • Thodsizamin,
    When the first flush of higher income flows in,people generally rush for consumerism and and enjoyment.That is understood.What we should try and do is start planning our first major asset.
    Having a good chunk of money when we approach a builder for buying a flat is indeed a good feeling.Loan should be minimum required(if not avoidable)
    As far as entreprenuership is concerned,it is an inbuilt mindset.
    We have some good examples of people setting up shops,business and flourishing,besides giving employment.
    Once you are in a position to give employment to many,that is indeed an index of achievement.Your ability to generate revenues,sustaining a productive team should be the capability which system and business environment should encourage.Licensing,inspector raj should be reduced,but whatever regulatory raj remains should be effective and not for harassment.
    The whole thing boils down to change in administrative setup and encourage development of ideas,convert ideas into workable commercial products and generate employment.
    Directional change in our economy and industry can only make India grow in the league of nations
    CommentQuote
  • Builders & Real Estate Bulls Theory Proved Wrong

    Originally Posted by southsea
    >I would agree with you if some owner legally can rent me his home for 20 years with fixed rent amount. Or you will you manage shifting every year dong new rent agreement with "better cash flow" ?

    Your FD (personally I prefer liquid funds) is getting compounded as well. So it too will throw off more cash over time.

    Also factor in the benefits of HRA.





    Benefits under sec 24 are more than HRA benefits!
    CommentQuote
  • Originally Posted by Sj2013
    check out

    IT sector exports to grow 13-15% in FY15, says Nasscom - Livemint


    It says NASSCOM predicted 13 to 15% growth in terms of IT export.


    If you re-read what I said, I said we seem to have reached the high plateau levels. By this I meant that our growth from now on would be in the low teens tending towards single digit levels - not beating inflation.

    Apart from that you will notice that profitability has decline by more than 50% from the 90s or even early oughties.

    In any case IT is only part of the economy and I was talking about the whole economy.

    We are now at a very slippery phase of global "recovery". Growth is not taking off and adding debt is not paying off. Now Central Banks, facing the possibility of rising interest rates - which, given the much higher debt levels will bite into revenues in a much bigger way - are alarmed and hurriedly shutting off the debt tap - which is leading to a debt trap anyway :).

    If you noticed, Europe is starting to slide into recession again. Italy is officially in recession, Germany has seen 1 Qtr negative growth and France is not growing at all. EU measures to kick off growth is failing and Japan is in deep trouble with enormous debt, rising interest rates, rising taxes and crashing GDP growth.

    See what Sikka is trying to do. Get his managers to become "Design", "Innovation" and "Customer" focused as a medicine to get Infy out of the rut of "factory" environment and start on a new tack.

    Typical situation where current revenues are okay but future outlook of revenues growth and profitability improvement is hazy.

    Thats what I meant.

    cheers
    CommentQuote
  • Builders & Real Estate Bulls Theory Proved Wrong

    Originally Posted by wiseman
    If you re-read what I said, I said we seem to have reached the high plateau levels. By this I meant that our growth from now on would be in the low teens tending towards single digit levels - not beating inflation.

    Apart from that you will notice that profitability has decline by more than 50% from the 90s or even early oughties.

    In any case IT is only part of the economy and I was talking about the whole economy.

    We are now at a very slippery phase of global "recovery". Growth is not taking off and adding debt is not paying off. Now Central Banks, facing the possibility of rising interest rates - which, given the much higher debt levels will bite into revenues in a much bigger way - are alarmed and hurriedly shutting off the debt tap - which is leading to a debt trap anyway :).

    If you noticed, Europe is starting to slide into recession again. Italy is officially in recession, Germany has seen 1 Qtr negative growth and France is not growing at all. EU measures to kick off growth is failing and Japan is in deep trouble with enormous debt, rising interest rates, rising taxes and crashing GDP growth.

    See what Sikka is trying to do. Get his managers to become "Design", "Innovation" and "Customer" focused as a medicine to get Infy out of the rut of "factory" environment and start on a new tack.

    Typical situation where current revenues are okay but future outlook of revenues growth and profitability improvement is hazy.

    Thats what I meant.

    cheers


    My all post in last 2-3 days are with the reference of only IT sector.

    If you are talking about general economy excluding IT sector, then I agree with you that this is not right time to purchase home and living on rent is better than buying.
    CommentQuote
  • Originally Posted by southsea
    >I would agree with you if some owner legally can rent me his home for 20 years with fixed rent amount. Or you will you manage shifting every year dong new rent agreement with "better cash flow" ?
    Your FD (personally I prefer liquid funds) is getting compounded as well. So it too will throw off more cash over time.
    Also factor in the benefits of HRA.

    The myth that rents pay the owner whereas buying pays oneself is widespread.
    Thodisizamin and Wiseman made good posts about how if you take a loan, you are 'renting' capital from the bank.

    Personally it seems to me that most folks here on IREF are in their early 30s or thereabouts. (no data to back it up ofcourse). The last crash of 1996-2002 is just a distant memory (if at all). It has been replaced by theories about black money, investors, builder mafia etc, india shining, etc.


    We had this discussion at many points in the history of IREF. Once Baruch (I think) even posted a link to a nice site which permitted viewers to enter various numbers and do a Rent Vs Buy comparison.

    I have also done some spreadsheets which try to figure out the breakeven point where renting and buying will be equivalent.

    The whole thing hinges on the renter putting away the EMI amount (less rent) into savings meticulously every month. This generally does not happen and therefore the comparisons are skewed leading to the belief that rent means giving away the money and EMI means investing it in a home!

    I believe there are 3 major causes for this propagation of thinking wrt RE.

    - From a long time ago (when other avenues for investing were few) we were brainwashed from young age that "as soon as possible" we should buy a house. This was generally passed along with little analysis of what it entailed financially by people generally financially illiterate

    - People on rent do not enforce the discipline of saving (as though they were on EMI) and therefore ending up when opportunity came with little money to buy a home. This further propagated the belief that EMI meant investing and rent meant splurging

    - Govt skewing RE with subsidies and tax brreaks which led to excessive and sustained increase in RE prices where a lot of money could be squeezed out of people over long periods of time (milking, its called) and keep the cattle corralled by ensuring that the EMI yolk forced them to put head down and toil in "jobs" endlessly

    Will it change? I don't think so for the large mass of people.

    cheers
    CommentQuote
  • @Wiseman - "Will it change? I don't think so for the large mass of people."
    Is that why the 'masses' remain so? I mean if indeed they were financially literate and had the required iron discipline, then they would not be the 'masses'.

    The days of mass employment in IT are largely over. Like in manufacturing, a wave of automation is going to hit it. This movement is still nascent but plenty of small examples. See what Whatsapp did with 10-15 engineers. Instagram with 5(?) engineers. This will particularly hit low end IT (maintenance, manual testing etc).
    CommentQuote
  • Originally Posted by southsea
    @Wiseman - "Will it change? I don't think so for the large mass of people."
    Is that why the 'masses' remain so? I mean if indeed they were financially literate and had the required iron discipline, then they would not be the 'masses'.

    The days of mass employment in IT are largely over. Like in manufacturing, a wave of automation is going to hit it. This movement is still nascent but plenty of small examples. See what Whatsapp did with 10-15 engineers. Instagram with 5(?) engineers. This will particularly hit low end IT (maintenance, manual testing etc).


    I've been harping about automation being the BIG ONE for some time now. I noticed that long ago and used to cite hot.mail (can you imagine? "hot-mail" was blocked as a badword?! :)) as the example (how much it was throwing out System Admins doing localised Mail Server Administration with a few 100 people handling 100s of millions of MAil Accounts! :)

    It will be hard and I can think of the once-mighty Mainframe SysAdm guys who were making money in large quantities going the Horse-n-Buggy way as an example.

    The process is underway and people in the IT business (also other businesses who are getting automated away rapidly) need to start looking beyond their noses and start taking action to avoid getting runover. I've been taking mine for a long time now.

    "Job Security" is starting to look like an Oxymoron now! :)

    cheers
    CommentQuote
  • I was just looking at past couple of pages..Just thinking are all the 'Honorary Moderators' Bears since the thread started in 2009 or any Bull moderator is there at all in the forum? :P ..Everyone is so flustered about job & economy..those who are so scared of upcoming scarcity in jobs or lesser onsite oppurtunities or % decrease in revenue of an XYZ company or country, should stay on rent only..as who knows what will happen to their jobs!..I am not a bear or a bull..was a bull till 6 months ago..but am optimistic this a normal lull in RE sector which will continue or might continue increasing (not like 09-13) if the economy improves..
    Well we are free for our assumptions and understanding, but why are we making money? Just to put it in FD, equities, gold?? Owning a home on loan does not mean we stop investing in FD and other instruments.
    On the Assest Liability part, when you pay rent, you are paying your landlord’s loan or adding equity to his or her bank account. However, when you have a home loan, you increase your degree of ownership in your home with every payment
    CommentQuote
  • All honorary moderators are bears.This is an assumption.Conservative opinions based on individual reading of the economy-signals,policies etc are always welcome
    I dont want to hear total bullish noises.
    Honble Modi has come economy is going to swing-come out all guns blazing and invest in all u/c projects-is that good advice?
    Yes Modiji may yet move the moribund administration into working hard,he may/will change policies which block our growth,but it is not instant noodles style.
    Every thing takes time,uncertainities abound and world tensions are high-Middle East is as always on boil,Ukraine crisis is affecting us in some ways.Actually even if Mali has problems our Sensex drops:)
    In the mean time we need to be cautious in our investments,businessmen need to look and see what changes are going on.
    At one stage a simple device like VCR/VCP was the rage and companies made millions producing and selling it,but where is it now,similarly with CDs and floppies.Companies which make them are now moving out of those products.
    Only those who can reasonably accurately predict likely changes can shine in the competitive economy.
    Amidst all these changes if my Honorary moderators are Bears it is good to get what is good value posts.
    Every man see value as per his mind frame.
    CommentQuote
  • I agree with wieseman. One should look to buy a house without leverage. Even if you want to take a big loan, your net worth should be such that you will be able to pay off from your own equity and still left with a lot. For ex, if you are looking to buy a 2 cr house, your net woth should be 6 to 8 crores. You should treat housing as an expense and it should not create a dent on your balance sheet.
    An alternate approach is that take a small loan just to cover the IT exemption limit. ( I think its 2 lakh per year now). Other good thing about this is that, bank also will do some legal verification on the property.

    Originally Posted by wiseman
    Taking home loan Vs saving and buying is a game that ought to be understood in the right context.


    cheers
    CommentQuote
  • @vaibhav123 - 2009-2013 the world economy was in shatters...recession in US Europe Japan started in 2008 and continues till today(improving though in some places), wars in Iraq afghanistan was on, Kon-gress and NCP rule in Maharashtra, even after all these issues the RE market surpassed expectations..I am not saying it will continue that astronomical rowth but even if there is a slump it will be smaller drop or stagnant growth compared to the 100% or 200% rise in property prices..But it will pick up again as more and more ppl come to work in metros..and Pune has all the factors for growth, MFG industry showing signs of revival (it will take couple of quarters), IT not growing strongly but growing gradually, Education hub, Investors from Mumbai who could afford buying homes @15000-20000 psqft find Pune cheap and continue investing..And how much ever the government ries, black money is infested in India, and RE is the only option other than elections where the maximum black money is invested..
    "I dont want to hear total bullish noises" - Well what I meant to say was not a single bullish noise is a Honorary Moderator or a veteran member..they just come and go in this forum..they research a lot, take inputs and leave the forum..they don't waste time here..on the other hand the Bears never leave this forum :P
    If you see the first few pages of this thread, you will understand that whatever be the scenario outside, its just impossible to predict the RE scenario in India..especailly in Pune coz its one of the few cities in India where RE is still somewhat bullish alongwith Mumbai and Bangalore..North India will see a definite drop according to me..especially places like Gurgaon and Noida..
    CommentQuote
  • Originally Posted by vaibav123
    Thodsizamin,
    When the first flush of higher income flows in,people generally rush for consumerism and and enjoyment.That is understood.What we should try and do is start planning our first major asset.
    Having a good chunk of money when we approach a builder for buying a flat is indeed a good feeling.Loan should be minimum required(if not avoidable)
    As far as entreprenuership is concerned,it is an inbuilt mindset.
    We have some good examples of people setting up shops,business and flourishing,besides giving employment.
    Once you are in a position to give employment to many,that is indeed an index of achievement.Your ability to generate revenues,sustaining a productive team should be the capability which system and business environment should encourage.Licensing,inspector raj should be reduced,but whatever regulatory raj remains should be effective and not for harassment.
    The whole thing boils down to change in administrative setup and encourage development of ideas,convert ideas into workable commercial products and generate employment.
    Directional change in our economy and industry can only make India grow in the league of nations


    I agree. India needs to change its mindset. Running a shop and employing 10 people should be considered a more honourable pursuit than working an an accountant - with regular salary - is a big shop!!!

    Sadly middle class (at least south Indian) still considers job as better than shop or business. But Bania community in north do both excellent studies and business in the same family.

    Originally Posted by wiseman
    If you re-read what I said, I said we seem to have reached the high plateau levels. By this I meant that our growth from now on would be in the low teens tending towards single digit levels - not beating inflation.

    Apart from that you will notice that profitability has decline by more than 50% from the 90s or even early oughties.

    In any case IT is only part of the economy and I was talking about the whole economy.

    We are now at a very slippery phase of global "recovery". Growth is not taking off and adding debt is not paying off. Now Central Banks, facing the possibility of rising interest rates - which, given the much higher debt levels will bite into revenues in a much bigger way - are alarmed and hurriedly shutting off the debt tap - which is leading to a debt trap anyway :).

    If you noticed, Europe is starting to slide into recession again. Italy is officially in recession, Germany has seen 1 Qtr negative growth and France is not growing at all. EU measures to kick off growth is failing and Japan is in deep trouble with enormous debt, rising interest rates, rising taxes and crashing GDP growth.

    See what Sikka is trying to do. Get his managers to become "Design", "Innovation" and "Customer" focused as a medicine to get Infy out of the rut of "factory" environment and start on a new tack.

    Typical situation where current revenues are okay but future outlook of revenues growth and profitability improvement is hazy.

    Thats what I meant.

    cheers


    IF you notice, the US long term rates are now 2.4 after touching 3.

    Lowering long term yields is the BEST indicator to a future recession.

    We just have to wait for it.

    Originally Posted by wiseman
    We had this discussion at many points in the history of IREF. Once Baruch (I think) even posted a link to a nice site which permitted viewers to enter various numbers and do a Rent Vs Buy comparison.

    I have also done some spreadsheets which try to figure out the breakeven point where renting and buying will be equivalent.

    The whole thing hinges on the renter putting away the EMI amount (less rent) into savings meticulously every month. This generally does not happen and therefore the comparisons are skewed leading to the belief that rent means giving away the money and EMI means investing it in a home!

    I believe there are 3 major causes for this propagation of thinking wrt RE.

    - From a long time ago (when other avenues for investing were few) we were brainwashed from young age that "as soon as possible" we should buy a house. This was generally passed along with little analysis of what it entailed financially by people generally financially illiterate

    - People on rent do not enforce the discipline of saving (as though they were on EMI) and therefore ending up when opportunity came with little money to buy a home. This further propagated the belief that EMI meant investing and rent meant splurging

    - Govt skewing RE with subsidies and tax brreaks which led to excessive and sustained increase in RE prices where a lot of money could be squeezed out of people over long periods of time (milking, its called) and keep the cattle corralled by ensuring that the EMI yolk forced them to put head down and toil in "jobs" endlessly

    Will it change? I don't think so for the large mass of people.

    cheers


    I have always contended that the reason for youngsters to buy flat on EMI is a very good thing - nopt because it makes financial sense - but because it forces them to part with a big chunk of their income.

    Otherwise they lack discipline to save. Even I lack it - I recently reduced PF contribution thinking I will save more in Equity - but I have not been as systematic - and end up saving less than when I just cut the salary into PF.

    Originally Posted by wiseman
    I've been harping about automation being the BIG ONE for some time now. I noticed that long ago and used to cite hot.mail (can you imagine? "hot-mail" was blocked as a badword?! :)) as the example (how much it was throwing out System Admins doing localised Mail Server Administration with a few 100 people handling 100s of millions of MAil Accounts! :)

    It will be hard and I can think of the once-mighty Mainframe SysAdm guys who were making money in large quantities going the Horse-n-Buggy way as an example.

    The process is underway and people in the IT business (also other businesses who are getting automated away rapidly) need to start looking beyond their noses and start taking action to avoid getting runover. I've been taking mine for a long time now.

    "Job Security" is starting to look like an Oxymoron now! :)

    cheers


    Around 90% of current Indian jobs are redundant - with greater efficiency we can eliminate so many jobs.

    Productivity per worker will go up and he will earn better salary.

    What will happen to the 90% who lose their job?

    Its happening in USA also. People get 100,000 a month job - or get 20,000 a month flipping burgers - or end up unemployed.

    Originally Posted by vlokras1
    I was just looking at past couple of pages..Just thinking are all the 'Honorary Moderators' Bears since the thread started in 2009 or any Bull moderator is there at all in the forum? :P ..Everyone is so flustered about job & economy..those who are so scared of upcoming scarcity in jobs or lesser onsite oppurtunities or % decrease in revenue of an XYZ company or country, should stay on rent only..as who knows what will happen to their jobs!..I am not a bear or a bull..was a bull till 6 months ago..but am optimistic this a normal lull in RE sector which will continue or might continue increasing (not like 09-13) if the economy improves..
    Well we are free for our assumptions and understanding, but why are we making money? Just to put it in FD, equities, gold?? Owning a home on loan does not mean we stop investing in FD and other instruments.
    On the Assest Liability part, when you pay rent, you are paying your landlord’s loan or adding equity to his or her bank account. However, when you have a home loan, you increase your degree of ownership in your home with every payment


    I was a bull in 2009 and called RE the investment of the decade. I myself bought.

    I am a bear now - nobody can be bullish for ever. And RE HAS ALREADY BEEN the investment of the decade, giving better returns than Stock bonds and even gold.

    But now it is over. Stocks are the investment for the remainder of the decade.

    Originally Posted by kaatesha
    I agree with wieseman. One should look to buy a house without leverage. Even if you want to take a big loan, your net worth should be such that you will be able to pay off from your own equity and still left with a lot. For ex, if you are looking to buy a 2 cr house, your net woth should be 6 to 8 crores. You should treat housing as an expense and it should not create a dent on your balance sheet.
    An alternate approach is that take a small loan just to cover the IT exemption limit. ( I think its 2 lakh per year now). Other good thing about this is that, bank also will do some legal verification on the property.


    Leverage is good for youngsters - it forces a saving which otherwise gets frittered away on mobiles, clothes and parties.
    CommentQuote