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Why Do Intelligent People make wierd Real Estate Decisions

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Why Do Intelligent People make wierd Real Estate Decisions

Last updated: April 23 2012
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  • Re : Why Do Intelligent People make wierd Real Estate Decisions

    one more reason - Why US has better home.
    because they are minimum basic living standards are well defined...but in india, you can sell an apartment with no parking at all.

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    • Re : Why Do Intelligent People make wierd Real Estate Decisions

      Originally posted by wiseman View Post
      Assumption is that Central Banks of the world see a giant Tsunami of currency devaluation coming (all currencies, including the Rupee - just see prices of commodities today, especially Rice, Atta, Vegetables) followed by severe hyperinflation worldwide.
      Hi Wiseman,

      You have spoken about Tsunami of currency devaluation coming. In that case what is the best asset to hold on? Or is it better to invest in something before the devaluation starts?

      Thanks,
      Sridhar

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      • Re : Why Do Intelligent People make wierd Real Estate Decisions

        In my opinion.. disgusting articles like these are also responsible for misleading the general public.

        ="http://timesofindia.indiatimes.com/biz/india-business/Undergrad-nets-Rs-32-lakh-offer-from-Deutsche-Bank/articleshow/5266831.cms"]http://timesofindia.indiatimes.com/biz/india-business/Undergrad-nets-Rs-32-lakh-offer-from-Deutsche-Bank/articleshow/5266831.cms[/url]
        • It is an international posting so it should not be mentioned Rs 32 lac salary but it should be mentioned $69,000 salary.
        • $69,000 salary in London is average and also in NY is going to be average. So there is nothing to dance about.
        • It is these articles that make builder wonder and feel that anyone should be able to afford a price of Rs 1 Cr and above for the crap that they make.
        Personally I have nothing against anyone and it is good for the candidate but I believe he knows this that once he reaches London/NY and sees the cost of living there; he will know the reality. So again let me repeat I have personally nothing against anyone but articles like these really create a false impression amongst people about salary levels in India in general and hence the repercussions of increase in costs.

        VK

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        • Re : Why Do Intelligent People make wierd Real Estate Decisions

          Its fault of college or placement agency involved. They like to publish packages offered while candidate would generally avoid disclosing his or her package before media or to unknown people.

          However I don't think giant builders are so fool that they will rely on such selective news items (how many got 69K $ salaries in that year ) to decide RE prices. After all, majority of buyers are not getting salary in dollars.

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          • Re : Why Do Intelligent People make wierd Real Estate Decisions

            Originally posted by puser View Post
            However I don't think giant builders are so fool that they will rely on such selective news items (how many got 69K $ salaries in that year ) to decide RE prices. After all, majority of buyers are not getting salary in dollars.
            I beg to differ.. i have seen many people on this forum claming salary increaments of 2-3 times in the past 3-4 years. THis salary ncreament is only for the cream in each company not the average employee.. while the media reports are oftern misleading about the increments given.
            Besides i dont think builders think logically..... i think i posted somewhere on this forum about inventory cycle time.
            However, even as a builder if i know the reality.. i would still want to increase prices as the general feel the media is spreading is increasing salaries around.

            VK

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            • Re : Why Do Intelligent People make wierd Real Estate Decisions

              Originally posted by realacres View Post
              Hence, if you are getting a sweet deal, go for it but make sure you don't end diabetic at the end of the loan tenure.
              Real,

              a very well thought post. The problem is that by the time the diabetic knows that he is a diabetic, it is already too late. As hporwal has said, it is only in retrospect that we can tag our decisions as right or wrong.

              If one was to say the stock market would tank, I would believe it more easily because I have seen it recently(from 21K to <8k). Can we say the same for RE?

              some questions

              1. Isnt the buyer base increasing by the day with young generation coming into the job market and existing ones going into higher salary slabs(although not as quickly) and hence with higher ambition of owning a bigger,better house?
              2. What would be the proportion of people in pune staying in own house v/s rented house?
              3. Between the builder v/s buyer stand-off, is it a matter of who blinks first for deciding which way the RE prices would go? If so, more probability is of the buyer since builders seem more united(cartel is the word). Morever builders aim is to earn money(no emotions, sole economics), so they will hold to max possible. Buyers aim is to own a house(emotional decision) and not necessarily save money(bad economics)
              4. Might seem like a stupid futuristic question but none the less. For a 11+ storey building, what happens after it serves it life (30-40 years) would it be re-developed by a builder into a taller structure(30+) or the owners/society has to do it on its own?

              5. In stock market terms, the support during the fall was immediate in RE since buyers were waiting to buy. Hence the prices have started increasing again. But the resistance(due to non-buying) does not seem to push the prices down again. Why so?Is it because in stocks. not buying stocks does not bug me, but not owning a house keeps playing on my mind(again emotional thinking)?

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              • Re : Why Do Intelligent People make wierd Real Estate Decisions

                Originally posted by realacres View Post
                Hence, if you are getting a sweet deal, go for it but make sure you don't end diabetic at the end of the loan tenure.
                Real,

                a very well thought post. The problem is that by the time the diabetic knows that he is a diabetic, it is already too late. As hporwal has said, it is only in retrospect that we can tag our decisions as right or wrong.

                If one was to say the stock market would tank, I would believe it more easily because I have seen it recently(from 21K to <8k). Can we say the same for RE?

                some questions

                1. Isnt the buyer base increasing by the day with young generation coming into the job market and existing ones going into higher salary slabs(although not as quickly) and hence with higher ambition of owning a bigger,better house?
                2. What would be the proportion of people in pune staying in own house v/s rented house?
                3. Between the builder v/s buyer stand-off, is it a matter of who blinks first for deciding which way the RE prices would go? If so, more probability is of the buyer since builders seem more united(cartel is the word). Morever builders aim is to earn money(no emotions, sole economics), so they will hold to max possible. Buyers aim is to own a house(emotional decision) and not necessarily save money(bad economics)
                4. Might seem like a stupid futuristic question but none the less. For a 11+ storey building, what happens after it serves it life (30-40 years) would it be re-developed by a builder into a taller structure(30+) or the owners/society has to do it on its own?
                5. In stock market terms, the support during the fall was immediate in RE since buyers were waiting to buy. Hence the prices have started increasing again. But the resistance(due to non-buying) does not seem to push the prices down again. Why so?Is it because in stocks. not buying stocks does not bug me, but not owning a house keeps playing on my mind(again emotional thinking)?

                Originally posted by RAJESHP View Post
                Right, but we are not trying to control others decisions, they all will be forced to, when capped with affordability. So those "dayalu" in your case who gives beggers money, here in RE those same dayalus wont be able to buy even if they want to, if they cannot afford it..
                Point taken. Thats normal logical thinking. But then why dont we see the results in reality. Bank loans have helped in increasing the affordability and people do not necessarily think deep of huge EMIs while taking loans to fulfill their ambition of owning bigger/better house. And combine that with point #1 and 3 above.
                Last edited by gsa177; November 25 2009, 05:55 PM.

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                • Re : Why Do Intelligent People make wierd Real Estate Decisions

                  Originally posted by gsa177 View Post
                  Real,
                  If one was to say the stock market would tank, I would believe it more easily because I have seen it recently(from 21K to <8k). Can we say the same for RE?
                  Haven't seen RE in Bangalore, Mumbai, Delhi-NCR?

                  1. Isnt the buyer base increasing by the day with young generation coming into the job market and existing ones going into higher salary slabs(although not as quickly) and hence with higher ambition of owning a bigger,better house?
                  That's right, but how many new buyers have incomes of 6L+/annum (min)? If you drop the IT guys, hardly any other sector pays this salary for a fresher.
                  2. What would be the proportion of people in pune staying in own house v/s rented house?
                  Can't say the precise ratio, but yes as there are vacant rentals, the owners are more & tenants are less.
                  3. Between the builder v/s buyer stand-off, is it a matter of who blinks first for deciding which way the RE prices would go? If so, more probability is of the buyer since builders seem more united(cartel is the word). Morever builders aim is to earn money(no emotions, sole economics), so they will hold to max possible. Buyers aim is to own a house(emotional decision) and not necessarily save money(bad economics)
                  That's what I have already said, Heart Overtakes The Brain (this also results in marriage too).
                  4. Might seem like a stupid futuristic question but none the less. For a 11+ storey building, what happens after it serves it life (30-40 years) would it be re-developed by a builder into a taller structure(30+) or the owners/society has to do it on its own?
                  If you don't end up diabetic, what does it matter even if the entire building is swallowed up? You can built a new one right?
                  5. In stock market terms, the support during the fall was immediate in RE since buyers were waiting to buy. Hence the prices have started increasing again. But the resistance(due to non-buying) does not seem to push the prices down again. Why so?Is it because in stocks. not buying stocks does not bug me, but not owning a house keeps playing on my mind(again emotional thinking)?
                  Stocks runs on fundamentals, RE is more of sentimental. When you buy stocks, you think of returns, in RE you think of hosue ownership. That's where the core issue lies.

                  Bank loans have helped in increasing the affordability and people do not necessarily think deep of huge EMIs while taking loans to fulfill their ambition of owning bigger/better house. And combine that with point #1 and 3 above.
                  How many are eligible for loans? Compare the ratio of people wanting to buy house & banks willing to lend. The fact remains that banks can't lend 1Cr for person earning 8-10L/annum. If most people are earning less than this, the RE prices should be less.

                  The biggest factor:- People have realised that RE doesn't always goes up, it falls too.
                  If you are happy, you are successful.

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                  • Re : Why Do Intelligent People make wierd Real Estate Decisions

                    6 L/annum is for IIT passouts in ITs. Package offered are like 2-3 LpA for normal passouts IT freshers from pune university.

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                    • Re : Why Do Intelligent People make wierd Real Estate Decisions

                      Thanks for this info. Man, but then who is buying flats worth at 40L+ (that too without proper infra)? This then means that most have overstretched themselves. Some have either increased the period & few have increased the EMIs, which normally runs more than 60-70% in several cases. In such cases, chances of one getting diabetic run very high.
                      Originally posted by puser View Post
                      6 L/annum is for IIT passouts in ITs. Package offered are like 2-3 LpA for normal passouts IT freshers from pune university.
                      Last edited by realacres; November 25 2009, 09:12 PM.
                      If you are happy, you are successful.

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