Market is again bullish. I heard that, builder lobby is going to charge 3100/- in wakad. I am not seeing any hope to crash the RE.

Any comment ?
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  • Let me see if I can explain ...

    Originally Posted by RAJESHP
    Its not virtual loss. Its actual. Loss of Interest on your loan amount.
    If the investor had bought the property today, he would have earned interest on that money(down payment) for last 1.5 year.
    So net loss: Loss of Interest(on down payment) if kept in bank FD + interest paid for the loan amount.
    I strongly doubt if future of RE is bright in India. Very few people can afford. Who will you sell your investment tomorrow? People cannot pay the asking price.



    There are 2 issues here ...

    1. If you put 10 lakhs as down payment, then, even if price stagnated for 2 years, you probably lost around 20% of that 10 lakhs (2 lakhs) in terms of interest calculated at 10% pa which you would have otherwie got if you invested that 10 lakhs. So, this is a real loss, not notional.

    2. Then comes the more dangerous interest on highly leveraged loan! Imagine you borrowed 40 lakhs more at a home loan interest of around 10% average across this period. Each year, you paid an interest of 4 lakhs (not declining balance but year-end balance for simplification sake), which means, over the last 2 years you are out of pocket 8 lakhs which does NOT add to the value of the house. This 8 lakhs is simply transfering from your salary account to the bank's pocket.

    This get eve more serious when you have deducted 30% income tax on salary before paying the interest amount (I'm being simplistic again for illustrations sake). Pre-tax, you have a hit of Rs.11.40 lakhs from your salary for the privilege of holding a stagnating home. For this home to start showing value above your gross purchase price, it must increase at least by this (11.40 + 2.00) lakhs before it breaks even!!!:o which is a 27% increase in home value needed to see breakeven! You home, in 2 years need to sell for 63.5 lakhs to break even for you!!!

    If prices stagnate for say 4 years (not unreasonable in my view), the loss of interest on 10 lakhs will be 4 lakhs, interest paid (pre-tax) will be in the range of 20 lakhs and your home must appreciate at least by this amount (24 lakhs, which is 50% higher than your purchase price!!!).

    How long do you think your home will take to show a positive gain under these conditions? Its like starting a race with a negative handicap, while also running against a faster opponent. Your best position is at the beginning when the gap is the least. Then as each minute passes, your opponent pulls away further and further from you. The gap between your home's value and the money you put into it goes up higher and higher against you, till some day an inflexion point is reached and the gap starts turning down as your annual interest declines and annual growth rate overtakes it. That could well be 10-15 years from your point of purchase!

    So, stagnation also means loss or decline in value!!!

    cheers
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  • Originally Posted by wiseman
    So, stagnation also means loss or decline in value!!!
    cheers

    I agree with the explanation. On an avg a person think less on how to invest the money than the effort he puts into the work to earn that money.
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  • Originally Posted by wiseman
    For this home to start showing value above your gross purchase price, it must increase at least by this (11.40 + 2.00) lakhs before it breaks even!!! which is a 27% increase in home value needed to see breakeven! You home, in 2 years need to sell for 63.5 lakhs to break even for you!!!

    Also need to consider Inflation. A actual worth of 50L after 2 yrs is less by the rate of inflation for 2 yrs.
    Originally Posted by kirunOnly
    On an avg a person think less on how to invest the money than the effort he puts into the work to earn that money.

    Completely agree with Kirun on this.
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  • Originally Posted by ash7979
    Do, you know what is SLR & what was it earlier rate & what is now???

    and you have pass ur judgment as well...Govt trying to curtail Liquidity:D:D

    I think all economist of India only write here on this forum only:):)

    Why dont you join some good Financial Institution, then u will able to earn enough, so that u dont have to bother abt RE prices....

    This is going too far now...ha ha ha


    o ha ha ha.. Thanks for calling me back after i had gone too far.

    Can you please explain what is SLR? and what is the effect of it moving from 24% to 25% and what other hints did RBI give about the future?

    Please give RBI direction and not ICICI Banks direction.

    VK
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  • Originally Posted by lazybone007
    Off course IT salaries are increasing. Dont u read the papers


    Newspaper reports are misleading. The reality is very different.
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  • Originally Posted by lazybone007
    Off course IT salaries are increasing. Dont u read the papers



    Media is putting all rosy pictures like salary hikes.....
    Beware don't lose your job going by this
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  • Originally Posted by nimish1981
    Newspaper reports are misleading. The reality is very different.


    Could you explain the realty?
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  • US economy grew 3.5% in third quarter. How will this impact RE? I gues +ve.
    ]http://timesofindia.indiatimes.com/biz/international-business/US-economy-grows-in-Q3-signals-end-of-recession/articleshow/5177134.cms
    These are facts, not hypothetical theories.
    These are facts, not hypothetical theories.
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  • How does that really matters ? US is growing not your pockets , still they have 10 percent people jobless ... so those in job have more risk of losing by some unemployed asking lower salary ?

    And there are lot many factors that are supportive of indian RE being stable. but the anxiety of buyers is not letting that happen...

    I have never seen so many free and discount schemes that were seen this diwali in all consumer products ... now why so ....??
    all consumer durables sacrifieced their margins to get the sales ... so is RE from Mars...
    and they are reversing the trend because of weak hearted buyers .. no one wants to wait ?

    Are we not weak hearted ? cant we delay our purchases for a year ?
    No well some one or the other get lured and .......
    Homes will not disappear .... and we are living now with less ownership ?
    Good locations will go away ?
    I dont think so each home has its price and based on the current situation that is not cheap...... its our perception of costly that has changed ?
    Now even 50 L is not costly while 3 yrs back that was costly ? so what changed in 3 yrs ? all our salaries doubled ???
    Pls correct me
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  • Originally Posted by Saurabh01
    Could you explain the realty?


    Everybody knows who works in IT:D:D
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  • Unemployed tap their 401(k)s

    Originally Posted by shirishtiwari01
    US economy grew 3.5% in third quarter. How will this impact RE? I gues +ve.
    ]http://timesofindia.indiatimes.com/biz/international-business/US-economy-grows-in-Q3-signals-end-of-recession/articleshow/5177134.cms
    These are facts, not hypothetical theories.
    Add to it the US$ 1.5tn fiscal deficit & falling value of US$. Even Obama has said that worst is not yet over. Make a visit to NYC & see for yourself the facts, first hand. 21% people polled said that they would grow their own veggies. Look at Dow, it remains poor. People are withdrawing their 401k, which indicates very bad scenario for mango man in US.

    ]http://money.cnn.com/2009/10/28/pf/hewitt_401k/index.htm?postversion=2009102814
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  • Guys if you read it in detail it says "increased at an annual rate of 3.5 percent in the third quarter of 2009,
    (that is, from the second quarter to the third quarter)". anything +ve will appear much better when you look at -ve numbers
    Also, US economist are predicting sluggish 2010 because of high unemployment and weak wage growth.
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  • Originally Posted by shirishtiwari01
    US economy grew 3.5% in third quarter. How will this impact RE? I gues +ve.
    ]http://timesofindia.indiatimes.com/biz/international-business/US-economy-grows-in-Q3-signals-end-of-recession/articleshow/5177134.cms
    These are facts, not hypothetical theories.
    More facts for your knowledge:

    1) Decline in USA RE prices started in 2006 when economy was booming. Infact RE bubble burst is what caused the recession

    2) RE sales are now improving, when economy is still in deep recession.

    I dont trust media articles, tomorrow same TOI will write about high jobless rate in USA.

    I could never understand(may be because I not a economist) how can huge profit turn in huge loss in 6 months as below

    Bank of America Earns $4.2 Billion in First Quarter
    ]http://newsroom.bankofamerica.com/index.php?s=43&item=8438

    Bank of America Announces Third-Quarter Net Loss of $1.0 Billion
    ]http://newsroom.bankofamerica.com/index.php?s=43&item=8552

    I only trust recruitment figures as the only indicator of health of company.
    Do some ground verification yourself. Ask your friends in USA, how is the job scenario there? I am sure most of them looking for job from last one year are still struggling to even arrange a single interview call in one full year. There may be exceptions, but this is the general scenario.

    Healthy recruitment is a very good and genuine indicator of health of the company or economy in general. I have done my ground check and conclude that USA economy is in deep recession and may get even bad in 2010.

    I may be wrong, I am common IT man, not a economist, but for sure I know that buying RE now in India is the last thing I would do.. There may be exceptions, but this is the general scenario.

    Healthy recruitment is a very good and genuine indicator of health of the company or economy in general. I have done my ground check and conclude that USA economy is in deep recession and may get even bad in 2010.

    I may be wrong, I am common IT man, not a economist, but for sure I know that buying RE now in India is the last thing I would do.. There may be exceptions, but this is the general scenario.

    Healthy recruitment is a very good and genuine indicator of health of the company or economy in general. I have done my ground check and conclude that USA economy is in deep recession and may get even bad in 2010.

    I may be wrong, I am common IT man, not a economist, but for sure I know that buying RE now in India is the last thing I would do.. There may be exceptions, but this is the general scenario.

    Healthy recruitment is a very good and genuine indicator of health of the company or economy in general. I have done my ground check and conclude that USA economy is in deep recession and may get even bad in 2010.

    I may be wrong, I am common IT man, not a economist, but for sure I know that buying RE now in India is the last thing I would do.. There may be exceptions, but this is the general scenario.

    Healthy recruitment is a very good and genuine indicator of health of the company or economy in general. I have done my ground check and conclude that USA economy is in deep recession and may get even bad in 2010.

    I may be wrong, I am common IT man, not a economist, but for sure I know that buying RE now in India is the last thing I would do.. There may be exceptions, but this is the general scenario.

    Healthy recruitment is a very good and genuine indicator of health of the company or economy in general. I have done my ground check and conclude that USA economy is in deep recession and may get even bad in 2010.

    I may be wrong, I am common IT man, not a economist, but for sure I know that buying RE now in India is the last thing I would do.
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  • RAJESHP is true to much extent, Many ppl are not finding the job and there is lots of bargain going on for billing rate. CEO of Indian MNCs said the next quarter will have high volume which would be due to no of deals due to reduced billing and not due to increase in profit margin.

    to add to REALACRES comment, many ppl who ever on unemploymnet status and were getting allowance, will not get the same from Jan onwards. Even after bailing out the huge sum of $$, senators are not seeing positive results as expected hence OBAMAs comment. Definitely India will recover before US but unless US recovers there will not be much growth.

    As per salary increase in IT, you will see exact increase in salary of Dec/Jan.
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  • Those who have started thd thread and supported by, looks to me from builders lobby. Market is not at all good. There was some demand festivals.

    Builders are creating virtual market. This is how ppl are being fooled.
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