Saturday, August 22, 2009

Tim Giethner cannot sell his house

if the US treasury secretary cannot price his house accurately to reflect the market, how can we expect any other seller to be realistic in this market.
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Anonymous said...

LoL... good one!

As good as the blathering BB talking about how many crows (oops, was that crores?) he has!!

BB Blabbering about crows in chembur!

**Grin** where is the cretin nowadays btw? Maybe reading about rent discounting..

Anonymous said...

US and most countries nowdays are run by morons. They are all on dope and have no fuckin' clue about economics.

If he cannot price his house right, what you you expect from him for the country. What a shame for US for him to head the Treasury.

shailesh said...

Homing in on value

For instance, Provident Housing, a subsidiary of Puravankara Projects, which is involved in the affordable housing segment, launched Provident Welworth City with 3,360 apartments in Bangalore last month. Prices start at Rs 14.90 lakh for two-bedroom apartments and Rs 18.90 lakh for three-bedroom. “We opened bookings for 1,000 apartments three weeks ago, and 50 per cent have been booked (cheques received so far),” said Mr Jayakar Jerome, IAS, Managing Director, Provident Housing.

HDFC says 5.1 times annual income is the maximum affordability of a household. For instance, for a household with an annual income of Rs 3 lakh, an affordable house would cost Rs 15 lakh.

According to Ernst and Young survey ‘Realty Pulse 2008’, developers believe that considering the city, location and product offering, the price of an affordable house ranges between Rs 10 lakh and Rs 25 lakh.

Anonymous said...

Interesting link to view the website viewers stat.

Anonymous said... is also Bindaaaas bhai site. Fortunately this time i was not fooled. Dear readers please be careful of this site also.

I will let you all know all the sites of Bindaas bhai......

-Retired Old Man

nupu said...

Can any one suggest what the property prices might be around Chembur 5 years from now ? Does it make sense to buy now or save now and buy later ? thanks. (i noticed that after some correction pre elections the prices are back to the peak there)

Anonymous said...

it looks like nupu is BB in disguise.

nupu said...

no I am not, just looking for some honest advice. thats all.

shailesh said...


Market watchers think Unitech’s is a classic case of a real-estate company that had over-expanded during the boom years, and now finds itself saddled with high debts. Many of its recent moves smack of desperation, such as selling of promoters’ stakes to institutional buyers, turning luxury projects into affordable housing units (leaving customers, who had booked flats in these projects at a time when prices were at their peak, feeling cheated). In all this, the worst-hit are its older buyers: with many ongoing projects way past their delivery, they don’t know when their flats will be delivered, and worse still, where to turn to for recourse.

At a time when the real-estate market is showing a few signs of revival, developers ought to focus on timely completion and delivery of projects in order to regain buyers’ confidence. Instead, as Unitech’s example shows, they are focusing more on launching new projects and collecting money from buyers. Therefore, buyers need to exercise immense caution before they entrust their savings with a developer. Developers contend that they pay a penalty for any delay. But the penalty they pay doesn’t really cover the total cost of the delay: even if it covers the interest cost on your home loan, it doesn’t cover the rental cost that you pay while you wait for your flat to be delivered. At least in case of listed entities, potential buyers should look at the developer’s balance sheet and avoid those who are heavily in debt. A good idea would be to book an apartment which is close to completion, even if it costs more. But the bottom line remains that till the sector gets a regulator, developers will continue to take buyers for a ride.

shailesh said...

Property demand revives

In a providential turn of events, the global economic slowdown has provided end users a unique opportunity to buy their long cherished 'sweet
homes' as prices in many pockets in the National Capital Region have fallen steeply. In particular, apartments in the new launches are now available in some markets at almost 50% of the prevailing price a couple of years ago. The average price in Gurgaon has fallen by almost 30% and in Noida by over 15% since 2007. Samir Jasuja, founder CEO of realty research firm PropEquity, says prices have fallen to the prevailing levels of 2005.

The impact of global slowdown on the Indian residential real estate market was most visible during the second half of 2008 with sale of apartments and villas almost coming to a grinding halt. Particularly, in the third quarter, between October and December 2008, the total number of new units sold in Gurgaon came down to an all time low of 256, as shown in the chart. According to PropEquity, by June 2009, Gurgaon had an unsold supply of 17,680; Ghaziabad had 17,028, and Faridabad 11,026. Interestingly, the unsold supply in Noida and Greater Noida is very low as developers effected a sharp price correction.

Anonymous said...


You are the only one... who gives true picture.... of Real Estate in India.....
I have realised.... that I am a fool.... and that I was living in dreams...Forgive me...
Request all to listen... to BB seriously.... and buy houses as he says....

-Retired Old Man

Anonymous said...

10th-largest bank failure in U.S. history

Regulators shut Guaranty Bank
By MARCY GORDON, AP Business Writer Marcy Gordon, Ap Business Writer – Fri Aug 21, 11:37 pm ET

WASHINGTON – Regulators on Friday shut down Guaranty Bank, a big Texas-based lender felled by losses on loans to homebuilders and borrowers, in the second-largest U.S. bank failure this year.

Guaranty's failure, along with those of three banks in Georgia and Alabama Friday, brought to 81 the number of U.S. bank failures in 2009, a mounting toll and the most in a year since 1992 at the height of the savings-and-loan crisis

While losses on home mortgages may be leveling off, delinquencies on commercial real estate loans remain a hot spot of potential trouble, experts say. Many regional banks like Montgomery, Ala.-based Colonial hold large numbers of them. Many companies have shut down in the recession, vacating shopping malls and office buildings financed by the loans.

Anonymous said...

Analyst Bove sees 150-200 more US bank failures

August 23, 2009: 04:51 PM ET

NEW YORK (Reuters) - A prominent banking analyst said Sunday that 150 to 200 more U.S. banks will fail in the current banking crisis, and the industry's payments to keep the Federal Deposit Insurance Corp afloat could eat up 25 percent of pretax income in 2010.

FDIC Center for Financial Research Working Paper

Bernanke (1983) extends the FS analysis to incorporate the effect of bank failures on investment spending. In Bernanke’s bank-centered model of business finance, firms depend on bank lending for investment and working capital funding. Firms typically have a long-term relationship with a single bank and when the bank fails, relationships are dissolved and the information and trust gained through the relationship are lost. When bank-dependent firms seek funding from new bankers, they face increased costs until they can establish new banking relationships. Thus, for some period after a bank failure,investments by bank-dependent firms are discouraged by increased funding costs and investments may be limited by the availability of internal funds.

Anonymous said...

More trouble on the way

What the Stress Tests Didn’t Predict
Published: August 22, 2009

Institutional Risk Analytics gave 4,234 banks a rating of A+ or A (as a measure of their financial soundness) as of June 30. That total was down 21 percent from the end of March and 25 percent from the end of 2008. Meanwhile, it slapped a failing grade on 1,882 banks as of June 30, up 16.5 percent from the end of March; the number with failing grades had dropped a bit in the first quarter.

This downward migration is a sign that more banks are now feeling the effects of economic conditions regardless of their business models, Mr. Whalen said. In other words, even the best-run banks are having trouble escaping the impact of a sluggish economy and high unemployment.

SURELY, investors in financial companies have earned a respite from their long slog of losses, and the recent rally has been a tonic for damaged stock portfolios. But it’s simply not clear that the banking industry is out of the woods. It took many years to inflate the enormous debt bubble that popped in 2007. The deleveraging process, which is nobody’s idea of fun, will take a long time, too.

Shriniwas K said...

John Stewart Rocks.. My advise is - Buy if you think you can afford and not falter on EMI. Buy if the project is ready or 90% complete. Buy only if you get 10% discount over the quoted price.

The economy is in no condition of recovering for at least next 2 years. So prices wont bounce back no matter what anyone does. However the rates wont collapse as some people here had expected. The reason is simple, there is undercurrent demand, and excess supply. The bridge is very shaky. with few people willing to cross.

I think you should cross it if you really dont mind prices correcting further, thats why go for ready or near ready possession.

I only expect 10% more correction - but no bounce back till late 2011-early 2012

my 0.02$

Anonymous said...

@Shriniwas K

You really sound pompous when you make these kind of claims - "undercurrent demand, and excess supply"

How do you measure either of those parameters? No numbers..just egoistic opinion's??

Ha Ha Ha Ha Ha ...Loser...

Go ahead and buy houses..don't try to influence others...

Anonymous said...

Considering all the new entrants being out of this giant ponzi scheme (freeze on new hiring, lay offs due to 'Poor Performance' ) and rise in defaults due to reduction in purchasing power ( reduction in the monthly salary by 40 to 90%)..the housing prices/rents are set to crash by 50 to 60 %...

Anonymous said...

"My advise is - Buy if you think you can afford and not falter on EMI"....why would anyone buy if the outrageous price of the flat/property doesn’t justify the fundamentals?

this is utter nonsense

Venkat said...

""My advise is - Buy if you think you can afford and not falter on EMI"....why would anyone buy if the outrageous price of the flat/property doesn’t justify the fundamentals?

this is utter nonsense "

Excellent thought unfortunately the bubble would not have come if people are sensible like you... Nowadays when people discuss about property i keep quiet... I dont have energy to educate 99 % people who think other way

Anonymous said...

The second dip in recession coming after Labor Day.

Both Dow and Sensex to reach new lows. Would be down by another 40%.

Anonymous said...

(A report from a reliable source)

Just like the arrival of tiny birds called 'swallows' marks the beginning of summer, the arrival of a phenomenon in the Indian real estate market is also known to signal the beginning of a season. The season of a rise in property prices that is. And what is this phenomenon? Well, it's nothing but the tendency of brokers to start underwriting more and more properties so that a perception of scarcity can be created.

As per a leading daily, the nexus between the builder and the broker, which pushed property prices to record highs in 2006 and 2007 in the NCR (National Capital Region) is back in business and hence, buyers better watch out.

Buoyed by lower home loan rates and reduced property prices, end users are once again sending out the feelers for buying properties and this is making the brokers confident that the properties they underwrite will be offloaded at a later date with a hefty premium. This is also a win-win situation for the builder as it not only results in upfront sales but also keeps the price from falling any further. It's presumably on the back of this phenomenon that a clutch of high profile firms in the real estate industry have claimed to have recorded buoyant sales in the past few months.

So, if you are looking to buy a property in the NCR, or for that matter any part of India, get ready for artificially inflated real estate prices!


Anonymous said...

How did Bindaas Bhai caught H1N1 virus?

shailesh said...

Some BB Jokes,

How did BB made conclusion that it was Sellers Market?
The bill board on large building said "Sale, Sale, Sale. Everything must go."

shailesh said...

Rs 5000cr redevelopment project up for grabs in Bandra

Who will buy all these properties at Jacked up rate of Rs 10000+ per sqft.

Ambika said...

BB is great, people just cant stop talking about him. I just went thru some of his old post. Guys he is spot on!!! surprisingly he has only spoken about Bombay!! No wonder why people over here hate him.

Guys like BB will only make money and people like us will retire and live only miniscule pension.

Anonymous said...

It is a Prime mortgage crisis ( plus subprime ) now....

What rebound? Foreclosures rise as jobs and income drop

The rise in prime delinquencies . . . is a clear indication that employment is the driver of mortgage performance, with the worst performance coming in those areas that are combining jobs losses with large drops in home values like California and Florida," Jay Brinkmann, the group's chief economist, told McClatchy. "We won't see a turnaround in delinquencies until we see improvements in employment, most likely the middle of next year."

Forty-one states notched a rise in their foreclosure rate for prime fixed-rate mortgages in the second quarter, and prime fixed-rate loans accounted for one in three foreclosure starts. A year ago they were one in five starts.

Prime fixed-rate loans are 65 percent of all U.S. mortgages outstanding, but more than 32 percent of foreclosure starts from April to June. They also constitute 27 percent of all U.S. loans now in foreclosure, up from 17 percent in the comparable 2008 period.

The Making Home Affordable effort, however, is geared toward borrowers who have jobs and income. The increased rate of delinquency and foreclosure on prime fixed-rate loans reflects massive job losses occurring nationwide. Workers losing jobs won't qualify for housing help.

Anonymous said...

Ambika, Nupu, BB, Shriniwas ..whatever you choose to call yourself..

It's not difficult to make you out. You are funny and also very greedy since you are trying to manipulate and keep alive the perception that RE is alive..This is probably because you have still not managed to exit your holding and if some innocent gets slaughtered due to all this manipulation, its no sweat for you. You are the type of people who used to be cannibals in pre-history and now look civilized but have the same tendency.

I wish all the worst to you and your type..and am sure all the bad wishes are being showered on you by countless others who have been hurt financially by all this manipulation.

Anonymous said...

Excellent analysis of how the real estate developers spin the data/news to sucker in gullible buyers...

Existing Home Sales Far Worse Than Advertised.
By Barry Ritholtz - August 24th, 2009, 7:00AM

The latest housing consensus as sung in three part harmony amongst the media and green shoots crowd. Their song goes something like this:

1) The worst of the housing trouble is now behind us;
2) Only recently, Housing was “Getting worse more slowly;”
3) That has transitioned to “Housing is getting better.”

I don’t believe it. IMO, all 3 are misleading or outright wrong. This post explains why.....

shailesh said...

Mr. Anuj Puri says everything is fine and we are on fire now. Go ahead and buy your dream home.

End users coming back to buy property: JLLM

Just wondering where were his analysis when the bubble was brewing.

shailesh said...

Big builders for swanky Bandra govt colony

Shriniwas K said...

Stop yelling at me. All I wanted to say was that buy if you can get a steal deal.

The undercurrent demand is from people like you and me who have saved enough for a down payment and are confident of a decent loan say 20-25 lakh

Many places in North West Pune where the rate was being quoted 4000 rs psft is now down to about 2200-2400 psft

I still feel even if the rates fall they wont go below 1900.

I think if you are in need for a house, and this suits your needs, this is a steal deal. Of course if you have money to put down and get only 40-60% of the property as loan.

The issue is surmising in the bottom of the bear market. The bloated prices in Mumbai are artificial agreed. But in Pune, the market seems to have cooled off. I would also thank the H1N1 scare that has reduced short term demand in Pune.

Heil Schwein

Example, if I am getting a nice flat for 30 lakh, I take loan of 20 lakh, I can repay it in less than 2 years @8-10%, what makes you guys think that is bad?

Even if I lose Rs 5 lakhs in the price of the house due to further correction, I save up on a hell load of cash by repaying my loan early. (I know it doesnt make fiscal sense but it nevertheless gets me the satisfaction of a fully owned house)...And this is not for investment purpose as my parents will be staying there.

To be honest, how long shall I wait, I dont have any qualms if I get a loss of 4 - 5 lakh, as I will recover this in way of rupee's screwed up conversion value.

Anonymous said...

Heil Shriniwas...

"Stop yelling at me. All I wanted to say was that buy if you can get a steal deal."

You DID not say that. You were saying buy now..big difference from saying go ahead for a steal deal.

Secondly, all your thesis is around you and what's affordable to you in Pune. Yet you generalised in your post..The world is not you dear Shriniwas and the world is not pune.

Before you advice others on what to do, learn to put appropriate disclaimers.

I still think you work for BB.

Because you make the same sense as him, which is nonsense!!

Shriniwas K said...

@All people who think I work for BB.

I have been one of the first critics of BB. I am NOT buying so that the rates will go up in the future. I said I may buy because I think I can afford it now.

Firstly when I said you should buy if you can afford, it solely depends upon what is logically affordable.

Shailesh posted this in the 3rd comment
"HDFC says 5.1 times annual income is the maximum affordability of a household. For instance, for a household with an annual income of Rs 3 lakh, an affordable house would cost Rs 15 lakh."

If yo you make 5-7.5 lakh per year, you should be comfortable with something around 30-40 lakh not more.

Now in suburban Mumbai you will never get anything for this rate. However in outskirts of many other cities - Pune Jaipur, Ahmedabad, Hyderabad, Bangalore, you can slowly but surely get such deals.

If you cant get that value in your city, is that my fault? And if there are projects with less rates (i.e 5.1 * annual salary), what makes you think its bad to buy?

Anonymous said...

Mr. Kulkarni,
If you think it makes financial sense for you, please go ahead and buy.

We'll buy only when the prices have reached bottom or close to bottom which means a further reduction of 50%.

Thanks for your advice.

Bindas Bhai said...


Self denying mode is the best mode. Prices in Mumbai have already shot up atleast by 20% in most of the pockets and guys like you are still in denying mode. Whom are you trying to fool, yourself?

Shriniwas, it is just matter of two quarters that Pune will shoot up (minimum 25% proper Pune ). I agree with you, this is the right time to buy.

You guys will buy RE at the peak and trust me the moment guys like you buy RE will fall.

Where is Vulture, Bharat aka Retired Old Man and all the bears? Absconding, hiding their faces where?

Chembur Diamond Garden was 8.5k pre election results and I had mentioned that minimum 50% increase in two years. Now the same property is 11K. Can someone do the working and let us know the growth?

Pal this is just the beginning there will be further momentum upwards. I will let you the prices once gain in Diwali.

Minimum 50% increase from pre election rates for Mumbai in two years!!!

Bindas Bhai

Shriniwas K said...


Please dont go overboard with your predictions. I am just saying that some builders are willing to compromise on the table.

I dont see any upswing in converting potential buyers into real buyers unless the prices are not unreasonable. So 50% upswing is not the correct prediction.

I see a nice 2 year stagnation - like a mexican standoff between buyers and sellers with the occasional shot fired. 5 - 10 % movement + or minus.

Now that the Credit default swaps and collateralized Debt obligations have been strictly monitored by the Fed and SEC, US markets have kind of shrugged off their weaknesses.

THe real trouble in the US is the commercial real estate bubble and the possibility of a second wave of poor consumer sentiment which would cause more job loss and send down the economy spiraling again.

I think Mumbai may see more correction if the US/EU financial sector suffers blows.
Pune, Chennai has more manufacturing and IT related industries, Mumbai, Ahmedabad depend a lot on trade and commerce. Bangalore, Hyderabad strictly depend on IT. Delhi is a dodo - I dont want to even bother commenting on.

All other Indian cities will suffer from bad stagnation for at least a year.

This is my new naara -

No steady rise/steep fall till 2011.

Anonymous said...

Dumb@$$ Bhai Says.

"You guys will buy RE at the peak and trust me the moment guys like you buy RE will fall."

Guys we have got our answers. Vik, Srinivas, Shailesh please buy now so that RE falls aand we can buy six months later.

BB Joke:

BB applied for H1N1 , thinking that it was a new US Visa type and caught Swine Flu virus.

Bindas Bhai said...


What i have said about Mumbai has come true so far. I will get back to you after six months about Pune. Let's wait and watch

about: Crash

It is very difficult to predict a crash but trust me I will also want a crash but i would rather move with my experience and take a call then going on certain selfish write up, beliefs and analysis.

Bindas Bhai

Bindas Bhai said...

Retarded Old Man said:
Guys we have got our answers. Vik, Srinivas, Shailesh please buy now so that RE falls aand we can buy six months later.

Please let me know if they have brought.

Bindas Bahi

Anonymous said...

Kansa became so obsessed with Krishna that he would see Krishna everywhere. In trees, in spears almost everywhere. Same happened with Ravana before he was killed by Lord Rama.

The same thing is happening with you Dumb@$$ bhai. The above post and joke was by me and not by retired old man.
It appears that old felllow's comments hurted you so much that you are still appllying anointments to your rotten @$$ :)

Come on dude, you don't have just one basher.There are many chaps other than old man who feel that you are a shithead.

Regarding Dumb@$$ being rich, haha he sounds like a beedi ki factory ka mazdoor.

Anonymous said...

You are going to get your ass kicked by all the people who you are suggesting to buy.

If you want to buy, go ahead and buy. Let other people decide by themselves. You are behaving like a pimp for RE lobby.

Anonymous said...

Retarded old man stop your mythlology crap and add value to this forum instead of talking like a failure.

I guess you are living up to your name.

Red this and enjoy a$$hole.

Anonymous said...

BB, is it prudent to buy at 9k in Deonar ? Need the house to live in only after 4-5 years. Is there likely to be any further upswing, or prices are likely to remain stagnant then maybe I buy later?

Bindas Bhai said...

Prices are likely to go up for atleast two years from now, buy now and take an exit between 13 and 14.

Bindas Bhai

Anonymous said...

BB, what confuses me is that how come then appartments are not selling at 10K levels? I had seen Oliva appartments by Kukreja (near Runwal), they qoute 10k, location is good, still seems like only few appartments sold. Who will buy at 12k 2 years down the line ? The salaries are not rising much at all now, what will change to bring about further price rise?
Also Hiranandani is struglling to sell at 12k seems like..

Bindas Bhai said...

Hiranandani is selling at 13k non negotiable. Fundamentals of market moves on demand/supply and affordability. Fundamentals get valued once in a while god knows when but herd mentality and sentiments drive the market.

People who cannot afford Dadar, Bandra and other areas will come to Chembur. Besides this Chembur is getting uplifted by lot of other infra projects.

Trust me I just closed a deal. I just sold a 4 BHK flat at diamond garden, sold to an investor at 11k. This investor feels that Chembur will touch easily 14 to 15k in a years time.

Now slowly you will see investors also coming in and driving the market. Pal go and close it and sell at my recommended price, you will thanks me.

BTW we all know Kukreja's reputation.

Bindas Bhai

Anonymous said...

I guess the real analyzers are a working class vs pro BB who are actually full time guys sponsored by builders lobby from Mumbai and Pune and paid very well to create noise. Builders and politicians are no diff and Politicians very well know the tricks of fooling masses with intelligent campaigns across all media. Some one must already posted the link but again I would like bring attention to the ET article -

unfortunately economy is drifting more towards emotions, greed and mass opinions than basic fundamentals and people's own judgement. many of the masses do not have time or don't do their own study and judgments, they just see where is the majority and thats what this nexus are trying to do. create more noise of rosy economy picture and herd mentality masses will just start jumping. and the worse part is , these fools not only make suicidal decisions, they make others to do the same just to gain security feeling that we not alone. hope it make sense

- Anil

Anonymous said...

' I just sold a 4 BHK flat at diamond garden, sold to an investor at 11k.'

-- so BB you finally admit you are an RE agent :D

Anonymous said...

Guys Please Suggest Alternate Names for BB. Some alreasy used are

Anonymous said...

Retarded Old man has got a new name, Anil

Anonymous said...

Abe Ch**ye BB urf Bhadwe.

Ye jo DNA ka articlle ka link bheja hai hai na tune ek bacchi ne likha hai Pooja Sarkar ne.
Use personally jaanta hoon. Bachelor of mass media kiya hai . passed out in 2007. very junior but office main matak matak kar article chapwane lagi hai apne. 23 saal ki umar main kisi ke article nahin chapte. ladkon ko to bolta hai ki angrezi sudhaaro.
pehle doosre sector ka analysis karti thi wahan se nikaal diya aur real estate section main daal diya hai. Ye aur iska boss dono 10-10 din ki chutti per jaate hain . all sponsored by builders. Unke paise se aish karti hai to ye sab to likegi hi.

mujhe to lagta hai pooja ka boss hi BB hai.. Kaala Kaloota . Aaina phod de aisi shakal hai.

Anonymous said...

Jaat bataaya aakhir mein khajur. Baap se baat ker rah hi kya? Sudar abhi waqt hi. Jhopde se bhar nikal Retarded Old man.

Anonymous said...

Anonymous said...
Guys Please Suggest Alternate Names for BB. Some alreasy used are

why dont you ask your mom she will be the right person


Anonymous said...

Heard Raheja will be launching new project in Deonar , any idea about rates BB? since you are insider of Rahejas seems to be

Anonymous said...

Friends once again this is Bindaaas Bhai, Dumb A$$ site. I got robbed for 10k.

Friends please be careful and stay away from this site.

-Retired Old Man

Anonymous said...

Old man has gone crazy, BB you have to be blamed for this.

Anonymous said...

The crisis which was triggered due to CDOs going awry due to default on subprime residential mortgages has entered into a new phase. The current crisis is of

- Prime residential mortgage
- Alt A & Option ARM loans
- Commercial real estate mortgages
- Reduced purchasing power due to loss of pay

- Systematic Bank failures
- Reduced credit availability to the shoppers due to strict regulation for credit card companies.

- Baby boomers worried about retirement savings due to hit on 401(k) and increasing Medicare costs

- Rising Unemployment: One out of every five people is either underemployed or unemployed. The unemployment rate is 20%

Prime residential mortages were considered safe but recently they are constituting the major ( 27 percent of all U.S. loans ) chunk of the foreclosure. This is driven due to rising unemployment. The official figure of 9.4-9.6 is the twisted one because it doesnt take into consideration the people who are underemployed or the people who have given up job searh after prolonged time. The real unemployment rate is 20% Please check following reference.

1. Visual Guide to Unemployment.

2. Part-Time Workers Mask Unemployment Woes

3. Unemployment Numbers: A Primer

Since there are very less new jobs, the industry that was dependent on younger generation for quick sale has started shifting focus to the group having ample money in the kitty e.g. retirees/ baby boomer but this segment has become more prudent since it can not depend on 1. rising stock market 2. home equity loans ( using home as an ATM machine) and much worried about the finances Ref .

There is going to be substantial reduced spending due to "Underwater Home". The home owners having mortgages worth more than the value of the home. The number is set to increase to 48%. This is a staggering number. Underwater’ Mortgages to Hit 48%

The problem is going to get compounded to due to reset in interest rates for Alt A and Option ARM loans.

The consequences are very severe for all the sectors.

Coming back to IT/ITeS business, the clients are asking the vendors to give the discount of almost 32-35%. The size of the pie is becoming smaller and there are more competitors. So the IT companies in the efforts to retain profit margin have already started trimming the costs guessed it right...employment salaries....The companies are applying every trick in the book to lay off employees. Recently (Accenture, Mahindra Satyam ) the focus has been on the senior employees i.e. Senior Manager, Group Manager, Engagement manager - non billable resources ...and the more has to follow. The new employees are getting peanuts. So it is anybody’s guess that the prices for the big ticket items e.g. houses will crash.

The bankers, brokers, builders, speculators can not sell houses/flat among themselves to jack up the prices artificially and hold it for forever. It is the genuine buyer who will be dictating the terms.

Trust your self said...

I tired of people saying the bottom is over and its time to buy.. I am looking at Hiranandani thane for the past 1 year and the rates have only increased. It seems there never was a bottom at Hiranandani thane. The current quoted price range from 5300 to almost 7000 depending on the area. The price does not include floor rise. So say a 1000 spft home is almost 53lac + all the other amenities in the far off HE in thane which can fetch maybe 10000 to 12000 rent seems way off to me. I would put the money in an FD and rent one of these homes with money to spare.. Just parking costs 2lacs. I think the involvement of Black money cannot be ruled out for people who are buying at these rates. have you seen the population at he. All retires who bought when the rates were between 700 to 2000 psft. So buzz off all the bulls and give us a break.

I bought one in 2004 @ 1700 in He thane. Then it went upto 3200 which seemed ok in 2006. But suddenly they jacked up the rates from 3200 to 5000. If someone bought at 4 or 4k please come forward and just reveal the timeline.

Cool Head said...

Speaking of Hiranandani Estate, yes the place seems occupied, but you are right, most people I know have bought it when it was below Rs. 2000.
And if you look at the other project Hiranandani Meadows, there are a lot of empty ghost like buildings with nobody in sight. The first building only is occupied, all later ones are empty. I have heard the cost of flats there is 75 lakhs to 1 crore! Come on, if you had 1 crore, why would you buy a flat in Thane of all places? In New Jersey you can get an independent home for this money at todays rates.
So the whole situation looks ridiculous and maybe it seems poised to crash-somethings gotta give!

trustyourself said...

Ok now I am in a commenting mode. Ever since BB and bulls made their foray into this website with their esteem expertise on the real estate in chembur, I have been wanting to ask BB when did you think was the bottom in mumbai if, according to you prices will keep rising in mumbai from now on.
You say prices have gone up 20% in chembur to about 11000 psft.

If NRI's are buying at these rates or even close to these rates they are real suckers. People in chennai are buying Hiranandani @ 4 to 5 k and its about 1 hour from chennai city. Moreover HE thane is marred by the forest land issue so are some projects in mulund. If you go through certain desi forums you can read about indians who had poured in all their resources in US housing market only to see it all go down the drain. People in India need to wake up to reality...Its coming to our shores...Ofcourse its not yet over in the us. The Alt-A mortgages are about to set at the end of this year. Its going to be worse in the next 1 or 2 years. As some posters have noted commercial prop is another area to watch out. Wake up...

Anonymous said...

There is always a 2-3 years lag between US and India. WHen housing started going up in US in 2001, in India it started in 2003-4.

US started to decline essentially in 2008 and India will see the decline starting 2010.

Buying in India is like catching a falling knife.

A lot of Indian techies in US are going back. No jobs. They got screwed by buying in US that crashed and the money they have invested in India will be wiped out in the next few years if they don't sell.

US is in a bad shape. Moreover, Bernanke is going to try to remove excess liquidity from all over the world in his next term to avoid inflation. Which means No more Stupid money floating around.

Anonymous said...

Bindaas B...
You need to behave otherwise I'll have to call Vik to give you a timeout.

Shriniwas K said...

Awrra All you anonymous posters (or may be its just one person).

Please dont throw your personal issues at anyone.

@Anonymous 3-4 hours ago - you say that US market started decline in 2008 - AFAIK it started to decline in 2006 end (I have been here since 2005)

@ some crazy anonymous who is typing in Hindi.

So what if any reporter is 23 and has done Bachelors in Mass Media. What is your problem? She is just doing her job. I hate to see people talk derogatory terms about women. This is not "Pakistan's housing bubble" so stop behaving like some medieval Sheikh who just thinks women should sit at home and make babies

@ Everyone comparing US and India
We have different situations -

See in US the market is in the damn if you do and damned if you dont mood in terms of risk taking. If we start digging the history it will all go back to Clinton who capitalised on the fall of Soviet union by pushing for sub prime loan, Ronald Reagan (who pushed for cheaper loans and free money borrowed from East Asian country surpluses), The OPEC noose on the oil markets in the 70s following Israels aggression on Egypt and the fallout causing Americans to become more globally financially active and manipulative. The chain keeps going back -

so these are indeed troubled times but many people who are in a position to take risks can take risks, and can buy/sell do whatever.

Everyone has a job and everyone maximizes profit in a market economy. If the Government ever cared for economical housing it would have awarded the housing boards like MHADA, HUDCO, DDA, etc to get more land and build more houses - but it didnt and it cant - because govt work is inefficient and quality is extremely poor.

I have spent my childhood in a MHADA flat which almost looked like mud hut (its still valued at 15 lakh for a 500 sq ft 22 year old block :P )

I think there will be a nice phase for next 2 years in all cities except Mumbai proper. THane, Navi Mumbai and Kalyan Dmbvli will definitely cool off. allowing people with some ability to commit for house, to go ahead and buy.

Its hard to say anything about Mumbai from Borivali upto Andheri and also the eastern suburbs - There has been lot of black money and rotten deals that are outside of public eye. so the general bubble bust rules may not apply.

Anonymous said...

If we start digging the history it will all go back to Clinton who capitalised on the fall of Soviet union by pushing for sub prime loan, Ronald Reagan (who pushed for cheaper loans and free money borrowed from East Asian country surpluses), The OPEC noose on the oil markets in the 70s following Israels aggression on Egypt

What all this has to do with the current crisis caused due to Greenspan's easy credit policy - keeping key interest rates too low for a long time...applying ONE & THE ONLY solution of "reducing the interest rate" to keep Wall Street happy..and the same policy is being now followed by Helicopter Ben Bernanke ...

In past it was Paul Volcker who managed inflation successfully (unfortunately it cost jimmy carter his presidency) by hiking interest rates.

Anonymous said...

Buying a Flat in Provident is a foolish option. They have very regid policies. Instead Provident is making people fools.