Thursday, March 31, 2011

“Housing Is Dead”: Bubble Still Bursting Here and Abroad, Says Harry Dent



After initial US based review, he talks about China and India, particularly Mumbai.

31 comments:

Anonymous said...

Harry seems to be dead right. It seems the end is coming for China, India, Aussie and Canadian bubbles. Brazil will go down but will sustain a few more years due to Olympics.

Anonymous said...

Humpty Dumpty have raised the prices in Mumbai. Spoke with Kalpataru and Lodha.....they fucking rock.....they get a hard on increasing their prices. so bitchin'. I want to fuck their wives because its the sex which is giving them this aggression. Yeah baby lets go fuck'em all

Anonymous said...

Some Economists See Canada’s Market Ripe for a Correction, With Debt Rising to Worrisome Levels
By MONICA GUTSCHI And DON CURREN

TORONTO—As much of the U.S. housing market limps along, home prices north of the border are on a fresh tear, fired up in part by a borrowing binge that has sent Canadians’ debt to record levels—and now higher than their notoriously profligate U.S. neighbors—while income growth pokes along.

There are signs that debt-laden Canadians might not be able to adjust if rates rise. Above, construction workers building homes in Calgary last May.

All that has raised worry at the country’s central bank, which repeatedly has warned about rising debt levels, and among some economists, who say the market is ripe for a correction—maybe a steep one.

David Madani, Canada economist at Capital Economics, an independent research consultancy based in London, says Canadian housing prices could be in for a 25% drop in the next three years, a correction he says is warranted by the now-inflated ratio of house prices to income.

House prices have risen to almost 5.5 times disposable income per worker, well above the long-term historical average of 3.5, he says.

“We’ve been through a fairly hefty housing boom over the last 10 years, and the next three years is going to be an unwinding of that,” Mr. Madani says.

Anonymous said...

India's financial crisis is coming. Fools are still buying and smart people are making profit and running away. Time will tell the truth. I'm not a buyer until all prices correct by 60%. Else, I'm a happy renter and saver.

Anonymous said...

Hi

Any of you have information regarding when in the history of Indian real estate the market had burst or was in bear phase. Although I heard it burst in 1999 and started rising again in 2003 I cannot find any links on the net.

Also was it the only instance when the it was down or are there more instances?

shailesh said...

I remember prices almost doubled in Mumbai during 91 to 93 period. After the crash in 94, prices went half.

Anonymous said...

Thanks Shailesh,

So after 1994 crash when do you remember prices started rising. Was it inbetween 1994-2003 or in 2003?

And also have you heard of any other instances before.

I could not find a report or history about Indian real estate on the net. Please share if anyone has.

Anonymous said...

Market crashed around 1995. Remained down in the pits till about 2003.

Coincidentally, whenever Congress is in the seats, prices rise skywards. When BJP was in power, prices hit bottom! Guess the stage is set for BJP to come back, what with all these scams - Adarsh HSg Soc(seems to have disappeared), CWG (Cover up in full swing), 2G (scape goat's being still discovered) and not to forget the 26/11 mysteries of bulletproof jackets not working, bullets not firing, grenades not working...our defence and police procurement audits have not happened and corruption is sky high.

Congress = Scams + Inflation.

Anonymous said...

As far as I recall, Indian RE market was dead between 1996-2002. There was no liquidity in the market and business was very very slow. Then came the Republicans in US and Congress in India, both with the same agenda. Massive bubbles were blown up not only in US and India but Govts. all over the world followed them. Bubbles sprang up in many parts of the world.

USA was smart to get its bubble pricked before it got really bad. Other places it has gone so bad, that there could be revolts in the coming future. Govt. are scared and trying hard to keep these bubbles propped up. But ultimately, they will burst and cause a lot of pain all these economies.

Anonymous said...

So if the market remained bearish for 8 years, then do you think 8 years are enough for bullish Market ?

If the long term trend in RE market is bullish then bull phase should last longer than the bear phase right?

But is it the time or the rise which decides the phase?

==> said...

As far as I recall, Indian RE market was dead between 1996-2002. There was no liquidity in the market and business was very very slow. Then came the Republicans in US and Congress in India, both with the same agenda. Massive bubbles were blown up not only in US and India but Govts. all over the world followed them. Bubbles sprang up in many parts of the world.

USA was smart to get its bubble pricked before it got really bad. Other places it has gone so bad, that there could be revolts in the coming future. Govt. are scared and trying hard to keep these bubbles propped up. But ultimately, they will burst and cause a lot of pain all these economies.


==> With bubble came profits, growth, many Indians are rich today. Democrats came to power in USA, but with that came deflation and now within few years they are on edge to lose.

Even if BJP comes to power for now, it will be ousted in few years and will have bull run.

Anonymous said...

With bubble came profits, growth, many Indians are rich today.

That is what happens in all giant Ponzi schemes. The first few people always get rich. The rest pay the price.

Exactly how many people do you think got rich in India as a result of the bubble? This is the first time I have seen a bubble being equated with prosperity.

Sorry my friend, you sound like the dimwit who peddles drugs at a street corner with the logic that drugs will make you happy.

For how long? If one might ask...

Anonymous said...

=>Said:

When bubbles burst, be it Democrats or Republicans , no one can do anything. The RE market is still collapsing in US and will be down 20% more this year. No one wants to buy and easy money is gone.

Same would happen in India. Once it collapses, all the buyers will become sellers and the inventory would increase drastically. Banks will stop providing loans. With valuations of RE down, banks who have loaned too much will start hurting. People will start walking away from houses. No buyers even at 50% of the peak prices. It will result in unemployment in almost all sectors related to RE.

Be it Congress or BJP, no one would be able to save this mess. They will try to re-inflate the bubble unlike Democrats who have been printing money to cause inflation but that also will not happen quickly unlike USA.

So, be careful about buying in this market. All this black money/stolen money will evaporate.
Easy come, easy go.

Anonymous said...

as long as black money exists housing will remain high. Dent has rightly said that this is a bubble of the rich.

Anonymous said...

Bloggers here and people in India need to understand that it is NOT black money casuing this massive run up in RE prices. They need to understand the world economy and prices. If black money thing was true, there wouldn't have been no bubble in Australia, Canada, Singapore, Hong Kong, USA etc. as there is nothing like black money in these countries.

It is due to broader macro economy issues like massive Govt. stimulus, Keynsinianism and taking a lot of debt. All that would be exposed in the months to come. These things have caused more black money and not the other way.

Anonymous said...

Rupee depreciation and massive inflation in India are more likely than RE prices going down.

That is what has happened with every Congress govt in the past. Expect the same till 2014 at least - and effects to linger till 2016 before we Indians get over our own currency printing (negative long term bond real interest rates here in India - unlike USA where long term bond yields are still positive vis-a-vis inflation.

When the crash comes in India, it will be the Rupee which will crash, not RE prices.

It happened in 1984-1989, 1992-1996 and 2004-2008 - By the time any congress govt ends its reign, there is massive inflation and Rupee depreciation.

Better get into whatever real asset suits you - India's fiat currency is toast

==> said...

That is what happens in all giant Ponzi schemes. The first few people always get rich. The rest pay the price.

==> Bingo! So you agree that people do get rich with bubble, ponzi schemes or whatever. India is land of scheme and thieves and cheats.

Exactly how many people do you think got rich in India as a result of the bubble? This is the first time I have seen a bubble being equated with prosperity.

==> Many. Seen many people in Mumbai living envious lifesytle. Seen people pay in crores in cash for RE. With bubble comes opportunity to make money. So yes bubble is being equated with prosperity it you know how to use this window of opportunity.


Sorry my friend, you sound like the dimwit who peddles drugs at a street corner with the logic that drugs will make you happy.

==> I don't get into unneccessary arguments.

==> said...

Same would happen in India. Once it collapses, all the buyers will become sellers and the inventory would increase drastically. Banks will stop providing loans. With valuations of RE down, banks who have loaned too much will start hurting. People will start walking away from houses. No buyers even at 50% of the peak prices. It will result in unemployment in almost all sectors related to RE.

==> DON'T COMPARE USA to INDIA. Most of USA survives on credits and 95% RE transactions are on mortgages. India people pay almost 50% black, other 30% down payment in white and rest on loans.

Be it Congress or BJP, no one would be able to save this mess. They will try to re-inflate the bubble unlike Democrats who have been printing money to cause inflation but that also will not happen quickly unlike USA.

==> let's hope so. democrats are unable to inflate bubble because they cannot generate demand. With immigration tightening and less population usa is at losing end.

So, be careful about buying in this market. All this black money/stolen money will evaporate.
Easy come, easy go.

==> never seen this happening in land of cheats.

Anonymous said...

people pls put ur money in RE its th safest bet..after all who can u trust thescam ridden government or r angelic builders.be smart invest smart take out loans for crores to buy mumbai real estate.do not believe these economists.believe in BEN BERNANKE after all he was made in USA.ITS FORIEGN MALL..ALWAYS SUPERIOR IN QUALITY AND A BETTER BUY.

Kanjani said...

For the last 6 months there isn't any significant increase in real estate prices in Mumbai. The only development is that some builders have raised the black portion from 40% to 50%. Some even demand 55% in black . The black need not be in cash. Cheques are accepted and the payee information is filled by the builders agent. In majority cases, several cheques are required, each payee being some Hindu charitable institution. For the last 10 years, thousands of charitable institutions have sprung up, so as spiritual Gurus all over India.

No matter what the theories floated around, it is unlikely that the real estate prices would decline. They may remain unchanged for few years.

Foreign guys base their predictions on the statistics provided by government, some private companies with vested interests,and the overall economy. Therefore, it is unwise to depend on their forecasts. The money lender community (marwaris)have been conducting business in India for 100s of years and there guys are the pillars of real estate. Now that the swiss channels to hoard money are blocked, you see a lot of investment within the country, be it gold, stock market or real estate

Anonymous said...

Readers and Kanjani,

One think that needs to be understood is where is all this money coming from? Be it black or white?

I think it is massive printing of Rupees by Govt., some FDI, some IT and other business money. Majority is printing by Govt. and loans by Govt. to be spent in infrastructure. Once that tap has to be closed, there would not be money either black or white generated. People are looking at after affects of the money that has already been generated and needs to be parked either in RE or other assets. India already has a very high debt to GDP ratio and if it defaults, see what is happening in Portugal and Spain. There is nothing as India shining or growth or this is the new normal. Whenever reality will hit the bigger picture, all the liquidity will evaporate.

+> Said:
Your logic is based on after affects that money is there. Just think how the money is being generated? Read about the money base , M1, M2 for India.

Anonymous said...

I just woke up from a nightmare that the Fed bailed out the Central Bank of Qaddafi, Libya. One should think how much Indian banks took from US Fed and RBI in 2008?

April 1st, 2011 2:13 pm ET

Kenneth Schortgen Jr
Finance Examiner

The Fed has finally been forced to release information on institutions and banks that borrowed money during the height of the credit crisis, and the public now finds that Libya of all places, along with many other foreign banks, borrowed more money from the United States Federal Reserve than US banks and institutions did. Yet, the US government is now providing money and manpower to topple the same bank that they loaned money to in 2008.

Anonymous said...

Being in denial may help someone by way of mental peace, but the long term effect may be crippling. Examine all the theories presented whether pleasant or unpleasant and base your decision on your intuition. This applies to all business decisions.

A Mr. Kanjani pointed out, the foreign guys who predict our monetary health base their thesis/reports provided by our own 420 guys. Indian admire foreign goods for their superior quality but equating them to foreign opinions is utter foolishness.

My firm opinion is that the overall real estate situation wont improve until and unless govt cracks down on illegal money hoarders public tricksters. If the government jails few builders for clandestine activity for not reporting actual transactions, the whole market will hit rock bottom or to the actual value.

Let us hope that BJP comes into power and cleanses the system

Anonymous said...

India's foreign currency reserves exceed by 40% of the total national debt. Therefore, India going into the path of greece, ireland etc is out of question.

Moreover, the theory of printing money in excess is totally absurd. India isn't a banana republic or dictatorship yet.

Anonymous said...

Anon above:
Have you looked at India's debt/GDP ratio? Have you looked at this ratio for countries that are failing or have failed or going towards bankruptcy? Look it up for Spain, Greece and Portugal? India's is more than 80%.

Also, if YOU don't know how much is India printing, it doesn't change the situation that it is not a banana republic. 90% Americans don't know what their Fed is doing. All they see is economy is improving and doing better.

Lastly, do know why the middleeastern countries are revolting? The main reason is inflation and unemployment. Look at these figures for India. Think of the 80% people in India who are at the tipping point and their blood is boiling. You'll not see these people posting on the web, but they will show up anyday in the form of a revolt. Normal Indian is really unhappy with inflation and unemployment. Most people representing here are gainfully employed with high salaries, most money still coming for US/EU. Think of Aam Admi.

I think another round of inflation, high Oil prices and we'll see a backlash from 80% poor people.

Anonymous said...

@Anon above

India was 95% poor 1bout 30 years back. In fact, people were starving. No one revolted. What makes you think that they will revolt now. Now, the economy is better than it was 30 years back.

Indians always want to be subordinates. It is in our blood. This fact is what makes India, a slave country. Even a highest paid CEO of a indian company acts like a puppy when confronted by a white skinned guy. Our customs guys at the airport treat blacks and indians like shit, but are forever ready to please white guy, be them hippies, pedophile or scum.
No one is going to revolt my friend. Those with leadership qualities are always bought by the rich. rest all are sheep

Anonymous said...

30 years back the prices of basic commodities were affordable by common man. You must have read in 5th calss science book the basic needs: Air, Food, Water, Shelter and Sex. Let's talk about Shelter and Food. See where we stand now. Are they affordable for the common man? They will get to it and revolt to get it.

People should get out of their nonsense thinking that everything is fine and people are happy. Masses are really unhappy. It is a matter of time. I hope the crisis in middle east doesn't spiral as its imapct would come to India too.

Trade Show said...

Unesta offers accomplished real estate solution, property management services in Indian cities like Mumbai, Delhi, Pune etc, India Property Management Company. The main projects of unesta are: Hiranandani Palace Gardens (HIRCO- Panvel), B Safal Ahmedabad and IREO - Gurgaon, Try Unesta and get better profit also know about actual worth of your property in India.

rocksnroses said...

Guys we need to look at India in a different dimension..

first the money supply :
-FIIs : they brought a big chunk of money into India in booming time but how much? (FII to GDP ratio) and they mostly exit with profits so they actually take money off the table.

-FDI and IT wont it grow in the future too and will keep on getting inflows rather then outflows ?

Future source of money supply :
Huge flow of global money is looking for quality destinations. Where they are? Developed west? China? jst going on creating a oversupply of very expensive infrastructure for the sake of its GDP.
Doesn’t India provide an opportunity? We need all the basic infra for our ever growing population?

-Infrastructure : will be the biggest demand for money. Infra spending is unavoidable. Govt is not going to contribute all the money but private parties will hv to bring in the major part which they can, once they make projects n execution commercially viable. Cant it attract significant money from domestic and foreign sources?


Public unrest:
Unemployment: Where is unemployment? Business managers, administrators and organizations across the country (rural, urban, semi urban, cities metros everywhere) are crying inadequate supply of manpower (all kinds of, skilled or unskilled). Even daily labor is a problem for organizations from the business streets to interior factories.

Unemployment leads to migration. Think of Biharies, bhaiyyas, Bengalis and oria labor. That supply pipeline is drying up for cities like Delhi, Mumbai and industries across country. Isn’t the cost of labor skyrocketing everywhere?

Isn’t the rural income increasing? Thanks to massive improvements in road connectivity and telecommunication the face of Indian villages and towns is changing drastically.

Lot of people have made lot of money in last 8 years. Is all that money going to b converted in to gold n dumped under the floorings of drawing rooms?

==> said...

@ rocksnroses above:

==> Answer to all your question: HIGH INFLATION.

Anonymous said...

This is good blog with lot's of comments from well educated and interesting people. Legendary Warren Buffet has made billions of dollars in the investment. He always says, "When everybody is greedy it is time to sell, when every body is scared it is time to buy". So my investor friends please take his advise and don't invest in RE at this point. Wait and watch. If you are looking to buy home to stay then go ahead buy. Rented place is rented place , it will never give feel of home.