If you thought buy-one-get-one free offers were limited to trousers, shoes and other small-ticket items, think again. You could get houses too for free, thanks to Orange Properties, which came out with a ‘buy-one-flat-get-one-free’ offer recently for its Orange Resorts in Devanahalli, in Bangalore.
Sales didn’t quite skyrocket and the advertising campaign across print and outdoor met with mixed response, but given the current market conditions perhaps that’s understandable.
With real estate being struck badly in the slowdown, real estate developers, who were once riding a high, have now tightened advertising and marketing expenses. They have also had to think out of the box even while operating on leaner budgets. They have been forced to rework their marketing strategies to woo consumers at a time when the propensity to buy is not very high. Marketing initiatives may be fewer but they are becoming more focussed, specific and project-based, using direct and candid communication. And pricing is obviously the key premise around which the initiatives revolve.
24 comments:
Household Balance Sheet
G-20 efforts & central banks’ actions provided stimulus to world economy. Also govt.’s policy response provided lot of incentives to corporates & free money to banks for indefinite period. The effect is, improved corporates earnings. But household balance sheet is still deteriorating. The falling asset prices are deflating the house hold wealth [housing, pension investment] & cash flow [wages & salary]. The consumer bankruptcies are rising sharply. It means economy bottomed down only for corporates not for the household. So till the time household economy reach to bottom, retail sales & housing is in downturn.
Employment Bear
“The combination of weak wage growth and falling hours worked means that nominal weekly wages are actually falling.”
http://angrybear.blogspot.com/2009/06/
by-spencer-employment-report-appears-to.html
Consumer Bankruptcy Filings up Sharply
“As consumers continue to face increasing levels of unemployment and rising foreclosure rates, bankruptcy filings will continue to accelerate as families seek financial relief from the tough economic climate,” said ABI Executive Director Samuel J. Gerdano. “We predict more than 1.4 million new bankruptcies by year end.”
http://www.calculatedriskblog.com/2009/06/
consumer-bankruptcy-filings-up-sharply.html
Why Home Prices May Keep Falling [Robert Schiller]
Even if there is a quick end to the recession, the housing market’s poor performance may linger. After the last home price boom, which ended about the time of the 1990-91 recession, home prices did not start moving upward, even incrementally, until 1997.
http://www.nytimes.com/2009/06/07/
business/economy/07view.html?_r=1
So guys let it fall then only pick up, minimum 50% price cut is guarantee.
Vulture.
Economy Turnaround?
Old Comment from May 17th 2009 Post.
"UPA govt impact on real estate."
Has the market reached to bottom of recession?
Technically yes, Fundamentally not.
Media is flooded with both side of news; technical indicators are showing bottoming signs whereas fundamentally the issues are still there. To digest both the news one has to acknowledge the change in market. Lot of things of the past will never come back, new trends & changes will shape the market, align your investment accordingly.
As per last year’s survey of 50 economists, market will bottom in June-2009.
My own opinion is that economic turn around will happen in Sept-2009.
Nobel Winner Krugman Sees U.S. Recession Ending Soon
The U.S. economy probably will emerge from the recession by September, Nobel Prize-winning economist Paul Krugman said.
http://www.bloomberg.com/apps/
news?pid=20601087&sid=a8ZaruoJGPLM
So guys let it fall then only pick up, minimum 50% price cut is guarantee.
Vulture.
Updates on IT Parks, SEZ and Commercial Real Estate
Good posts Vulture!
If you think that the economy will
turn around in sep'09, when do you
think real estate will turn around?
I am no expert but doesn't RE lag
the economy by 6-12 months?
Economy will take a long time to turn around. Sept09 is just impossible. The stock market has yet to fall to a new low. If you look at the GD of 1929-30, there were temporary spikes in stocks and it took a few years for it bottom.
Moreover, the housing market has to bottom before the economy can turn around. In US the bottom may be around 2012-13. And India may take more time as housing will keep falling slowly for another 5-6years or more.
Lots of Indians on H-1Bs are without jobs in the US and are coming back. A lot of MBAs and fresh grads in the US are screwed. India has yet to face the music.
Salaries will be further slashed and there will be a big supply of people seeking employment.
--HB
World's Sexiest News Reader
Anon above-
let's focus on housing/economy here and not on Hot Babes as you posted.
--HB
Devanahalli is a VILLAGE and is NOT near 50kms from bangalore. You should get buy one and own everything offer..
Counter point to HB;
I will just quote a few headlines as a counter point.
ABC news: Recession Is Over According to Financial Experts.
http://abcnews.go.com/Business/Economy/Story?id=7564649&page=1
Forbes :
The Recession Is Over
http://www.forbes.com/2009/05/04/recovery-indicators-unemployment-opinions-columnists-recession.html
More cautious note from Fed Chief,
Recession 'over by Christmas', says Fed chief Bernanke
http://www.telegraph.co.uk/finance/financetopics/recession/5280510/Recession-over-by-Christmas-says-Fed-chief-Bernanke.html
All this pertains to US of course.
I am still of the opinion the RE of India has a long way to go before it becomes "Normal".
Specifically in Mumbai I see that the middle class is driven out of the city to far flung suburbs. The lower middle class is shunted to outside the distant suburbs. The upper middle class white collar worker is holding out, however without black money he too is facing a bleak future in purchasing any housing in the nearer suburbs without going for highly priced loans. The hope that the property will hold value in the future is what is keeping them in the market. Its another story that they will encounted street dweelers living on the foothpath next to their multi crore houses. This is actually not the case in many distant suburbs. Life is very tough for the average mumbaikar. I think everyone with a sane mind should look for a job in Pune/Bangalore/Hyd/Chennai or abroad and just move. the city is just good for corrupt politicians, corrupt govt officials and nefarious builders.
and with stock market up, the builders arent negotiating anymore, this sucks :(
DesiGuy:
If Financial Experts knew what they are saying and doing, this mess wouldn't have even happened.
They all are trying to get people and institutional investors to put back money in markets in US and emerging economies for their short term gains. Even the US Govt. is aiming at short term recovery.
I would never believe what those idiots at Forbes or Bernanke say. Did you forget Alan Gree'd'span?
Follow your instincts. If economies are doing good, there would be hiring and unemployment would be low. Stock market nowdays is more or less like a casino.
--HB
Anon at 12:03::
Builders will be the last to lower prices. Even in the US after 2-3 years of downturn, builders are not lowering prices substantially. But are giving a lot more free options and incentives.
Prices will be lowered by distressed properties and banks doing mass liquidations in years to come when there would be no buyers and no loans.
--HB
Employement recovery is the lagging factor in economic recovery. This would be one of the last to stablize and that is not expected till end 2010.But economy would begin recovering much before that.
I, who is commenting here as a timepass, cannot claim to have more knowledge nor intelligence to second guess people who have spent life time in studying macro and micro economics though they have not been failproof.
But I will rather trust the collective wisdom of people who are doing it for a living all their life under the harshest spot light of the world, than going by my hunch.
Their collective wisdom has been certainly more reliable than my hunch which is based on my key hole view of the universe.
Happily I am in a majority on this !!
Economy Turn around but Slow recovery.
After reading the economic recovery news people started dreaming about prosperity year 2006/7. But there is long way to go, to reach previous level.
--It is a global synchronous recession.
--It is comparable to great depression.
--Global Housing Bubble was the cause of recession.
--Even though economy will come out of recession, housing prices will keep falling.
--The recovery will not be strong so many people will argue it as recession.
For Indian RE it’s a major shift in trend, from luxury housing to affordable housing. Property above 30Lakh price tag will see further correction. I am very happy after listening that builders are not negotiating prices, means we have further deep correction.
Not a robust recovery
Often after a sharp economic downturn we observe an equally dramatic recovery. But nobody can claim to be seeing that so far in the currently available data.
http://www.econbrowser.com/archives/
2009/06/not_a_robust_re.html
Anon@9:00 AM, RE turn around time can’t be predicted for whole market. Based on price range segmentation only it can be analyzed. Also we need to take into account the trend change & dynamics with other segments.
Whatever sales builders are talking, everything is only in so called affordable housing segment.
So guys let it fall then only pick up, minimum 50% price cut is guarantee.
Vulture.
Desi Guy,
--Builders build houses for their living, would you trust them.
Financial community also has a vested interest in keeping it propped up. Government is keeping the economy up on steroids. I would never trust a politician and most people are politicians as they act based on their vested interest and not truth.
--HB
After all the party from 2002-2008 for India and Indians abroad, reality is surfacing now. People in white countries still consider India as third world and are being beaten in Australia and Canada. I think of reasons why is it happening. COuld it be:
--that the number of Indians in the last 4 years have multiplied in these countries and they are seen everywhere. Daytime for jobs and college and night time driving cabs.
--that natives of Australia are thinking that Indians are taking their jobs.
--that Slumdog Millionaire gives a dirty description of Indians and they want to treat them the same way.
--that Indians live in a filthy way abroad in bad neighbourhoods due to affordability issues.
Whatever is the reason. They were granted visa and should get proper treatment as they were admitted lawfully. They have paid tons to money to Australia for education.
--HB
for unfortunately for mumbaikars, transactions are taking place at 7k plus levels also :-( , what is the hope for people like me who can afford only upto 5k, just to move to outskirts of mumbai :-(, unfortunately job is here or else s vik said move to pune/gurgaon/hyd whereever, atleast there are cheaper houses
Option ARMs Threaten U.S. Housing Rebound as 2011 Resets Peak
By Brian Louis
June 11, 2009 00:01 EDT
Option ARMs Threaten U.S. Housing Rebound as 2011 Resets Peak
June 11 (Bloomberg) -- Shirley Breitmaier’s mortgage payment started out at $98 when she refinanced her three-bedroom home in Galt, California, in 2007. The 73-year-old widow may see it jump to $3,500 a month in two years. Breitmaier took out a payment-option adjustable rate mortgage, a loan popular during the housing boom for its low minimum payments before resetting at higher costs later.
About 1 million option ARMs are estimated to reset higher in the next four years, according to real estate data firm First American CoreLogic of Santa Ana, California. About three quarters of those loans will adjust next year and in 2011, with the peak coming in August 2011 when about 54,000 loans recast, the data show.
“The option ARM recasts will drive up the foreclosure supply, undermining the recovery in the housing market,” Wachter said in an interview. “The option ARMs will be part of the reason that the path to recovery will be long and slow.”
Option ARM recasts will mean more pain for California, the state with the most foreclosures in the U.S.
$750 Billion Problem
More than $750 billion of option ARMs were originated in the U.S. between 2004 and 2008, according to data from First American and Inside Mortgage Finance of Bethesda, Maryland. California accounted for 58 percent of option ARMs, according to a report by T2 Partners LLC, citing data from Amherst Securities and Loan Performance.
Shirley Breitmaier took out a $315,000 option ARM to refinance a previous loan on her house.
Her payments started at 3/8 of 1 percent, or less than $100 a month, according to Cameron Pannabecker, the owner of Cal-Pro Mortgage and the Mortgage Modification Center in Stockton, California, who is working with Breitmaier. The loan allowed her to forgo higher payments by adding the unpaid balance to the principal. She’ll be required to start paying principal and interest to amortize the debt when the loan reaches 145 percent of the original amount borrowed.
Late Payments Soar
“Once you start amortizing that loan, the payment is going to shoot up,” said David Watts, a London-based strategist with research firm CreditSights.
JRam
So called all these great economists did not see coming in first place. Then how do you take their words about RECOVERY AND GREEN SHOOTS!!!
HAHAAAAA
JRam
And now major world economies are dumping US Dollar. Russia just did it. Not good for US or USD.
If USD becomes weak even by 10-15%, IT sector in India is further screwed. And majority of Indian housing depends on IT sector doing good.
--HB
Good and Happy Times ahead, people were talking about US Depression and now forget about it and even Recession is OVER. What a JOKE!! Thanks to Helicopter Ben!!
Jram
If you are young, it makes sense to look outside Mumbai. I've personaly know many folks in Pune, Bangalore, Hyd, Chennai who are very happy with their lifestyle, as compared to Mumbai. The Mumbai of the Bollywood is very different then the real Mumbai.
The current market bounce is just dollars and rupees unable to go elsewhere, it is not a rebound. I recently noticed that hotel rentals in Palo Alto and around have sunk to new lows ($87 for a Mariott Courtyard), a more than 50% drop. The US economy is in deep trouble and will take time to recover.
I feel things would start to turn around only in January 2010 and real estate will therefore turn around only around January 2011. Developers cannot wait till then, more steeper falls are just around the corner IMO
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