That's nearly 20 lakh jobs lost - have we, in India, come to that or close? And, the question to ask really, is that going to happen?
Another piece of news is that mortgages in foreclosure or 30 days behind or worse is now nearly 10% of all mortgages. Worse, it is not just subprime - Calculated Risk says the problem is in prime ARM loans, and prime loan delinquencies have now gone up 41 basis points (more than 10%).
You lose your job, you lose your house...it doesn't take long for the second to happen after the first. Until the job losses get better, I don't see how the mortgage market will improve.
Meanwhile in India, we have the hope that reducing interest rates will stem the real estate fall. DLF says he wants 7 percent interest rates. The U.S. has long term mortgage rates of 5.6% and a funds rate of 1%, and they're going nuts - in India, prices are still way too high. Our real estate bust has yet to begin.
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>How do you define a bust? I saw an ad in the paper (there’s no way to post an attachment so you’d have to take my word with it) which says that the decline in prices is over and we are in the beginning of a cycle where stock prices would only increase, followed by increased liquidity and inflows into commodity markets finally making headway into real estate. For all practical purposes, property is down 20-25% depending on how hard you bargain while equites are down 60%-90%. Not sure if the bust that you have been mentioning for a while is going to happen any soon. And surely it won’t happen if there’s a hint of the markets rebounding from here or within next 12-15 months.
–V Kumar
12.06.08 at 7:02 AM
>I must disagree – we haven’t even seen the beginning yet. Markets are early indicators – the real economy comes a lot later. Real estate is a lagging indicator. So we’ve had a bad run on the markets – but the real economy impact isn’t in yet. It will be, next year and the year after that.
The real estate carnage will only start next year – what’s happening now is barely a correction.
But I am happy to be wrong…
12.06.08 at 7:06 AM
>Newspaper advt wrote something and you believed in it??
When you talk about real estate cartel and today’s profiteering journalism you ‘believe’ that someone paid to the news paper for the advt and its intent was for genuine customer benefit??
I wished if I could believe everything ALL media says all the time!!
Its like when the rats jump the ship, they KNOW its going to sink. You cant fool them with a advt saying its just turbulent weather so please get back on..
Good Luck. to you and to me too.
12.08.08 at 4:21 PM