Who is buying overpriced RBA real estate in Mountain View, Sunnyvale and Palo Al
2011 Oct 9, 3:38am 18,493 views 54 comments
by SJ follow (0)
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Vasant Vihar in New Delhi
Irrational Exhuberance. Happened to Japan, and is happening in US and Europe today. And will happen in New Delhi. Few if any will able to afford those prices. What are they expecting Rich US Companies enriching locals with lots and lots of high paying jobs.
They will fall, as have others.
Kind of hard to image for some folks even Beverly Hills / Malibu crashing.. but it has happened back in early 90s. Imagine that.
http://articles.economictimes.indiatimes.com/2011-07-15/news/29778040_1_carpet-area-bhk-vasant-vihar
22 crore = $4.48M at the exchange rate as quoted by Google of 49.13 rupees to the dollar. For 4000 sqft, that's 1119/sqft, which is still cheaper than many houses in uber-prime SF, e.g. high-end Pacific Heights.
The cost you are quoting (22 crore rupees i.e $4.48 million is for a single floor in a multi-unit building - probably around 3 floors).
If you are looking for a SFH in Vasant Vihar, that will cost you around 40 crores rupees (around $9M) with highest end SFH in vasant vihar going for 80 crores (approximately ~$18M). And these are no where near the size of mansions with large lots that you could buy for $4M+ in palo alto, Atherton, Hillsborough, etc. I don't think there is a so-called "green zone" in delhi or if there is then I don't know about it.
If you are looking for a mansion on a large lot, this is probably the highest end (as far as I know at least in delhi):
it will cost you $500 million USD.
But you would withdraw the money in dollars. The issue is not taking money out of the country (you could just change it all to another currency), but rather taking physical rupees out.
Rupee as a currency is only valuable within India. It's not a reserve currency like the dollar or even euro to some extent, so I am not sure what would be the practical use of trying to take rupees out of India. You might as well take old newspapers out.
But, the basic point that I am trying to make is that house price to income ratio is a academic ratio and has no value beyond that and you or I may not see the money, but their is plenty of money sloshing around in silicon valley and good ol' US of A
house price to income ratio is a academic ratio and has no value beyond
So like any other financial ratio, has no value ? What is risk and how do you measure low-hi risk and return.
house price to income ratio is a academic ratio and has no value beyond
So like any other financial ratio, has no value ? What is risk and how do you measure low-hi risk and return.
To put things in perspective, consider the following two statements:
1. the shortest distance between any two points is a straight line.
and
2. median house prices can only be 3 times the median income.
Point 1 above is a law of nature. If you break it, the universe won't exist, i.e its always true in the absolute sense, you can't tweak it, you can't bend it, you can't reinterpret it.
Point 2 above is probably based on a statistical model that some lowly accountant came up with sitting in his lonely office back in the 70s thinking why his girlfriend ditched him for that dancer. In other words, point 2 can be changed, tweaked, stretched, condensed, bend, reinterpreted, and be open to all sorts of subjective assessments without bringing an end to the universe.
So I won't loose too much sleep if I don't see median house prices at 3 times median income. However, if you have two points between which the shortest distance is not a straight line, let me know ASAP, before the universe ends and I loose my sleep :-)
Hope this makes sense.
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I am baffled as to who would pay 800k for a tiny 2 bedroom home in Mountain View! Google does not pay that way UNLESS you are early employee or have VP position. So who are the morons over paying now?
#housing