BouncyUnicorn

How is there no correlation to layoffs and Real Estate?

We've witnessed so many layoffs in the past year and this continues to be an upward trend. Bangalore is a city of IT professionals and these layoffs seem to have no effect on the real estate. Is this because the numbers are negligent? I don't think that's the case, my company has been laying off people since last year. It was never public. I'm sure there are lots of such companies. What are your thoughts?!

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PrancingHamster

Infinite Computer14mo

Because freshers are being hired more than layoffs

BouncyUnicorn

Betterplace14mo

I recently learnt through a newspaper that major service companies have only hired a total of 70-80k freshers. Which used to be a number in lakhs.

GroovyBoba

Goldman Sachs14mo

freshers aren’t buying flats

SquishyPanda

Flipkart14mo

There is a lag effect, give it a few months and you will see rents and prices not increasing anymore

ZoomyMuffin

Stealth14mo

Because every downturn has an epicenter. Usually it's Real Estate because excesses easily pop up there.

But this downturn started in IT and VC world, so for the quakes to be felt in Realty, you gotta wait more. Also, if RE is indeed suffering, it is very hard to know for outside people. RE sells in optimisms, so RE players would be creating a fake aura of super sales and huge demand, sold out units, ads in TV, banners etc. Most of these might be a lie.

CosmicLlama

Freelancer14mo

Real estate is black money sink. And secondly most people buy Re estate after 7/8 of exp. They Are well funded. The number of people distress selling thier property is small, if not it would have made news.

TwirlyWaffle

Microsoft14mo

Sobha which is claims each flat is 2 cr plus look at their last quarter PAT meare 15 cr lol..

ZoomyNarwhal

Stealth14mo

Dont forget that old money bangalore ( that includes the reddy bros + mallu bros + gowdas/plantations bros) are keenly watching the real estate markets like hawks. They are always in standby to pick up real estate whenever an opportunity arises keeping the prices firm.

BouncyUnicorn

Betterplace14mo

I agree, but these people are the ones who are selling, we are the consumers. If we can't afford to pay them, the prices should come down.

DerpyMarshmallow

Stealth14mo

Will you leave Bangalore if it becomes too much unaffordable? Nobody leaves Mumbai, New York, California due to that reason

SillyMochi

Stealth14mo

Our IT(laid off) makes only 0.01% of market. RE is resilient to minor changes, RE have stood Corona times. Layoffs are nothing for RE market

BouncyUnicorn

Betterplace14mo

0.01% of the overall market, maybe yes. But in Bangalore that may not be true, IT makes up a large chunk of the city's economy.

JazzyWalrus

Stealth14mo

That 0.01% is the main TG and the one who is not laid off will hold their money due to fear of getting laid off.

FluffyNugget

Plivo14mo

RTO was in part for RE. They’re happy

SparklyRaccoon

Stealth14mo

RE suffers when the overall economy suffers. Just layoffs in tech companies cannot be a reason for the crack in RE Space.

BouncyUnicorn

Betterplace14mo

This is most definitely the case for any other city. But in cities like Bangalore, layoffs can be a deal-breaker. San Francisco RE has taken a big hit due to layoffs.

QuirkyMarshmallow

Walmart14mo

Wow, do you have some numbers. During peak lockdown a SF house was 1.3million, and at peak went down to 3 million. It might be 2.5 million today. The ones who bought at 1.3 million at 2% interest rate aren't selling to buy another at 7% interest rate.

SnoozyKoala

Stealth14mo

I am in bengaluru since 2008 and have seen Bengaluru during 2008 Global financial meltdown and feel equipped to answer here. Bengaluru real estate never went down even during GFM of 2008. Today's layoffs haven't reached even a qtr of 2008 so I don't think this will impact RE any soon. I stay in Whitefield 2kms from ITPL and my entire road is filled with constructions and big builder projects selling as high as 11k-12k psft. I don't see that coming down any time sooner. So if anyone is thinking that layoffs gonna take down RE and will be able to buy property then, living in a bubble I would say then

BouncyUnicorn

Betterplace14mo

I'm not talking about a crash, just hoping there would be some correction in the prices, considering the sudden surge after the Covid.

SnoozyKoala

Stealth14mo

Not sure. Like if I have invested in a property in ITPL at 7k psft and I know it's 11kpsft now even if it goes to 9k psft tom I won't sell since I know that's temporary and it will come back to 11k psft sooner or later. So I will hold it creating artificial scarcity in market not allowing prices to go down unless am selling it at distress. I think a lot of RE in bengaluru is such and hence you will not see prices go down or correct anytime soon, speaking from experience and reference of 2008

SparklyNoodle

Freelancer14mo

Real estate is hit last, because builders have already got their money they have expenses occured for, first there will be defaults on loan, monthly purchases will go down, there will be supply more than demand, builders will try to sail through this, since they have least amount of money contributed by them.

In short it will need huge number of defaults, large number of months will dull in sale and huugggeee number of flats in market for sale.

BubblyCupcake

Stealth14mo

Exactly

BubblyCupcake

Stealth14mo

I feel most people have had great returns on MFs and stocks recently. And on top of that I am assuming lot of people would also be using their runway money smartly.
I personally feel the unrealistic prices will still be there till people actually start moving out of Bangalore. My assumption would be people will first give their houses for rent and move to their natives. And then people will also stop renting. And then lot of people defaulting on their loans.

I might be totally wrong. But I think if the current market continues for this year in especially IT and specifically in Bangalore, we will start seeing this effect in 2025 something.

Again, all of this is just my assumption without much research

BouncyUnicorn

Betterplace14mo

Yeah probably another year before we start seeing the effect of this on RE.
Most of them are probably using their severance pay/ emergency funds. If the trend continues there's definitely a crisis.