Mixed emotions cloud buying, renting and selling plans

Consumers concerned about how recent terrorists attacks will affect the real estate market are rethinking their approach to fulfilling the Indian dream. Initial reports revealed consumers were backing away from buying and selling, but others showed strong consumer confidence in real estate.

Along with the fear of more terrorism, deep mourning and growing anger, terrorists attacks on America are also generating feelings of insecurity and uncertainty among real estate consumers.

According to Gautam Rao, a real estate expert “Social factors are less likely to be affected by the despicable acts of terrorists than are the investment considerations of home buying.

Our homes are both a social and financial investment. Financial experts usually ignore the social reasons for buying and selling our homes. Factors such as relocation for employment, better schools, better neighborhoods, decrease or increase in family size, retirement, etc., will influence our decision more than investment considerations.”

Initially, however, terrorists' attacks triggered an immediate withdrawal by online home buyers and sellers.

Real estate experts, however, were hammering home the point that housing decisions more often should be based on personal need and individual financial ability rather than what the market may or may not do because of terrorism.

Despite all the negative economic news this year, the housing market has been incredibly resilient. As long as you live in a community that has positive job growth and you have low housing loan rates, like we have now, you can't help but sell houses. (Note: housing loan disbursements are up 20% in the first half of current year)

Indeed, in the waning days of the longest economic expansion on record, real estate has been perhaps the strongest economic sector, largely credited with keeping the weakened economy out of recession.

That's because so much of consumer spending is tied to the home. Consumers who buy homes also buy things to put in it, they use the funds to buy still more stuff and then they buy bigger, more expensive, larger homes to fill up with yet more stuff.

And consumer spending is the real lubricant that keeps the economy growing.

The real estate sector has been buoyed by near record low home loan rates that, even after the terrorists' attacks, continued to be a strong reason to buy a home (note: recent rate cut reduction by HDFC and ICICI).

Even if rates rise and prices fall, buying and selling a home will remain largely a personal decision.

Unfortunately, after the terrorists' attacks, some consumers found themselves unable to consider buying much of anything because of layoffs, investment market losses and other income-threatening fallout.

But the commercial real estate scene does not look so good as it is mainly driven out of financial consideration and has witnessed both a fall in activity and prices. “Existing companies tend to hold on to their expansion plans and new companies do not find environment conducive to start business in these times” says Ravi Bhinder, a real estate advisor.

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