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In Maharashtra’s Thane district, police have registered a case of alleged fraud involving two construction company owners accused of deceiving a family of ₹1.2 crore. The incident came to light after a 28-year-old woman from Thane’s Rabodi area lodged a complaint against the two accused, who are brothers. The accused allegedly persuaded the woman, her mother, and her sister to invest the substantial sum in their construction company based in Mumbai’s Bandra area. Promises were made of a significant payout within five years or, alternatively, the option of acquiring two or three apartments in the city’s prime real estate zone. According to the complaint, the woman’s family entered the deal on December 31, 2022, convinced by assurances of either a return of ₹3 crore over five years or property options in Bandra. To meet the required investment amount, the family borrowed funds from various sources, entrusting their money with the accused based on the lucrative promises. The police official handling the case noted that the family, enticed by the seemingly profitable terms, had not foreseen the outcome that would follow. In May 2023, however, when the family attempted to reclaim their funds and the anticipated profit, the accused allegedly declined the request. The complainant stated that the brothers not only refused to pay but also reportedly threatened the family, citing powerful connections that would shield them from legal repercussions. This behaviour alarmed the family, leading them to seek legal recourse. The Rabodi police have filed a case against the accused under various sections of the Indian Penal Code, including Section 420 for cheating, Section 406 for criminal breach of trust, and Section 506 for criminal intimidation. Additionally, charges were filed under Section 34, indicating common intention, along with relevant provisions of the Maharashtra Protection of Interest of Depositors Act. The case highlights the dangers that investors may face when lured by high-return promises in unregulated sectors. Fraudulent schemes in real estate and construction have been known to target individuals and families looking for profitable investments, often leaving them with financial losses and emotional distress. Authorities are continuing investigations, with the Rabodi police closely monitoring the case to gather further evidence. This incident is expected to bring more attention to regulatory practices within the real estate industry and underscore the need for stricter oversight to protect potential investors from falling prey to deceitful operators. (with PTI inputs)

Thane family loses Rs 1.2 crore as they get cheated by construction company, details here

The residential market shows a positive outlook, with 51% of stakeholders predicting higher sales over the next six months. However, a notable 24% expect stability, while 25% predict a potential decrease, reflecting a balanced yet cautious sentiment, as per a recent <keyword id="19895043" type="General" weightage="20" keywordseo="Knight-Frank" source="keywords" meta.keywordsubtype="org" meta.entityname="Knight Frank" meta.hostid="261" meta.entityid="Knight Frank">Knight Frank</keyword> report. The outlook for residential launches is also positive, with 61% expecting an increase, suggesting continued demand. A more tempered view is held by 20% of respondents who expect stability, and 19% foresee a decrease in launches. The Indian <keyword id="20152263" type="General" weightage="20" keywordseo="real-estate-sector" source="keywords">real estate sector</keyword> continues to reflect a positive outlook for the near future, though with a more cautious approach. In terms of pricing, 63% of stakeholders expect a rise, but 36% anticipate stable prices, and a very small minority predict a decline. G Hari Babu, National President, National Real Estate Development Council (<keyword id="20429653" type="General" weightage="20" keywordseo="naredco" source="keywords">NAREDCO</keyword>), said, "The residential and office markets continue to show notable activity, signaling ongoing growth and opportunity. Developers and other key stakeholders, including banks and financial institutions, are maintaining a positive outlook." He added, "This suggests that while there may be short-term challenges, the sector is well-positioned to adapt and thrive. The continued optimism and activity in the market highlight the sector's ability to sustain its momentum and drive forward, amidst changing conditions." The <keyword id="22822547" type="General" weightage="20" keywordseo="office-leasing-market" source="keywords">office leasing market</keyword> shows signs of strong recovery, with 63% of respondents predicting an increase in leasing activity, driven by positive business sentiments and <keyword id="21313740" type="General" weightage="20" keywordseo="economic-revival" source="keywords">economic revival</keyword>. However, 24% expect stability, and 13% foresee a decline. New office supply also remains a point of interest, with 47% expecting an increase, while 29% anticipate stability, and 24% forecast a decrease. Furthermore, 67% of stakeholders expect office rents to rise, signaling confidence in the market's ongoing growth, even as 27% anticipate stable rents and 7% expect a decrease. The <keyword id="20635920" type="General" weightage="20" keywordseo="future-sentiment-score" source="keywords">Future Sentiment Score</keyword>, which measures stakeholders' outlook over the next six months, saw adjustments across various regions. The North Zone score slightly decreased from 65 in Q1 2024 to 63 in Q2 2024, though it remains firmly optimistic. The South Zone witnessed a more significant drop from 76 to 65, signaling a moderated outlook. In the East Zone, the score fell from 77 to 65, largely influenced by the discontinuation of the 2% stamp duty cut. The West Zone also saw moderation, with the score dipping from 73 to 66, though it too, remains optimistic. The overall Developer Future Sentiment score decreased from 72 to 61, reflecting a more guarded approach. Developers, while cautious, continue to remain optimistic due to strong sales since early 2023. On the other hand, the Non-Developer Future Sentiment core, which includes financial institutions and PE funds, also moderated from 73 to 68. This shift indicates stakeholders' careful consideration of macroeconomic concerns. Optimism in India's broader economic scenario remains strong, with 59% of respondents expecting an improvement, reflecting confidence in the country's economic resilience. However, 24% foresee stability, and 17% predict a decline, underscoring global economic uncertainties. Meanwhile, 51% of respondents anticipate increased funding availability for real estate investments, reflecting continued confidence in the financial sector's support for the real estate market. Shishir Baijal, Chairman and Managing Director of Knight Frank India Pvt Ltd, noted, "As we transition through 2024, a host of factors are playing out globally. The global economic landscape shows resilience despite ongoing challenges. Inflation rates are gradually aligning with central bank targets, enabling a more supportive monetary policy. India, benefiting from stable post-election conditions, remains a strong growth beacon." He added, "Domestic consumption is robust, supported by consumer loans, though there are some signs of growth moderation. Food inflationary pressures persist, but are converging overall towards price stability targets. With a projected GDP growth rate of 7.2% for FY 2025, India's outlook remains positive. An effective monetary policy by the Reserve Bank of India has helped sustain growth with price stability, positioning India as one of the fastest-growing large economies globally." The Current Sentiment score, which reflects stakeholders' view of the market compared to six months ago, moderated from a decadal high of 72 in Q1 2024 to 65 in Q2 2024. This suggests a more measured outlook as stakeholders navigate evolving global economic conditions. Despite the dip, the score remains indicative of optimism. Looking forward, the Future Sentiment index also adjusted from 73 in Q1 2024 to 65 in Q2 2024, signaling a positive yet more conservative outlook for the near term. While macroeconomic uncertainties may dampen enthusiasm, stakeholders continue to show confidence in the sector's resilience and adaptability.

Despite budget provisions, residential housing market will see sales growth, notes recent report by Knight Frank

<ul><li>LTCG of up to Rs 1,20,000 in a single financial year is tax-free. </li><li>Effective July 23rd, 2024, <keyword id="21006654" type="General" weightage="100" keywordseo="indexation-benefits" source="keywords">indexation benefits</keyword> will no longer be available for real estate, gold</li><li>Effective July 23rd, LTCG will be charges at 12.5%, sans indexation benefit</li></ul> After FM <keyword id="19916618" type="General" weightage="20" keywordseo="nirmala-sitharaman" source="keywords">Nirmala Sitharaman</keyword> proposed to remove indexation benefits on <keyword id="20584761" type="General" weightage="20" keywordseo="long-term-capital-gains" source="keywords">long-term capital gains</keyword> (LTCG) on real estate, gold, and other unlisted assets, discussions were abuzz on the internet as to how this would lead to significantly higher <keyword id="20118944" type="General" weightage="20" keywordseo="taxation" source="keywords">taxation</keyword> on gains from <keyword id="20008581" type="General" weightage="20" keywordseo="property-sales" source="keywords">property sales</keyword>. Previously, LTCG on long-term capital gains was marked at 20%, but it came with indexation benefits, which eventually lowered the individual's overall <keyword id="19974193" type="General" weightage="20" keywordseo="tax-liability" source="keywords">tax liability</keyword>. Now, it has been lowered to 12.5%, but minus any indexation benefit. So, with indexation gone, how will gains from property sales be taxed going ahead? Is this applicable to all properties? What is set to change? Does it help that the <keyword id="22480102" type="General" weightage="20" keywordseo="LTCG-tax" source="keywords">LTCG tax</keyword> has been brought down from 20% to 12.5%? Lets take a deep-dive First, explain this long term short-term conundrum to me So, how much capital gains tax you're supposed to pay depends on how long you hold a particular asset before selling it. Prior to yesterday's announcement, there were 3 holding periods which determined whether an asset was held for long-term or short-term: The situation before- <ul><li>Shares, units of mutual funds would qualify for LTCG tax, if they are held for more than 12 months. If the holding period is less than 1 year, you'd have to pay short-term capital gains (STCG).</li><li>Real estate and immovable property would qualify for LTCG tax, if held for more than 24 months (2 years), along with indexation benefit. </li><li>Bonds, debentures and gold were to be considered long-term capital assets, if they were held for more than 36 months (3 years), with indexation benefit. </li></ul>But going ahead, there will only be two waiting periods which will determine whether an asset would be classified as long-term or short-term The situation now- <ul><li>For all listed securities (stocks, mutual fund units), the holding period for LTCG tax purposes would be more than 1 year (sans indexation benefits) All other assets (real estate, gold, bond, debentures) will qualify for LTCG tax, if they are held for more than 24 months (minus indexation benefits). </li></ul>What was the taxation situation earlier on long-term capital gains? What has changed? So, lets say Tara purchased a property in FY 2004-05 for Rs 20,00,000. In FY 2024-25, she decided to sell it for Rs 60,00,000. You'd think she'll have to pay a flat 20% on Rs 40,00,000, which was her total profit earned from selling her property (Rs 60,00,000-20,00,000). But this is where indexation swooped in and helped cushion the overall tax liability. Prior to July 23rd, 2024, the government considered something known as "indexed cost of acquisition" for determining an individuals' total LTCG tax liability, which was calculated using the following formula: [Cost Inflation Index (CII)value for transfer/sale year/CII for purchase year, or 2001-02 (whichever is later) X cost of acquisition]. Thankfully, you don't have to go about calculating this CII value, since the government does this for you, and notifies the same officially. What CII essentially does is that it compares the current prices of basket A(which contains a bunch of products and services) to the price of the same basket A in the year of comparison, to reflect the change in prices caused by inflation. So, for Tara, her indexed cost of acquisition would come down to Rs 64,24,778 [363(CII for 2024-25) /113(CII for 2004-05)X 20,00,000]. This would mean she incurred a capital loss of Rs 4,24,778, since her indexed cost of acquisition is more than her sales receipts. So, she does not need to pay any LTCG tax. She can set off this loss, but only against her other long term gains with a limit of Rs 2 lakh in one financial year, and can carry forward the same for a maximum of 8 years. However, this changed when the budget memorandum noted yesterday, "indexation available under the second proviso to section 48 is proposed to be removed for calculation of any long-term capital gains which is presently available for property, gold, and other unlisted assets. This will ease the computation of capital gains for the taxpayer and the tax administration". This means that indexation benefits on LTCG will be applicable starting July 23rd, 2024. To understand its impact, assume that this rule is in effect from April 1, 2024. In that case, Tara's LTCG will be a flat 12.5% of her total gains of Rs 38,75,000 (remember, Rs 1,25,000 per year on LTCG are tax-exempt). This would bring Tara's taxability to Rs 4,84,375 Long story, short, minus the indexation benefit, Tara will have to pay Rs 4,84,375 as long-term capital gains tax. However, there has been a slight increase in the basic tax exemption limit for LTCG. Previously, LTCG of up to Rs 1,00,000 in a single financial year was tax-free. But now, this threshold has been raised to Rs 1,25,000. Small wins! <div type="Article" hostid="261" msid="111956035" title="Decoding capital gains taxes: What FM Nirmala took from your pocket, what she gave you in Budget 2024" mstype="2" mssubtype="0"></div> Okay, is there something that continues to be the same for long-term capital gains? Yes, roll-over benefits continue without change. This means you can re-invest the proceeds from sale of your old property into buying a new, residential one, in order to avoid capital gains tax. But that too, is not without its share of catches: You can reinvest these funds in either 54EC bonds, which have a maximum annual investment limit of Rs 50,00,000. Or, you can avail this exemption for a maximum of 2 residential houses, provided your capital gains are limited to Rs 2 crore. Also, if you've it purchased a property, or held from before 2001, you can continue to avail indexation benefits, thanks to something called a grandfathering clause. Does indexation or lower tax rates work better? There's no general rule here. But a cursory look indicates that high capital gains would be favorably taxed under these reduced tax rates, while lower returns and holding periods would find indexation to be a better option. Says Pankaj Kumar, VP – Fundamental Research, Kotak Securities, "the Union Budget-FY25 has rationalized long-term capital gains tax on real estate transaction. It proposed to remove indexation benefits and reduce the long term capital gains tax rate from 20% to 12.5% with immediate effect (grandfathering for properties held before 2001). We find that the new capital gains tax structure for real estate favours investors, who have generated high IRRs, while investors with poor IRRs would be worse off in the new regime". "On the other hand, it is expected to have limited impact on end users who purchase homes for personal consumption. The budget has also talked about encouraging states to lower the stamp duty and consider lower duties for women buyers. Lowering of stamp duties would reduce the overall acquisition cost in high stamp duty states/markets like Gurgaon, Chennai, Mumbai and Kolkata", continued Kumar.

Budget 2024: How will long-term capital tax change your real-estate investments post-budget?

As Finance Minister Nirmala Sitharaman unveiled the Union <keyword id="19955368" type="General" weightage="20" keywordseo="budget-2024" source="keywords">Budget 2024</keyword>, all eyes were on the <keyword id="20024321" type="General" weightage="20" keywordseo="housing-sector" source="keywords">housing sector</keyword>, which has been a focal point for both developers and <keyword id="19907145" type="General" weightage="20" keywordseo="homebuyers" source="keywords">homebuyers</keyword>. Expectations were high for increased deduction limits on home loan interest repayments, higher principal repayment deductions, and more robust incentives for first-time homebuyers. Last year's budget focused on increasing <keyword id="20254620" type="General" weightage="20" keywordseo="affordable-housing" source="keywords">affordable housing</keyword> through the Pradhan Mantri Awas Yojana (<keyword id="19945794" type="General" weightage="20" keywordseo="PMAY" source="keywords">PMAY</keyword>), with a significant allocation to achieve the goal of "Housing for All." The <keyword id="20152263" type="General" weightage="20" keywordseo="real-estate-sector" source="keywords">real estate sector</keyword> had previously seen incentives for developers building affordable housing, such as tax holidays under Section 80IBA and increased allocation through the SWAMIH fund to improve liquidity for stressed projects. <h2>Major announcements in Budget 2024</h2>As per FM Sitharaman's 2024 Budget announcements, PMAY is set to add an additional 3 crore affordable housing — houses priced under Rs 40 lakh — in rural and urban sections of India. This will be accomplished with Rs 10 lakh crores, which includes assistance of Rs 2.2 lakh crores over the next five years. A provision of <keyword id="21240797" type="General" weightage="20" keywordseo="interest-subsidy" source="keywords">interest subsidy</keyword> to facilitate loans at affordable rates is also envisaged, the FM noted in her speech. “This is certainly pertinent – the affordable homes category has been seeing a decline in overall sales since the pandemic, to approximately 19% in H1 2024 from over 38% in the period before the pandemic in 2019,” notes Anuj Puri, Chairman of ANAROCK Group. “Consequently, this segment’s percentage share of the total housing supply in the top 7 cities also fell to 18% in H1 2024 from nearly 40% in 2019. Any boost to this vital segment is therefore welcome.” As per December 2023 reports, 65% of houses under PMAY-Urban had been completed and delivered to beneficiaries since the scheme was introduced in 2015. This amounts to over 78 lakh pucca houses out of the 1.18 crore sanctioned. The new addition to PMAY will thus attempt to more than triple the quadruple the number. <h2>Tax reliefs and transparent rental policies</h2>This year, the sector expected further <keyword id="20345361" type="General" weightage="20" keywordseo="tax-relief" source="keywords">tax relief</keyword> measures for homebuyers and developers. Key demands are aplenty, including increasing the deduction limit for home loan interest repayment from the current Rs 2 lakhs to Rs 3-4 lakhs for self-occupied properties, reintroducing tax exemptions for first-time homebuyers, standardising the definition of "Affordable Housing", and reducing GST on construction materials like cement and steel. However, there has been only disappointments on this front based on the announcements so far. However, in terms of the tax changes, the Budget has proposed a massive reduction in rental matters for the individual. While the current tax deducted at source (TDS) for Payment of rent by individuals or HUF under Section 194-IB stands at 5%, the new budget is set to bring this down to 2%, effective from October 1, 2024. <div type="Article" hostid="261" msid="111946291" title="Union Budget 2024-25 key highlights: Angel tax to be scraped" mstype="2" mssubtype="0"></div>Further, the government has promised to enable and implement policies and regulations for efficient and transparent <keyword id="20071228" type="General" weightage="20" keywordseo="rental-housing" source="keywords">rental housing</keyword> markets with enhanced availability. <h2>Additional initiatives</h2>Further, dormitory-style accommodations have also been announced for industrial workers in public-private partnership mode with Viability Gap Funding (VGF) support and commitment from anchor industries. VGF is a scheme that helps support important infrastructure projects that may not be financially viable, through grants that total up to 20% of the total project cost. The FM also announced that policies and regulations for efficient and transparent rental housing markets with enhanced availability will be put in place, to ease the rental and home-owning process. <div type="Article" hostid="261" msid="111953230" title="Union Budget 2024-25: Mobile Phones to get cheaper, as FM Nirmala Sitharaman reduces basic customs duty to 15%" mstype="2" mssubtype="0"></div>Markets are optimistic in the aftermath of these announcements, with many housing finance companies recording healthy gains since the speech. Puri notes that the renewed focus on rural and urban job creation, if effective, may provide some boost to affordable housing in even tier 2 and 3 cities. “The Finance Minister's allocation of ₹10 lakh crore to help 1 crore poor middle-class families buy houses will boost the demand for residential properties,” remarks Divyam Mour, Research Analyst at Samco Securities. ”This funding, along with interest subsidies, will greatly benefit real estate developers like DLF, Macrotech Developers, NBCC, and Sunteck Realty, as well as housing finance companies focused on the lower and middle classes, such as Aadhar Housing Finance, Aptus Value Housing Finance, and Aavas Financiers.”

Budget 2024: More affordable housing, lowered rent TDS — here’s what will change for the housing sector this year

The government's decision to remove <keyword id="22142879" type="General" weightage="20" keywordseo="indexation-benefit" source="keywords">indexation benefit</keyword> on sale of old property will result in huge <keyword id="22544904" type="General" weightage="20" keywordseo="inflow-of-black-money" source="keywords">inflow of black money</keyword> in <keyword id="19895040" type="General" weightage="100" keywordseo="real-estate" source="keywords">real estate</keyword> and investments in the sector will go down, AAP Rajya Sabha member <keyword id="19934326" type="General" weightage="20" keywordseo="Raghav-Chadha" source="keywords">Raghav Chadha</keyword> said on Thursday. Asking the government to roll back the proposal, Chadha, while taking part in the discussion on the <keyword id="19908389" type="General" weightage="20" keywordseo="Union-Budget" source="keywords">Union Budget</keyword> 2024-25, said people will never be able to buy their "dream homes". "Restore indexation on <keyword id="20584761" type="General" weightage="20" keywordseo="long-term-capital-gains" source="keywords">long-term capital gains</keyword>. Throughout the world, to woo investors to invest they are incentivised. In this country, by removing indexation we are disincentivising the investor class," he said, adding that removing indexation is not imposing <keyword id="19987671" type="General" weightage="20" keywordseo="tax" source="keywords">tax</keyword> but it is equivalent to "penalising investors". He said as a result of the step proposed by <keyword id="19956758" type="General" weightage="20" keywordseo="Finance-Minister" source="keywords">Finance Minister</keyword> Nirmala Sitharaman in the Budget 2024-25, individuals selling old properties will incur higher tax outgo. "If you do not bring back indexation three things will happen in this country. First, <keyword id="19895437" type="General" weightage="20" keywordseo="investment" source="keywords">investment</keyword> in real estate will go down and people will never be able to buy their 'dream homes'," Chadha asserted. He further said there will be undervaluation of property deals, people will buy properties at 'circle rates' and will never disclose the real value of the property. "Third, there will be a huge inflow of <keyword id="20592248" type="General" weightage="20" keywordseo="black-money" source="keywords">black money</keyword> if you don't roll back this decision to withdraw indexation," he said. In the Union Budget 2024-25, the government proposed reducing the long-term capital gains tax on immovable properties to 12.5 per cent from 20 per cent, but removed the indexation benefits to adjust for inflation. As per the Memorandum to the Union Budget, with rationalisation of rate to 12.5 per cent, indexation available under Section 48 of the Income Tax Act has been proposed to be removed for calculation of any long-term capital gains, which is presently available for property, gold and other unlisted assets. Chadha also highlighted the high tax burden faced by common people and asked for a comprehensive review of both direct and indirect taxes. "We impose taxes like the Europeans do, to get services like sub-Saharan countries," he added. Taking part in the discussion, Debashish Samantaray of the BJD said the central government has given a raw deal to all eastern states like Odisha, Jharkhand, West Bengal in the Budget. He charged that in spite of Odisha giving 20 seats to the BJP, there was hardly anything for the state in the Union Budget. He noted that "regional aspiration should be addressed", and asked the central government to treat all states as equal. RJD's Sanjay Yadav attacked the government stating the Budget had nothing for the poor and marginalised and only catered to the rich and powerful. He noted that his party has been demanding special category status for Bihar for a very long time. Yadav said instead of dividing people on the basis of religion and caste, the government should work towards generating employment in the country. Medha Vishram Kulkarni of BJP and Rajani Ashokrao Patil of INC also participated in the debate. C V Shanmugham of AIADMK said allocation in the Budget does not significantly address the pressing needs of Tamil Nadu's infrastructure, health care, Social justice and education. The government has mentioned 76 projects in Tamil Nadu, but most of them are pre-existing ones getting a facelift. Moreover, in the Budget, no help in flood mitigation was provided, despite the state being prone to cyclones. There is no mention of a linkage of Kaveri and Godawari in the Budget, he said. Samirul Islam of AITC said this Budget is anti-people, anti-poor and anti-Bengal. It only satisfies Bihar and Andhra Pradesh's allies and is to save the government. "The Budget has deprived Bengal," he said. It has also ignored the people, especially the unorganised sector. 83 per cent of India's workforce is employed by unorganised sectors and failed to announce a comprehensive scheme for them and migrant workers, he said. M Mohamed Abdulla of the DMK said the Budget has provoked a constructive debate and disappointment in Tamil Nadu, a state known for its economic contributions. Tamil Nadu expected support and recognition in the budgetary allocations, but received nothing. The government is supposed to represent the people of the country as a whole. However, it is very unfortunate and unfair to see unequal distribution to the state governments, especially for the non-BJP ruled states like Tamil Nadu which provides the highest tax for the government, he said.

Removal of indexation benefit will lead to huge inflow of black money in real estate: Raghav Chadha

Acouple of years into the COVID-19 pandemic, a California state flag appeared on a front porch near my parents' home in suburban Austin. The whole thing felt a little too on the nose, as if one household was trying to sum up all of the city's recent changes — the tidal wave of coastal dwellers, the skyrocketing home values, the maddening traffic — with a single banner.The flag is gone now, and so is the gold rush. Home prices and asking rents in Austin are down significantly from a year ago. Local Zillow listings are littered with price cuts. Real-estate agents who once doubled as bouncers at crowded open houses are now hiring ice-cream trucks to lure prospective buyers into properties.The sudden shift in Austin's real-estate market can be read in two ways. Look at it through one lens, and it's a cautionary tale in which FOMO-filled buyers irrationally bid up home prices, setting the stage for an inevitable bust. Look at it another way, though, and it's a success story of a growing city: Real-estate developers saw all those millennials and out-of-towners clamoring for a piece of Austin and answered the call, building tens of thousands of new homes in just a few years. The construction boom, combined with spiking mortgage rates, kept prices from spiraling further out of control. In other words, Econ 101 happened.This isn't a bust in the traditional sense — pretty much anyone who owned a home in Austin before 2020 is substantially richer today than they were a few years ago. But as other pandemic Zoomtowns continue to see increases in prices and rents, Austin stands alone in its change of fortune. The reversal has meant short-term pain for homebuyers who bought near the peak, <a target="_blank" href="https://www.businessinsider.com/home-sellers-summer-disappointment-mortgage-rates-house-prices-real-estate-2024-5">disappointed sellers</a> who now expect smaller windfalls, and homebuilders who are eager to offload their inventory. But letting some air out of the bubble will turn out to be a great thing for Austin in the long run. The slowdown, experts told me, is a sign of a healthy market, an example of how cities can dodge a true housing crisis by allowing developers to do what they do best: build, build, build.Housing in Austin has been through so many extreme distortions that nobody really knows what "normal" even means anymore. Long before offices shuttered and remote workers started pining for more space, Austin residents were sounding the alarm on the city's rising costs. New construction practically ground to a halt after the financial crisis in 2008, but as the economy recovered, the city's population exploded. No <a target="_blank" href="https://www.businessinsider.com/2020-census-fastest-growing-and-shrinking-metro-areas-2021-8">major metropolitan area in the US grew faster</a> between 2010 and 2020 than Austin, where the number of residents surged by 33% over the decade. Real-estate developers ramped up construction to meet the demand, but they couldn't get enough shovels in the ground to keep prices in check. The median cost of a house in the Austin metro area grew by 63% during that time, Zillow found, reaching $323,000 at the cusp of the COVID-19 crisis.Then the real boom began. To well-paid workers unmoored from their desks during the pandemic, Austin <a target="_blank" href="https://www.businessinsider.com/moved-from-san-francisco-to-texas-for-work-life-balance-2023-8">looked like paradise</a>: lower taxes, cheaper homes, and a thriving business ecosystem. Big-name tech firms like Oracle, Facebook, and Google endorsed the city, as did "<a target="_blank" href="https://www.businessinsider.com/manosphere-widening-ideological-gap-between-young-men-women-gender-genz-2024-2">manosphere</a>" figureheads such as <a target="_blank" href="https://www.businessinsider.com/elon-musk-austin-joe-rogan-biggest-boom-town-50-years-2021-2">Elon Musk</a> and <a target="_blank" href="https://www.businessinsider.com/celebrities-moved-to-texas-from-california-new-york-reasons-why-2024-8">Joe Rogan</a>, who urged others to follow in their footsteps. Austin was once again the <a target="_blank" href="https://www.austinchamber.com/blog/05-09-2023-migration">fastest-growing large metro</a> from 2020 to 2022, according to the Census Bureau, surging in population by 5.3%, or more than 120,000 people.As people flocked to the city, home prices exploded. I don't need to tell you that Austin got really expensive really fast, but the raw numbers are still stunning: The typical home price rose by nearly 56% in just a couple of years, Zillow found, surpassing $500,000 by the start of 2023. Homebuyers <a target="_blank" href="https://www.businessinsider.com/moving-to-austin-buy-a-home-texas-tech-jobs-2023-10">got swept up in bidding wars</a>, reasoning that even if the price ended up being steep, it would only climb higher if they waited. Things got so crazy that one large-scale builder started accepting bids for homes on its website, sight unseen. "That never happens," Keith Hughes, an Austin-based executive at the housing-research firm Zonda, told me. "It was that kind of frothy."I'd already moved out of Texas by that point, but I worried from afar that my hometown would meet the same fate as San Francisco, the poster child of the <a target="_blank" href="https://www.businessinsider.com/economic-inequality-housing-shortage-causes-2023-1">housing shortage and all its associated woes</a>. I feared that Austin would become known as a playground for the rich, a city where displacement and mind-boggling home prices marred the natural beauty that once made it such a draw. In my hand-wringing, though, I'd overlooked one crucial detail: Texas is better at building homes than almost anywhere else in the country.Austin-area builders immediately raced to meet the new demand, securing permits for about <a target="_blank" href="https://fred.stlouisfed.org/series/AUST448BP1FH">2,600 new single-family homes</a> in April 2021 alone, a 45% jump from the same month in 2019. All told, plans for more than 130,000 new housing units of all kinds were approved from 2020 through 2022. Once the paperwork goes through, it can take anywhere from a few months to a couple of years for homes to hit the market, so for a while, it didn't feel like any relief was on the way. That couldn't have been further from the truth.Consider the following trend: In the spring of 2022, more than 3,000 new listings were hitting the market each month, <a target="_blank" href="https://www.parcllabs.com/">Parcl Labs</a>, a real-estate-analytics company, found. By the following spring, the figure had surpassed 5,000. All told, Austin's housing stock has ballooned by more than 76,000 units since 2020, an 8.34% increase that includes single-family homes, condos, and townhomes. That's to say nothing of the <a target="_blank" href="https://www.businessinsider.com/rent-decline-fall-apartment-housing-market-landlords-tenant-lease-construction-2023-3">roughly 40,000 new rental apartments</a> that also opened their doors during that time. Now compare Austin's building blitz with San Francisco, which has added a measly 14,000 homes over the same period and grew its housing stock by less than 1%."It's pretty amazing when you think about it," Jason Lewris, a cofounder of Parcl Labs, told me. Considering the size of the Austin market, moving the stock of homes by nearly 10% is a colossal feat. "These are huge housing markets," Lewris added. "Austin wasn't small in 2019."Thousands of new homes weren't the only things pumping the brakes on Austin's runaway market. Mortgage rates reached record lows during the thick of the pandemic in 2021, making it easy for homebuyers to stretch their budgets by borrowing a lot of money for cheap. Then in spring 2022, the Federal Reserve started hiking interest rates to bring down inflation, and mortgage rates leaped. In October 2023, the rate for a typical home loan hit a 20-year high, making the prospect of <a target="_blank" href="https://www.businessinsider.com/housing-market-mistake-buyers-sellers-mortgage-rates-time-to-buy-2024-3">buying</a> — <a target="_blank" href="https://www.businessinsider.com/denmark-mortgage-rates-lock-in-effect-home-buying-selling-easier-2024-5">or selling, for that matter</a> — a lot less appealing. More expensive loans forced buyers to consider the possibility of paying several hundred dollars more each month for the same home, and many decided to play the waiting game instead. The result is homes are sitting on the market longer. These days, "there's no sense of urgency," Doreen Sidney, a local real-estate agent, told me. "There's no rush. The home that you saw two weeks ago, it'll still be there."The job market cooled as companies pulled back on hiring or laid off workers in the face of higher borrowing rates. Migration to Austin also slowed considerably. Between July 2022 and July 2023, more people moved out of the city's main county than moved in for the first time in two decades. Some departed for the suburbs or cheaper Texas locales like San Antonio — 20% of new San Antonians in 2022 had <a target="_blank" href="https://www.bizjournals.com/austin/news/2023/09/14/austin-sanantonio-migration-data-2023.html">moved from Austin</a>. Others, including some tech workers from places such as California, decided Austin wasn't all it was cracked up to be and moved on. "Austin is where ambition goes to die," one disappointed founder and angel investor <a target="_blank" href="https://www.businessinsider.com/tech-workers-moved-to-austin-regrets-2023-8">told Business Insider</a> last year.There was no shortage of ambition among Austin's homebuilders, however. Their efforts may have been focused on chasing all the profit that comes with a crush of demand, but they ended up doing what hopeful buyers had been praying for — bringing down home prices. The typical home price in Austin was down almost 4% in July compared with the same month in 2023, according to the Freddie Mac House Price Index, while prices across the US were up more than 4%. On the one hand, a single-digit drop like Austin's "is not a huge number," Sean Kelly-Rand, a Boston lender who works with home developers, told me, adding: "On the other hand, that's massive." Overall, Austin home prices are down more than 14% from the peak in 2022, according to Freddie Mac, and more than 18% according to Zillow.Homeowners and -builders don't like to see price drops — they want to watch their wealth balloon and reap the rewards of a market that's running red hot. But just like a collapse in prices is bad news for everyone, an unsustainable run-up in home values is also unhealthy. Companies don't want to move to a place where workers can't afford to live. Wannabe sellers might choose to stay in homes they've outgrown if they can't find anything else within their budget. Add up <a target="_blank" href="https://www.businessinsider.com/san-francisco-doom-loop-fix-american-city-housing-transit-2023-7">all these problems and you get San Francisco</a>. A crash in home prices would've also been bad news for Austin, sure, but that's not what's going on here. The vast majority of homeowners in Austin are still wealthier than they were before all this craziness, and local homebuilders made plenty of hay while the sun was shining. For that reason, Austin's slowdown isn't a doom signal — it's a dazzling success."It's nice to see the positive developments in Austin," Orphe Divounguy, a senior economist at Zillow, told me. "Austin should be a model for the rest of the country in terms of allowing builders to meet demand."Austin's long-standing advantages were on full display during the building boom: Sun Belt cities in the lower half of the US have traditionally been more permissive of growth, which enabled developers to mobilize when they saw the first signs of Austin's unprecedented spike in home values. And most of the new construction was concentrated in the suburbs, where there was plenty of space to build outward. Not all cities have the luxury of ample space, but they do have the power to cut red tape and make it easier to build more types of housing. When developers can get projects approved more quickly, they're more responsive to buyer demand, which prevents prices from getting out of hand. Relaxing the zoning laws, which tell builders what they can and can't build, allows developers to get creative and add multiple housing units to lots that might have traditionally allowed only single-family homes.Nobody watching the Austin market should be having flashbacks to the Great Recession. The market's cooling is less a disturbing sign of cratering demand and more a hopeful hint that the city can adapt to people's desire to call it home."I think Austin is going to be fine in the medium to long run," Jenny Schuetz, a housing-policy expert at the Brookings Institution, told me. "The fundamentals of Austin's economy are great, and it's going to continue to grow with jobs and population over time." In fact, easing the housing crunch will probably add to Austin's allure, which has always been at least partly predicated on being cheaper than the big cities on the coasts. The next challenge will be to avoid forfeiting this success — homebuilding is prone to cycles of booms and busts, and developers are already pulling back on new construction as they try to get their already-built units off their books. Home prices in Austin may be down year over year today, but it's not like there's a glut of empty homes like there was around the country in 2008. If building in Austin dries up, prices may very well resume their rise.Kelly-Rand, the Boston lender, thought about making inroads in Austin a few years ago when the building renaissance was in full swing. But ultimately, he decided not to — buyers' behavior was too frenzied for his taste, and prices seemed likely to come down when all those homes on the horizon actually got built. Nevertheless, Kelly-Rand told me he's still a believer in the Texas capital."Long term, I think Austin will be in an even better position," Kelly-Rand told me. "I think the right thing is happening in that developers are meeting demand."<a target="_blank" rel="" href="https://www.businessinsider.com/author/james-rodriguez">James Rodriguez</a> is a senior reporter on Business Insider's Discourse team.

How Austin's real-estate boom went bust

<ul class="summary-list"><li>The growing ranks of boomers aged 65-plus could spark a boom in the senior housing market.</li><li>Demand for senior housing is expected to surge 50% by 2040, Capital Economics estimated.</li></ul>A big investment opportunity is brewing in one corner of the real estate market, thanks to a wave of <a target="_blank" class="" href="https://www.businessinsider.com/how-retirement-of-peak-boomers-could-affect-economy-social-security-2024-4">baby boomers</a> that are about to age into retirement, according to Capital Economics.The research firm pointed to the so-called "<a target="_blank" class="" href="https://www.businessinsider.com/what-will-happen-baby-boomer-homes-die-millennials-gen-z-2024-1">silver tsunami</a>," the moniker that's been given to describe the imminent surge of Americans over the age of 65 entering prime retirement age. It says this will drive strong demand for <a target="_blank" class="" href="https://www.businessinsider.com/cost-of-a-retirement-home-community-in-every-state-2019-7">senior housing</a> facilities, including assisted living, independent living, skilled nursing, and memory care.For real-estate investors faced with a prolonged slump in the <a target="_blank" class="" href="https://www.businessinsider.com/commercial-real-estate-office-debt-investing-outlook-blackstone-jon-gray-2024-11">commercial real estate</a> space, senior housing offers an enticing alternative, wrote Imogen Pattison, an assistant economist at Capital Economics."With an <a target="_blank" class="" href="https://www.businessinsider.com/baby-boomer-gen-z-millennials-economy-housing-job-market-stocks-2024-2">aging population</a>, senior housing has a clear long run structural demand driver pointing to further growth in the sector. Our analysis shows rent prospects appear strong on the back of undersupply and solid wage growth," Pattison wrote. "That makes senior housing a compelling option for investors looking to break away from traditional property investment."The 65-plus population is on track to grow 30% over the next 16 years, encompassing 80 million Americans by 2040, according to estimates from the US Census Bureau.<div type="image" title="Graph showing number of Americans over age of 65" height="964" width="1396" msid="115427149" hostid="261" sizebytes="21546"></div>Meanwhile, around 11% of those over the age of 65 are currently living in a form of senior housing, according to the American Senior Housing Association. Assuming that percentage holds steady, that implies demand for senior housing will grow 50% over the next 16 years, per Capital Economics' analysis, up from 6 million in 2023 to 9 million in 2040.Rents, meanwhile, are seeing a strong uptrend, thanks to the supply of senior housing growing tighter after the pandemic. The sector posted more than 5% year-per-year rent growth in 2023, nearly double its 20-year average, the firm added.<div type="image" title="Chart showing senior housing rent growth" height="1001" width="1413" msid="115427143" hostid="261" sizebytes="26652"></div>That puts the senior housing sector on track to see average annual returns of 13% for the next four years, the firm estimated. Yearly returns are also set to peak in 2026 at around 16%, it added, more than triple the 4.5% yearly growth expected in 2024."We expect continued tight supply to bolster rents over the next year or so," Pattison added. "Taken together, strong capital value growth and income returns mean the sector looks relatively attractive compared to the other real estate sectors."The <a target="_blank" class="" href="https://www.businessinsider.com/commercial-real-estate-office-outlook-fire-sales-apartment-conversions-housing-2024-10">commercial real estate</a> space has been challenged in recent years, with the demand for offices being weighed down by work-from-home trends while borrowing costs rise in the sector. That means the most troubled office buildings could see a wave of fire sales and conversions, potentially sparking steep losses for property owners, real estate experts told Business Insider.

A 'silver tsunami' of retirement-age baby boomers is creating a big opportunity for real-estate investors, research firm says

<ul class="summary-list"><li><keyword id="19979912" type="General" weightage="100" keywordseo="mortgage-rates" source="keywords">Mortgage rates</keyword> are falling but remain high compared to the rates of the past few years.</li><li>Assumable mortgages can help <keyword id="19907145" type="General" weightage="20" keywordseo="homebuyers" source="keywords">homebuyers</keyword> get lower rates and reduce their monthly payments.</li></ul>Over the past few years, <a target="_blank" href="https://www.businessinsider.com/personal-finance/mortgages/average-mortgage-interest-rate">US mortgage rates</a> have fluctuated wildly, leaving both homebuyers and sellers scrambling. In 2021, rates fell to as low as 2.1% as the <a target="_blank" href="https://www.businessinsider.com/how-fed-rate-cut-could-impact-mortgage-rates-homebuyers-2024-9">Federal Reserve</a> acted to keep the economy ticking during the COVID-19 pandemic. But then inflation spiked. To cool inflation, the Fed implemented a series of rate hikes, pushing mortgage rates to a peak of 7.79% in October 2023, according to data tracked by the <keyword id="19904332" type="General" weightage="20" keywordseo="Federal-Reserve" source="keywords" meta.keywordsubtype="org" meta.entityname="Federal Reserve" meta.hostid="261" meta.entityid="Federal Reserve">Federal Reserve</keyword> Bank of St. Louis. But over the last few years, some homebuyers have used a workaround to get lower rates anyway: a lesser-known loan option called an <keyword id="23243178" type="General" weightage="20" keywordseo="assumable-mortgage" source="keywords">assumable mortgage</keyword>. Assumable mortgages let qualifying buyers take over a seller's existing loan, including its interest rate, principal balance, and other terms. This can lead to significantly lower <keyword id="19950650" type="General" weightage="20" keywordseo="interest-rates" source="keywords">interest rates</keyword>, making monthly mortgage payments more affordable and saving thousands over the life of the loan. It's important to note that not all loans are eligible for assumption, but ones backed by the Federal Housing Administration (FHA) and the Department of Veterans Affairs (VA) are. 2024, however, has brought some relief from high rates. In January, <a target="_blank" href="https://www.businessinsider.com/fed-cut-lower-mortgage-rates-should-you-refinance-2024-9">rates</a> hit about 6.7% and have been slowly decreasing since. According to Freddie Mac, the 30-year fixed-rate mortgage dropped to 6.2% as of mid-September, its lowest level since February 2023. The Federal Open Market Committee, which oversees US monetary policy, is expected to <a target="_blank" class="" href="https://www.businessinsider.com/interest-rate-cuts-decision-this-week-federal-reserve-powell-inflation-2024-9">cut interest rates</a> at its <a target="_blank" class="" href="https://www.businessinsider.com/personal-finance/banking/when-is-the-next-fed-meeting">meeting</a> this week. This could lead to further declines in mortgage rates in the coming months. Still, the 2%-ish rates of 2021 aren't likely to return as the Fed remains wary of inflation. So while additional rate declines may ease monthly mortgage payments for some, they won't necessarily make homebuying significantly more affordable for most Americans. For that reason, assumable mortgages still might be the best option for some people to get the lowest rates. Here are the stories of three homebuying couples who secured mortgage rates below 3% since March 2023 using assumable mortgages. They described how they redirected the funds they would have spent on higher monthly mortgage payments into healthcare, renovations, or retirement. <h2>One couple got a 2.6% rate and became the youngest homeowners in their families</h2>In 2022, <a target="_blank" href="https://www.businessinsider.com/first-time-buyers-got-lowest-best-interest-rate-assumable-mortgage-2024-3">Grace Lucchese</a> had just graduated from college. Her partner, Mickey Ricard, had finished his military service two years prior. The Gen Z couple had moved into an apartment in Lucchese's hometown of Sudbury, Massachusetts — a town about 40 minutes outside Boston — and found themselves spending much of their incomes on rent. "We were paying ridiculous <a target="_blank" href="https://www.businessinsider.com/rental-market-housing-affordability-real-estate-apartments-2024-1">prices for rent</a>, and our money was going nowhere," Lucchese told Business Insider. "We also have a dog with special needs, so we wanted to find a home with a backyard." <div type="image" title="Grace Lucchese, Mickey Ricard, and their dog at home." height="1701" width="2268" msid="113465770" hostid="261"></div>For the first-time homebuyers, finding an affordable, well-maintained home in their area was challenging. "During our homebuying search, we looked all around Boston," Lucchese said. "We could not find a home that was move-in ready and under $650,000. We put offers on probably seven different homes and got into bidding wars on two." After months of searching and nearly giving up, Lucchese and Ricard finally found their perfect home: a 1,600-square-foot, two-story Colonial built in 1885 with three bedrooms and one bathroom. The home also came with an assumable mortgage. "Our home was originally listed for $429,000," Lucchese said. "When we were <a target="_blank" href="https://www.businessinsider.com/real-estate-investing-how-to-negotiate-best-price-down-2023-4">negotiating with the seller</a> and trying to talk him down on the price, they brought up the assumable loan — I had no clue what that type of mortgage was." After learning about assumable mortgages and realizing they could take over the homeowner's 2.6% rate, they jumped at the opportunity. <div type="image" title="Grace Lucchese and Mickey Ricard's Massachusetts home." height="3024" width="4032" msid="113465773" hostid="261"></div>In January, they made a $13,000 down payment and bought the home for $422,500. With homeowners' insurance included, their monthly payments are around $2,100 — about half of what they would likely pay if they had gotten a traditional mortgage earlier this year. Their mortgage term is 26 years. The couple, now the youngest homeowners in both of their families, are using their monthly savings to renovate their home and help cover their dog's veterinary expenses. "Now that our assumable mortgage is saving us about $2,000 each month, it makes the stress a little less because we have the option of having more money available," Lucchese said. <h2>Retirees who got a 2.75% rate say their lives are easier</h2>In June, <a target="_blank" href="https://www.businessinsider.com/homebuyer-got-low-mortgage-interest-rate-assumable-mortgage-save-retirement-2024-7">Brian Sankey</a>, a retired military police officer, purchased a $400,000 home in Elizabethtown, Kentucky — a small town south of Fort Knox — with an assumable Veterans Affairs, or VA, mortgage. The loan has a 2.75% interest rate and 26 years remaining on its 30-year fixed-rate term. Sankey said it was "a win-win" situation for him and the seller. "The benefit of a loan assumption for the seller was that it allowed them to sell their home at a higher price," Sankey told BI. "For my wife and me, it allowed us to get a lower interest rate." <div type="image" title="Brian Sankey on the beach." height="1200" width="1600" msid="113465776" hostid="261"></div>Sankey said he learned about the assumption feature of Veterans Affairs mortgages years ago but had forgotten about it over time. It wasn't until he came across the four-bedroom, four-bathroom home in Elizabethtown that his memory was jolted. The home's proximity to an Army base led Sankey to suspect that the sellers might be connected to the military and have taken out a VA loan, making an assumable mortgage possible. He was right. However, getting the seller on board wasn't as easy as Sankey had hoped. "They weren't inclined to do it at first because they felt the assumption process would take too long, and they were looking for a quick sale," he said. "But after about 30 days, they realized that cash buyers wouldn't be throwing money at them and agreed to proceed with the assumption." According to Sankey, the assumption process took just about six weeks from the time he and his wife first viewed the home to closing the loan. "I'm happy I remembered it because it made our home purchase more affordable," he said. "Despite the current market conditions and higher interest rates, my wife and I were able to purchase a larger home with lower monthly payments." A smaller mortgage is allowing Sankey and his wife to <a target="_blank" href="https://www.businessinsider.com/personal-finance/how-much-do-i-need-to-retire">retire more comfortably</a>. "I can now use the money I would have spent on high-interest payments to cover living expenses," Sankey said. "We should also have more discretionary income." <h2>A couple is able to pay down medical debts after buying a house in Oregon</h2>In 2022, <a target="_blank" href="https://www.businessinsider.com/couple-got-low-mortgage-when-everyone-getting-high-interest-rate-2024-3">Amy Yzaguirre</a> was diagnosed with cancer. At the time, she and her son were living in Idaho while her husband looked for a job in Oregon. They had planned to reunite in Oregon after he found one and their Idaho home sold. However, following her diagnosis, the couple decided it was best to be together before the Idaho home was sold. Faced with the financial burden of paying the Idaho mortgage and Oregon rent at the same time, they moved into an RV on her parents' property in Tigard, a suburb about 20 minutes outside Portland. "It was pretty rough, but we made it work," Yzaguirre told BI. They lived rent-free in the RV for months while waiting for their Idaho home to sell and Yzaguirre to recover. Then, they began searching for a home to buy in Tigard. <div type="image" title="Amy Yzaguirre and her husband pose in front of the RV they purchased." height="542" width="720" msid="113465772" hostid="261"></div>It wasn't the experience they had hoped for. "It's funny how an area can be a nice, family-friendly, affordable place to live and then suddenly become overpopulated and much more expensive," she said. They eventually toured a townhome in nearby Sherwood listed for $416,000. The seller's flyer noted that a buyer could take over their 2.5% mortgage rate. "I did the math," Yzaguirre said. "The seller was locked in at 2.5%, so if we qualified to assume the loan, our mortgage would be a little over $2,100 a month versus the over $3,000 we would be paying with a traditional mortgage at current market rates. It would save us over $40,000 in the long run." <div type="image" title="Amy Yzaguirre, her husband, and son." height="3024" width="4032" msid="113465778" hostid="261"></div>In March 2023, the couple purchased the townhome for $418,900. They made a down payment of $48,000 and assumed a 30-year fixed-rate FHA loan with an interest rate of 2.5%. They have 28 years left on their mortgage. The money they are saving each month is helping them pay down Yzaguirre's bills. "Even though I was fortunate to have good insurance during chemotherapy and have excellent insurance through my current job, I still had quite a few medical bills to pay off," she said. "With the extra money we have saved on our mortgage payment, I've been able to pay them down." The family also used some of their extra funds to pay off other debts and purchase a Toyota Tacoma pickup truck with cash, covering the full amount upfront Correction: September 19, 2024 — An earlier version of this story misspelled Mickey Ricard’s last name.

3 couples who recently got mortgage interest rates under 3% share how they did it

<ul class="summary-list"><li>Goldman Sachs and JPMorgan Asset Management are becoming a bit less bullish.</li><li>Although the US economic outlook is strong, returns may have been pulled forward.</li></ul>A pair of Wall Street juggernauts are getting slightly more skeptical about stocks and bonds, but a compelling investment opportunity may be hiding in plain sight.<div type="image" title="GS 10-year projection" height="1088" width="1508" msid="114505224" hostid="261" sizebytes="75402"></div>Goldman Sachs stole headlines recently by forecasting that <a target="_blank" href="https://markets.businessinsider.com/news/stocks/stock-market-outlook-sp500-future-returns-decade-forecast-goldman-sachs-2024-10">US equities will only rise 3% a year in the next decade</a>, down from an average annual gain of 13% in the prior 10 years. The firm's rationale is based on a more challenging backdrop characterized by lofty valuations, an unusually high concentration in the market's biggest stocks, increased recession risk, lower profits, and elevated interest rates.<div type="image" title="GS 10-year projection baseline" height="742" width="1010" msid="114505227" hostid="261" sizebytes="35320"></div>Top minds at JPMorgan Asset Management (JPMAM) agree that stocks might not post the returns that investors have come to expect, though they're not nearly as pessimistic.The firm, which manages $3.5 trillion in assets, expects US large-cap equities to appreciate by 6.7% a year in the next 10 to 15 years, according to its yearly long-term capital market assumptions report released on October 21. For reference, JPMAM thinks global stocks will rise between 7.2% and 8.1% a year in that same span.A mid-single-digit annual gain for US large caps is nothing to sneeze at, though it would be down substantially from <a target="_blank" href="https://www.businessinsider.com/how-to-invest-economy-growth-outlook-recession-risk-inflation-jpmorgan-2022-11">7.9% two years ago</a> and <a target="_blank" href="https://www.businessinsider.com/how-to-invest-stocks-bonds-real-estate-outlook-strategy-jpmorgan-2023-10">7% last year</a>.There's a simple explanation for that marginally more tepid outlook: US stocks have been on a tear. And while <a target="_blank" href="https://www.businessinsider.com/stock-market-outlook-prediction-2025-how-to-invest-rally-trader-2024-10">some bulls are emboldened</a> by the S&amp;P 500's excellent track record, JPMAM strategists worry that the market has pulled forward future gains."Near the bottom of all these pages, we put a little statement saying, "Past performance is not indicative of future returns.' That's actually not true," said David Kelly, JPMAM's chief global market strategist, at a press conference about the report. "Past great performance is indicative of a more difficult environment going forward."The S&amp;P 500 is on pace to rise by at least 10% <a target="_blank" href="https://www.macrotrends.net/2526/sp-500-historical-annual-returns">for the fifth time since 2018</a> and the 11th time since the financial crisis, including what's been a 22.7% gain in 2024. That strength, combined with already-rich valuations, led JPMAM to cut its long-term projection for US large caps.<div type="image" title="JPMAM valuations" height="926" width="1038" msid="114505230" hostid="261" sizebytes="32120"></div>However, Kelly said the downward shift was gradual since the economic growth outlook is promising. The firm is calling for US real GDP of 2% in the long term, which is the highest mark since the pandemic, along with 2.4% inflation, which is down for the third consecutive year."The very good news is that we think that the foundations for the US economy and the global economy look better than they did a year ago," Kelly said. "We got through some of our more significant worries on inflation; economic growth looks pretty solid."<div type="image" title="JPMAM US GDP forecast" height="828" width="1032" msid="114505215" hostid="261" sizebytes="15222"></div><h2 id="ee7765b8-415d-46ac-862a-90df145c611f">As the 60-40 portfolio loses steam, real estate can take the baton</h2>Lower stock returns are expected to drag down the traditional 60-40 stock-bond portfolio, which JPMAM now says should fetch 6.4% a year for the next decade or so.That forecast is down from 7% last year and 7.2% heading into 2023, though it's higher than the <a target="_blank" href="https://www.businessinsider.com/alternative-investing-strategy-60-40-portfolio-bitcoin-outlook-inflation-jpmorgan-2021-11">4.3% mark in late 2021</a>, where US large caps were only expected to climb 4.1% a year in the long term after an outstanding rebound from the early pandemic lows.Bonds, which make up the second half of that calculus, have a solid but unremarkable outlook.US bonds broadly are expected to return 4.6% in the long term — down from 5.1% last year and the same as two years ago — while the US 10-year Treasury note is projected to fetch 4.2%, versus 4.6% last year and 4% two years ago. Meanwhile, high-yield bonds should deliver a 6.1% gain in the long term, compared to 6.5% last year and 6.8% two years ago.After accounting for inflation, JPMAM expects the standard 60-40 portfolio to return less than 5% in the long term, and the same is true of large-cap stocks and bonds. While such gains may be satisfactory for some, it would take over 16 years for an investor to double their money.Those looking for a more compelling investment opportunity should consider real estate, according to JPMAM. Unlike stocks and bonds, the firm's projected returns for that asset class are steadily rising, from 5.7% two years ago to 7.5% in late 2023 to 8.1% this year.US core real estate is projected to yield close to 6%, up from just over 4% a few years ago and well above the 10-year's yield of 4.2%. Real estate isn't cheap based on <a target="_blank" href="https://www.investopedia.com/terms/c/capitalizationrate.asp">capitalization rates</a>, which measure how much money a property generates relative to its market value, but JPMAM believes the asset class is an exceptional value relative to other yield-generating investments.<div type="image" title="Real estate vs 10-year yield" height="924" width="1032" msid="114505221" hostid="261" sizebytes="34048"></div>"If you were to look at this on a spread basis, the cap-rates spread would tell you that real estate looks a little bit expensive," said David Lebovitz, a global market strategist for JPMAM, at the conference. "But if you look at the all-in yield and think of that as your valuation and your starting point, we're looking at a generational opportunity."Monica Issar, JPMorgan Private Bank's global head of multi-asset and portfolio solutions, echoed that sentiment."This is absolutely the largest generational opportunity to invest in real estate in a long time," Issar said at the conference.Commercial real estate looks especially compelling, Issar said. Unlike residential real estate, which has held up well in recent years — as evidenced by <a target="_blank" href="https://fred.stlouisfed.org/series/MSPUS">remarkably resilient home prices</a> despite <a target="_blank" href="https://www.freddiemac.com/pmms">still-elevated mortgage rates</a> — office buildings have struggled to regain their value since the pandemic ushered in a new era of remote work for millions of Americans.As companies reduced their physical presence or eschewed offices altogether, demand for commercial spaces has taken a massive hit. However, Issar thinks that risk is reflected in prices."All we've been reading about and all we've been seeing is price declines and discussions about empty buildings," Issar said. "This is a time for investors to step in, move into attractive pricing, move into asset classes like non-core real estate."Investors can bet on a commercial real estate rebound by working with <a target="_blank" href="https://am.jpmorgan.com/us/en/asset-management/institutional/investment-strategies/alternatives/real-estate/">JPMAM's team</a>, or on their own through publicly traded real estate investment trusts (REITs). JPMAM didn't outline any specific investments to make, but Issar threw out a few ideas to help investors brainstorm."Think of multifamily housing; think of student housing around campuses; think of cell towers and data centers," Issar said. "That is the modernization of the new direct real estate that is going to be really attractive for investors in the future."

'Generational opportunity': Invest in real estate as stock and bond returns shrink, according to $3.5 trillion JPMorgan Asset Management

New Delhi [India], June 13 (ANI): Mumbai and New Delhi are among cities in India that recorded a sharp annual increase in their <keyword id="6354553" type="General" weightage="100" keywordseo="real-estate" source="Orion">real estate</keyword> prices in the first quarter of 2024, according to a report by London-headquartered global property consultancy firm <keyword id="6363605" type="General" weightage="20" keywordseo="Knight-Frank" source="Orion">Knight Frank</keyword>. In case of Bengaluru, the average real estate prices witnessed a modest 4.8 per cent rise in prime residential or luxury homes during the January-March quarter of 2024. According to the report by the property consultant, titled '<keyword id="22041946" type="General" weightage="20" keywordseo="Prime-Global-Cities-Index-Q1-2024" source="Orion">Prime Global Cities Index Q1 2024</keyword>', Mumbai's significant rise on the international index was largely due to the rise in demand in the city. While the demand has been strong for all segments, there has been a rise in the sale of higher value products. Mumbai recorded the third highest year-on-year growth in prime residential prices in Q1-2024, pushing it up the ranking table by three places to 3rd position from its 6th position in Q1-2023. Delhi NCR rose from 17th rank in Q1-2023 to 5th in Q1-2024 with a growth of 10.5 per cent on a yearly basis. However, Bengaluru observed a slight decline in ranking from 16th place in Q1-2024 to 17th rank in Q1-2024, even while it recorded a 4.8 per cent yearly growth in residential prices. India's main cities, notably New Delhi and Mumbai, have witnessed a surge in house prices driven by robust economic growth, with annual GDP growth exceeding 8 per cent in the just concluded financial year 2023-24. Manila, the capital city of Philippines, claimed the top spot in the ranking with a 26.2 per cent annual rise in prices. The growth, as per the Knight Frank report, can be attributed to two key factors: purchasing power, and substantial infrastructure investments within and around the city. Tokyo in Japan jumped 17 places up with 12.5 per cent yearly price growth and ranked 2nd in the index. Despite Japan's overall population decline, Tokyo sustains a net population growth owing to migration from other regions within the country. Shishir Baijal, Chairman and Managing Director at Knight Frank India said, "The strong demand trend for residential properties has been a global phenomenon, led by gateway markets of Asia- Pacific and EMEA (Europe, Middle East, and Africa)." "Like its peers in these regions, the improved rankings of Mumbai and New Delhi on the Prime Global Cities Index was underscored by the resilience in sales growth volume. We expect the momentum of sales to remain stable over the next few quarters as the economic conditions are likely to remain broadly unchanged." The Prime Global Cities Index is a valuation-based index tracking the movement of prime residential prices across 44 cities worldwide. The index tracks nominal prices in local currency.

Mumbai, Delhi record real estate price appreciation in double digits; Ranked 3rd and 5th globally

The <keyword id="19903456" type="General" weightage="20" keywordseo="Income-Tax-department" source="keywords">Income Tax department</keyword> on Wednesday said 'substantial <keyword id="20138064" type="General" weightage="100" keywordseo="tax-savings" source="keywords">tax savings</keyword>' are expected for a vast majority of taxpayers due to reduction in the <keyword id="22526761" type="General" weightage="20" keywordseo="long-term-capital-gains" source="keywords">long term capital gains</keyword> <keyword id="45031" type="General" weightage="20" keywordseo="tax" source="Orion">tax</keyword> (LTCG) rate in the <keyword id="19895040" type="General" weightage="20" keywordseo="real-estate" source="keywords">real estate</keyword> sector. The Budget has reduced tax rates on capital gains earned from sale of house properties held for long term, but has removed the <keyword id="22142879" type="General" weightage="20" keywordseo="indexation-benefit" source="keywords">indexation benefit</keyword> available to taxpayers. The LTCG has been reduced from 20 per cent with indexation benefit to 12.5 per cent without indexation for the real estate sector. The indexation benefit allowed taxpayers to compute gains arising out of sale of <keyword id="801267" type="General" weightage="20" keywordseo="capital-assets" source="Orion">capital assets</keyword> after adjusting inflation. In a post on X, the income tax department said the nominal real estate returns are generally in the region of 12-16 per cent per annum, much higher than inflation. "The indexation for inflation is in the region of 4-5 per cent, depending on the period of holding. Therefore, substantial tax savings are expected to a vast majority of such taxpayers," it said. Giving a comparison of benefits based on the holding period of the real estate property, the I-T department said the new <keyword id="22422932" type="General" weightage="20" keywordseo="tax-rate" source="keywords">tax rate</keyword> without indexation is beneficial in most cases. For property held for five years, the new regime is beneficial when property has appreciated 1.7 times or more, while for a property held for 10 years, it is beneficial when the value has increased 2.4 times or more. For a property purchased in 2009-10, if value has increased to 4.9 times or more, it is beneficial, it said. "From the above examples, it is clear that only where returns are low (less than about 9-11 per cent per annum) that the earlier tax rate is beneficial, but such low returns in real estate are unrealistic and rare," the I-T department said. As per the changes brought in the 2024-25 Budget, the government has retained the indexation benefit for taxpayers on properties bought or inherited before 2001. The changes in the tax rate have been made effective from July 23, 2024.

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