Dr. Susmit Kumar, Ph.D.

In US, the real estate is considered a parameter to measure the job growth in a region. In US Midwest, real estate collapsed during the 2008 Great Recession and still it has not improved. If you try to sell a home in Midwest, it generally takes 8 to 9 months to sell it and it is sold at about 8% to 10% below the market rate. On the other hand if you try to sell a home in Silicon Valley, California (which has the highest per capita income in US), it would sell within a week or two for 10% above the market value. Please see at bottom of this email two cases - (i) one in Rust Belt in US and (ii) another in Silicon Valley, California. This will tell you why Americans in Midwest voted for Trump.

We are witnessing the same in India, i.e. drop in real estate prices, except in financial areas and in ultra rich regions - this contradicts job growth theory. Please go to real estate websites like 99acres and magicbricks and see for yourself the drop in property prices in majority of regions in each of 20 major cities (there are ONLY few exceptions) all across India:

(1)   Magicbricks:

(Here is the link. There are 16 cities)

Browse Rates & Trends for Residential and Commercial Property

(Here is the link for New Delhi - please click on "View Trends" on right hand side to view price history)

Property Rates in New Delhi

(2)   99acres:

(this link is for Delhi - there are 22 cities in drop down) - Please click on "See Trends" to see price history

Property Rates & Price Trends in Delhi

Due to the US-based economists, India is witnessing the re-run of what the US has been going through for last one decade. The US GDP nearly doubled between 2000 ($10.28 trillion) and 2016 ($18.46 trillion), but instead of increasing good paying jobs, the US lost more than 5 million such jobs during the same period whereas the job growth was in the low-wage sector (Recovery Has Created Far More Low-Wage Jobs Than Better-Paid Ones, Annie Lowrey, The New York Times, April 27, 2014). The total number of jobs lost may be two to three times of the factory jobs, if we consider indirectly associated jobs also such as in schools, hospitals, apartments/homes, home repair related jobs, gas/petrol stations, restaurants, grocery shops and auto sector as factory workers would spend their income in these associated fields (please read my article: The Hidden Cost of Imported Items and The Need to Redefine Modi Administration’s “Make in India” Policy). In a small town, if a factory, having couple of thousand workers, closes, it devastates the entire town.

I would believe real estate websites' (Magicbricks and 99acres) property histories and the existing formula to calculate the job growth more than any NEW method of job growth formula from Niti Aayog which may be fudging the data.

There is a 2011 bestseller book "This Time Is Different – Eight Centuries of Financial Folly," written by Professor Carmen M. Reinhart (Minos A. Zombanakis Professor of the International Financial System at Harvard University) and Professor Kenneth S. Rogoff (Thomas D. Cabot Professor of Public Policy and Professor of Economics at Harvard University). After its publication, several countries, including the US and some European countries, used it to convince the lawmakers to support their austerity budgets. Later on it was found that there were several data which were there in their Excel sheets, but were not included in their calculations and if one adds those data in their calculations, the results were completely different from the ones in their book (“The Rogoff-Reinhart data scandal reminds us economists aren't gods”, Heidi Moore, The Guardian (UK), 18 April, 2013).

(A) US Midwest (Rust Belt - this region was the manufacturing hub in US) -

Please see Wikipedia - https://en.wikipedia.org/wiki/Rust_Belt

(in US, "Month" is written before "Date", i.e. 05/22/17 means May 22, 2017)

Following house belonged to an Indian-origin professor at University of Cincinnati, Ohio. He is from IIT-Kanpur and has a PhD in engineering from Massachusetts Institute of Technology. In 2013, he moved to Oklahoma State University, Tusla, Oklahoma. His house was sold at 9% below market price in more than a year. His house was in one of the richest area in Cincinnati, Ohio. I know him for last 24 years.

Please click on "Price/Tax History to see the data below:

4495 Classic Dr, Blue Ash, OH 45241, US (5 beds 4 baths 3,500 sqft)

(B) Silicon Valley, California - In just 3 months, the following house's price went up from $1.2 million to $1.68 million, a 40% increase. It was last listed for sell on March 15 and within 3 weeks, it was sold at 12% above market value.

1169 Susan Way, Sunnyvale, CA 94087, US (3 beds 2 baths 1,272 sqft)