ᐅ Is the real estate market increasingly forcing families to build their own homes?
Created on: 6 Apr 2019 11:35
T
Thierse
Actually, we would prefer to avoid building. Unfortunately, existing properties within a 20 km (12 miles) radius have become quite expensive, and affordable rental houses with small gardens are simply scarce.
Until now, we have been living in an old rental apartment without a garden. We would like to change that, but there is a lack of options. The listings on various platforms are overcrowded with families looking for affordable housing.
Who is familiar with this situation, and how do you deal with it?
Until now, we have been living in an old rental apartment without a garden. We would like to change that, but there is a lack of options. The listings on various platforms are overcrowded with families looking for affordable housing.
Who is familiar with this situation, and how do you deal with it?
Thierse schrieb:
Halving the property transfer tax, lowering energy standards for new buildings to an affordable level, more social housing, reintroducing the old homeowner subsidy, and tax incentives to promote homeownership....After a few years, prices will adjust accordingly. Sellers will also notice that subsidies make an additional amount of X thousand € available.
The Müller family and 10 other families have similar incomes and calculate how expensive a house can be for them. Due to all the subsidies, tax cuts, and so on, they now have capital X available. The same applies to the 10 other families. As a result, properties will sell even faster at first than before, until prices stabilize and sellers receive higher returns.
C
chand198619 Apr 2019 11:30Wealth accumulation is disproportionately encouraged:
Flat withholding tax on capital gains is much lower than income tax.
Interest on rental properties is tax-deductible.
Tax-free sale after 10 years.
Deductibility of renovation expenses after moving in.
Now also the child construction allowance (Baukindergeld).
Flat withholding tax on capital gains is much lower than income tax.
Interest on rental properties is tax-deductible.
Tax-free sale after 10 years.
Deductibility of renovation expenses after moving in.
Now also the child construction allowance (Baukindergeld).
We must not forget that one reason for the currently low interest rates is the problematic ECB monetary policy. Eventually, this huge interest rate experiment will backfire. And the taxpayer will have to pay the price. At the moment, the ECB owes the Bundesbank around €1,000,000,000,000 (about 1 trillion euros) through the so-called Target2 balances.
We will request 2–3 more quotes from homebuilding companies. However, due to various factors, we will probably end up choosing a higher-priced rental property (due to the lack of affordable offers). Once the older children have left the house, we can consider what to do next. Foreclosures in a few years might provide a more affordable option. Many families who are currently only able to build because of the low interest rates will face problems when rates rise. Many in our circle also still have a repayment rate that is too low and are only slowly moving into a positive equity position.
Even if I were to build now, it would take at least one year before the building is completed. It would only be interesting if there is a really good offer.
We will request 2–3 more quotes from homebuilding companies. However, due to various factors, we will probably end up choosing a higher-priced rental property (due to the lack of affordable offers). Once the older children have left the house, we can consider what to do next. Foreclosures in a few years might provide a more affordable option. Many families who are currently only able to build because of the low interest rates will face problems when rates rise. Many in our circle also still have a repayment rate that is too low and are only slowly moving into a positive equity position.
Even if I were to build now, it would take at least one year before the building is completed. It would only be interesting if there is a really good offer.
C
chand198619 Apr 2019 11:56Oh please, don’t bring TARGET balances into this discussion. Since this was discovered by a man who considers himself a scientist just because he was allowed to lead an institute for a long time—an institute that is inexplicably regarded as scientific—there has been a very specific German perspective on the topic. This perspective is neither shared by the rest of the world nor by experts in the field. And it only relates to house prices in a very indirect way.
Who is forcing people to keep high outstanding debts? Rising interest rates are absolutely not a problem until the end of the loan contracts!
Thierse schrieb:
Many families who can currently only build because of the low interest rates will face problems when interest rates rise. In our environment, many still have mortgage repayments that are too low and only slowly move into the safe zone.
Who is forcing people to keep high outstanding debts? Rising interest rates are absolutely not a problem until the end of the loan contracts!
chand1986 schrieb:
Who is forcing people to carry high outstanding debts? Rising interest rates are not a problem at all until loan agreements expire!Often, however, incomes are too low to afford effective repayment rates. Friends of ours repay at 1 percent. Depending on the interest rate, it can take 40 years to pay off the loan.
As long as the ECB exists, the Target2 issue remains a minor detail. However, it becomes interesting when problems arise within the Eurozone. The euro crisis is being artificially suppressed by the ECB’s interest rate policy. Struggling countries like Italy will still cause significant concerns. And if Germany’s economy also starts to falter, things will become even more critical.
Thierse schrieb:
Often, incomes are too low to afford effective repayment rates. Friends of ours repay with 1 percent. Depending on the interest rate, it can take 40 years to pay off.A 1 percent repayment rate for owner-occupied residential property is an unfortunate exception and the opposite of "often." Which bank even offers that...
If you are going to generalize from isolated cases and make slogans, maybe take a look at… hmm… perhaps Warren Buffett? Invest wisely and become wealthy.