ᐅ Is Buying a House a Wise Decision in the Current Market Situation?
Created on: 23 Sep 2020 14:32
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Alibert87
Good day and hello everyone,
Some time ago, I joined this forum to gather information and read experience reports.
I would like to get your neutral opinion on whether buying property at this time would be advisable. We currently rent in a "very good location" and would like to purchase a home here. Many properties are sold "off-market" or only available at very high prices (I’m talking well over 500,000). There is no land available for development; if there is, a property is demolished and rebuilt. I want to gather some input on whether this whole situation is crazy or if such a project is feasible.
Since we don’t have a specific property in view yet but have been monitoring the market for about 1.5 years and have already done quite a few viewings, I assume the median price for homes or condominiums that suit us would be around 600,000.
He, 33 years old, permanently employed in the public sector, net income 2,600 euros (plus 14 monthly payments plus bonus, around 5,000) – from 2021 about 3,000 net (fixed)
She, 32 years old, permanently employed part-time, 25 hours per week, net income 2,300 (plus additional payments around 2,000)
1 child (child benefit) – possibly a second child within the next 3–5 years
Married, tax class 4
Equity around 110,000 (plus 30,000 as a buffer)
Regarding equity, I have a question: Are bank conditions tiered, so that having, for example, 10,000 more in equity results in a better loan offer (how does this tiering work)?
We are really torn whether or not to take this step. It feels very surreal to spend so much money on housing.
I am grateful for any advice
Regards
Some time ago, I joined this forum to gather information and read experience reports.
I would like to get your neutral opinion on whether buying property at this time would be advisable. We currently rent in a "very good location" and would like to purchase a home here. Many properties are sold "off-market" or only available at very high prices (I’m talking well over 500,000). There is no land available for development; if there is, a property is demolished and rebuilt. I want to gather some input on whether this whole situation is crazy or if such a project is feasible.
Since we don’t have a specific property in view yet but have been monitoring the market for about 1.5 years and have already done quite a few viewings, I assume the median price for homes or condominiums that suit us would be around 600,000.
He, 33 years old, permanently employed in the public sector, net income 2,600 euros (plus 14 monthly payments plus bonus, around 5,000) – from 2021 about 3,000 net (fixed)
She, 32 years old, permanently employed part-time, 25 hours per week, net income 2,300 (plus additional payments around 2,000)
1 child (child benefit) – possibly a second child within the next 3–5 years
Married, tax class 4
Equity around 110,000 (plus 30,000 as a buffer)
Regarding equity, I have a question: Are bank conditions tiered, so that having, for example, 10,000 more in equity results in a better loan offer (how does this tiering work)?
We are really torn whether or not to take this step. It feels very surreal to spend so much money on housing.
I am grateful for any advice
Regards
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Nice-Nofret24 Sep 2020 09:13If you adjust your wishes to fit your budget, you can also achieve your preferred location.
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Alibert8724 Sep 2020 09:14Joedreck schrieb:
Are you happy living there? Offer to buy from the landlord if it works out. That way, the heirs won’t be stuck with the property. We have already considered that, but this is not a ground-floor apartment with a garden. The building has three units, and the landlord is unlikely to want to sell just one apartment (in case you’re wondering, the entire property is unaffordable, in my opinion well over 1 million).
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Alibert8724 Sep 2020 09:24Bookstar schrieb:
So, 600,000 euros really isn’t much money for a house anymore. New builds are probably out of the question anyway; you’re looking at existing properties? That will be difficult since, as you said, most of the good ones are already sold off the market. But homeownership is more popular than ever. Good luck!! Yes, exactly, it should be an existing property. New construction would only be an option if we found a free building plot (which is highly unlikely).
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Alibert8724 Sep 2020 09:26Nice-Nofret schrieb:
.. If you adjust your wishes to your budget, then you can also get your desired location.No, I don’t think so given the current situation. Or am I misunderstanding your point... We want to achieve added value compared to our current rental apartment.
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NoggerLoger24 Sep 2020 09:56We also searched for a long time, and here prices only start at around 600k. Our starting point was 200-230k in equity and my current net income of 4k per month, including 13.3 salaries. My wife is still studying but will finish in a few months. In the end, it became a newly built condominium with 114 sqm (1,227 sq ft) and a large garden. However, including the KNX bus system and upgrades, the price is about 490k. The actual goal was to get a semi-detached house or a small house.
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Hausbautraum2024 Sep 2020 10:17What do you currently pay for rent excluding utilities?
For a comparable house here, you would have to pay about 1500€ rent, so not a huge difference compared to the mortgage payment. The only downside is, of course, that the equity is initially "gone."
I’m skeptical whether it makes financial sense in our case, since the purchase price-to-rent ratio is at least 40.
But the feeling of living in your own home, the freedom to design everything the way you want, the security of not facing a landlord’s termination for personal use, and the retirement provision... it’s definitely worth it to us.
For a comparable house here, you would have to pay about 1500€ rent, so not a huge difference compared to the mortgage payment. The only downside is, of course, that the equity is initially "gone."
I’m skeptical whether it makes financial sense in our case, since the purchase price-to-rent ratio is at least 40.
But the feeling of living in your own home, the freedom to design everything the way you want, the security of not facing a landlord’s termination for personal use, and the retirement provision... it’s definitely worth it to us.