ᐅ Is Buying a House a Wise Decision in the Current Market Situation?
Created on: 23 Sep 2020 14:32
A
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
A
Alibert871 Dec 2020 13:10WilderSueden schrieb:
Compromises always have to be made, unless you have unlimited money. For us, the compromise is moving further away, working from home a lot (which in turn leads to compromises in the floor plan), and foreseeably doing many rides for our child. But in return, we get a modern house with a garden, some distance from the neighbors, and at the outskirts of town for a price that here I would at most pay for a three-room apartment in a block of flats. As I said, moving away from the city is not an option yet (both of our workplaces are reachable by bike and the daycare is on the way). WilderSueden schrieb:
You should be realistic about whether the houses you have in mind are really within your budget and available on the market. Relying on luck is a poor basis for decisions of this scale. Yes and no, occasionally something does come on the market. Unfortunately, many are sold "off-market" (here we are also trying to build networks and knock on doors). Yes, it is luck if we manage to get something (but not impossible) 🙂W
WilderSueden1 Dec 2020 13:17It is always the case that all the good offers are taken off the market through private deals. Whether it’s rental apartments or properties for sale, the same problem applies. The situation is similar with plots of land, unless you can show enough points in a new development area or, like us, find something outside of an official allocation process. Truly good options rarely appear on the open market. That was also our problem—we can’t afford anything nice here, and we don’t know anyone further out. In the end, no one has large amounts of money to give away for free. So, private deals probably don’t actually mean cheaper prices.
Alibert87 schrieb:
As I said, moving out of the city is not an option yet (both work places are reachable by bike and the daycare is on the way).We, who were once convinced city dwellers, thought differently for too long. In hindsight, an earlier decision to move to the countryside would have saved us tens of thousands of euros. Of course, you can watch the next three price increases before realizing that without compromise, nothing will work anymore.
If city prices ever fall or at least stabilize, we will consider moving back. But as long as nothing changes, I prefer to continue paying off my house in an 800-inhabitant village rather than keep paying rising rents for years and hope for a generous seller who would let me buy a great house in the city below market value.
A
Alibert871 Dec 2020 13:25WilderSueden schrieb:
And in the end, no one has large amounts of money to give away. So, under the table, it probably won't really be any cheaper. For us, it would be enough if we were offered something truly interesting and didn’t have to go through a silly bidding process. I’m always surprised when someone pays that price.
Alibert87 schrieb:
We would be satisfied if something truly interesting was offered to us and we were not stuck in a silly bidding process. I’m always surprised when this price is actually paid.No need to be surprised—if the price is really paid, then by definition it is the market price.Imagine you had a house to sell—would you sell it below market price? No, right….
In other words: you are waiting for a fool to sell you something too cheaply. Even if such a person exists, you are not the only one waiting. Meanwhile, prices are currently rising fast—and waiting is something only those who can afford it can do.
Winniefred1 Dec 2020 13:33It definitely sounds like you don’t really like the house and are only considering it because you don’t have better options. You don’t even urgently need to move. If your gut feeling is telling you not to go for it, then don’t, and keep looking. It might be true that renting isn’t more cost-effective, but if you buy the house and a better opportunity comes along in six months, you often can’t react that quickly with homeownership.
We live in a terraced house with access to the garden, driveway, parking space, and so on. Our neighbors in the mid-terrace house don’t have any of that. They only have garden access through an entrance reachable with a wheelbarrow (and they’re always happy when they don’t have to go around outside but can take a shortcut through our property), nothing else. A very narrow garden, no parking space—nothing. Considering all the things we constantly transport and install thanks to construction projects in the house and garden, my driveway, garden access, and parking space are priceless to me. The neighbors often park in our driveway to unload because there was no parking space available nearby. Of course, it’s all manageable, no question, but I wouldn’t choose that without a real need.
We live in a terraced house with access to the garden, driveway, parking space, and so on. Our neighbors in the mid-terrace house don’t have any of that. They only have garden access through an entrance reachable with a wheelbarrow (and they’re always happy when they don’t have to go around outside but can take a shortcut through our property), nothing else. A very narrow garden, no parking space—nothing. Considering all the things we constantly transport and install thanks to construction projects in the house and garden, my driveway, garden access, and parking space are priceless to me. The neighbors often park in our driveway to unload because there was no parking space available nearby. Of course, it’s all manageable, no question, but I wouldn’t choose that without a real need.
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