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 13:33Not to be taken completely seriously... one could just wait until, in the current situation (COVID-19), some houses become unaffordable and more "good" offers come in.
Forget the mid-terrace house. You clearly show that you don’t want it.
By the way, the investment value of the house should be completely secondary. You get a house because you want it. A house involves a lot of work and responsibility. You have to be willing to take that on. In return, you get the amazing feeling: This is MINE!
If you only care about the garden, get a community garden plot.
By the way, the investment value of the house should be completely secondary. You get a house because you want it. A house involves a lot of work and responsibility. You have to be willing to take that on. In return, you get the amazing feeling: This is MINE!
If you only care about the garden, get a community garden plot.
A
Alibert871 Dec 2020 13:37Winniefred schrieb:
It sounds quite clear that you don’t really like the house and are only considering it because you have no better options. You don’t even have an urgent need to move. If your gut feeling is warning you against it, then don’t go for it and keep looking. It may be true that renting doesn’t make financial sense, but if you buy the house and in six months a better opportunity comes up, you often can’t react that quickly with a property.
We live in a townhouse with access to the garden, driveway, parking space, etc. Our neighbors in the mid-terrace house don’t have any of that. They only have a garden entrance accessible by wheelbarrow (and are always happy when they can shorten their way through our property instead of walking around), but nothing else. A very narrow garden, no parking space, nothing. When I see all the things we have to bring in and take out because of our building projects in the house and garden... having my own driveway, garden access, and parking space is invaluable. The neighbors often park in our driveway to unload because there is no parking space available nearby. Of course, that’s all manageable, no question, but I wouldn’t choose that without a pressing need.Yes, my thoughts are similar. There are many compromises for over 500,000 euros (over $540,000). Normally, I would think anyone who pays that much for a small townhouse is out of their mind (regardless of the market situation).
Alibert87 schrieb:
We would be fine as long as something truly interesting is offered to us and we don’t have to participate in a silly bidding process. I’m always surprised when a property sells for that price here. Sure, that would be enough. But honestly, it can sometimes take years, and the waiting period can really wear you down. I’d rather have the bird in the hand than the one on the roof (something like that, right?). I clearly remember how we searched almost daily on the usual property portals and got more and more frustrated week by week because the dream home didn’t show up or nothing new was listed. That was very annoying.
Ultimately, it’s your decision, and no one can make it for you. Make a list of the hard facts your dream house absolutely must meet and the absolute deal breakers. Compare this with the offered house and then make your decision.
A
Alibert871 Dec 2020 13:39Evolith schrieb:
Forget the middle townhouse. You clearly show that you don’t want it.
By the way, the investment value of the house should be completely secondary. You get a house because you want it. A house is a lot of work and responsibility. You have to be willing to accept that. But in return, you get the amazing feeling: this is MINE!
If all you care about is the garden, get a community garden plot. Yes, you might be right there. As mentioned at the beginning, we don’t want to miss any opportunity. I wouldn’t go for a community garden plot, and therefore wouldn’t use one either.
W
WilderSueden1 Dec 2020 13:44Alibert87 schrieb:
Not entirely serious... one could wait until, given the current situation (COVID-19), some houses become unaffordable and thus more "good" offers come onto the market That is pure speculation. So far, COVID has not lowered prices—why should it? Most jobs have been preserved thanks to short-time work benefits, and the professions most affected are not typically homeowners. Many are currently working from home and only experience the problems indirectly. On the other hand, the market has been flooded with even more money during a prolonged low-interest rate period, which is now making its way into various markets. Look at stocks, gold, or real estate—prices are soaring everywhere. Even if some sellers have to put their homes on the market in the coming months, demand is so high that this will hardly affect prices. It would take a truly major crisis to change that. Not impossible, but before the next federal election, measures will likely be taken to prevent such a scenario.