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
M
Myrna_Loy31 Mar 2022 13:34Alibert87 schrieb:
What do you mean by equity increasing to cover repayments? Of course, we have continued to build equity.
Giving up the project is the issue, yes. >But what do we do as an alternative? That is probably more a question for investment advisors.
N
neo-sciliar31 Mar 2022 13:44Alibert87 schrieb:
What do you mean by equity increasing through repayments? Of course, we have continued to build equity.
Giving up the project is the issue, yes. >But what do we do as an alternative? Asking this question about alternatives in a homebuilding forum can backfire ;-)
The first and, in my opinion, most important point is to make you aware of the goals you want to pursue in life. Create a 3-10-30 year plan. To me, it sounds like you’re still unclear about this: You have children, young children. Your family’s needs today are very different from those in 15 years, and 25 years from now they will change again, before shifting once more in 35 years. Many want the so-called “jack of all trades, master of none” in their late 20s or early 30s. That doesn’t work (I don’t know anyone who has achieved that).
You have a luxury problem, be aware of that every day. What is the alternative if building is not possible? There aren’t many options: renting or a nomadic lifestyle. By the way, that offers a lot of flexibility. Financially? Securing your retirement (rent during any retirement income gap, plus covering that gap itself).
Maybe in 20 years a small house somewhere by a lake. Fishing peacefully, letting your soul unwind.
W
WilderSueden31 Mar 2022 13:51You can’t have everything at once. Five rooms, right in the city center, affordable, and easy to get. Just like with ownership, you have to make compromises somewhere. And to make reasonable compromises, you need to prioritize.
For us, it was clear that we wanted to live comfortably, with our own garden. And we didn’t want to spend a fortune on it. We are willing to accept living in a village with 400 residents. Being raised in a rural area and having only one child, the prospect of regular driving services doesn’t bother me much—certainly less than having 500 neighbors permanently within view from our balcony.
For us, it was clear that we wanted to live comfortably, with our own garden. And we didn’t want to spend a fortune on it. We are willing to accept living in a village with 400 residents. Being raised in a rural area and having only one child, the prospect of regular driving services doesn’t bother me much—certainly less than having 500 neighbors permanently within view from our balcony.
A
Alibert8731 Mar 2022 13:59neo-sciliar schrieb:
Asking this question about alternatives in a house building forum can backfire ;-)
The first and, in my opinion, most important point is to make clear what goals you are pursuing in life. Create a 3-10-30 year plan. You seem to me like you haven’t figured that out yet: You have children, small children. As a family, your needs today are very different from what they will be in 15 years, and in 25 years they will change again, only to change once more in 35 years. Many want the well-known all-in-one solution in their late 20s or early 30s. That doesn’t work (I don’t know anyone who has achieved it).
You have a luxury problem, so be aware of that every day. What is the alternative if building is not possible? There aren’t many options: renting or nomadic living. By the way, that offers a lot of flexibility. Financially? Secure your future (rent during the gap between retirement and pension, plus the pension gap itself).
Maybe in 20 years a small house somewhere by a lake. Relax, fish, unwind. We do have such a “plan”; we decided that when our first child starts school (with a desk, etc.), the house or something similar should be there. We still have about 1.5 years until then, but the plan is slowly falling apart with the ongoing situation (market developments and prices).
Sure, we are definitely not certain! I admire people who say they have no alternative, want to buy a house, and just go for it (even if it means making many compromises).
Yes, it is a luxury problem. But still, I want to find a solution. I also can’t fully decide to stop looking for property altogether.
I’ve only followed the thread sporadically... the last two pages sound a bit like you’re just looking for someone to say:
“I understand, I wouldn’t compromise on my expectations either, keep going, you’ll find something that exactly meets your requirements.”
This is really not meant negatively, but the reality probably looks more like this:
“Your demands regarding the location of the property are so high that it’s already difficult to find anything at all. 1.5 years is unfortunately not much time. Because from finding to completing the purchase, to renovating, and so on, that also takes time. The likelihood of finding something within the remaining time is getting smaller and smaller. So, when it comes to planning, I would say you can hope to get lucky, but for planning purposes, you should either be ready to make compromises regarding the location, or plan on not buying a house at all.”
“I understand, I wouldn’t compromise on my expectations either, keep going, you’ll find something that exactly meets your requirements.”
This is really not meant negatively, but the reality probably looks more like this:
“Your demands regarding the location of the property are so high that it’s already difficult to find anything at all. 1.5 years is unfortunately not much time. Because from finding to completing the purchase, to renovating, and so on, that also takes time. The likelihood of finding something within the remaining time is getting smaller and smaller. So, when it comes to planning, I would say you can hope to get lucky, but for planning purposes, you should either be ready to make compromises regarding the location, or plan on not buying a house at all.”
P
Pinkiponk31 Mar 2022 14:15Alibert87 schrieb:
we already have done / are already doing that. Here it’s quite difficult as we would then need a 5-room apartment. Maybe there’s also the possibility to buy two small apartments on the same floor and combine them.