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:
"...Many also say that money is better invested elsewhere... That may be true, but how many people really understand the stock market or similar? For example, I don’t at all...."
It’s really not rocket science. Monthly ETF savings plans in a diversified index and/or dividend funds, and that’s it. This way, you ride out the ups and downs of the market and achieve a long-term return of 6–8 percent per year. Without stress or hassle.I believe you, but I simply have zero knowledge about that. And almost no one in my circle of friends does either. So why doesn’t everyone just do it?
The fundamental issue is that many aspects of house construction are considered standard when they are actually luxuries. But: "You only build once." It’s no surprise that houses keep getting more expensive. Just take a look at photos of existing homes from the 1990s. Then you can understand for yourself why prices were lower back then. It’s not just the energy efficiency regulations and rising costs to blame.
Nordlys has shown how it’s still possible to build affordably today.
Nordlys has shown how it’s still possible to build affordably today.
Nordlys schrieb:
How does that work? No property transfer tax for owner-occupied homes.
In Denmark, you can deduct mortgage interest on real estate loans from your income tax. That really helps. Someone paying off a house effectively ends up paying very little tax.
Municipalities designate preferred land zones, and all of them do this. Why? Attracting financially reliable new residents genuinely benefits the city because the treasury receives more revenue per new resident than here. Copenhagen prefers to fund itself through very high indirect taxes, such as VAT, sugar tax, spirits tax, and so on.
However, speculation and land banking are strictly prevented. If you don’t build, you lose the land again. If someone wants a second home by the sea, they have to buy in a designated summer house area. If they try to have it in a regular single-family neighborhood, they will be expropriated. The rules are quite strict and they enforce them consistently. And in Denmark, if you are not Danish, you can’t simply buy property either. This keeps the speculation bubble small.
"I believe you, but I have absolutely no clue about that. And hardly anyone in my circle of acquaintances does. So why doesn’t everyone just do it?"
Because Germany is not a typical investor country. Here, savings accounts, unprofitable life insurance policies, and daily money accounts are still deeply ingrained in people’s minds. Stocks are seen as very risky, so people tend to avoid them. Banks and insurance companies profit from this fear. Some investors also recall the collapse of companies like Telekom or the New Market.
You don’t need to be a professional at all. Many believe that a worthwhile investment in stocks requires extensive knowledge and a lot of regular time commitment. Especially when focusing on low-cost index funds or ETFs, neither much knowledge nor much time is necessary to invest wisely in the stock market.
Because Germany is not a typical investor country. Here, savings accounts, unprofitable life insurance policies, and daily money accounts are still deeply ingrained in people’s minds. Stocks are seen as very risky, so people tend to avoid them. Banks and insurance companies profit from this fear. Some investors also recall the collapse of companies like Telekom or the New Market.
You don’t need to be a professional at all. Many believe that a worthwhile investment in stocks requires extensive knowledge and a lot of regular time commitment. Especially when focusing on low-cost index funds or ETFs, neither much knowledge nor much time is necessary to invest wisely in the stock market.
Thierse schrieb:
...
It’s really not rocket science. Monthly ETF savings plans into a broadly diversified index and/or dividend funds, and that’s it. This way, you ride out all the market’s ups and downs and achieve a long-term return of 6-8 percent per year. Without stress or hassle.But that doesn’t make you any happier, since you still don’t have a house, and taking money to the grave only makes sense if you’re aiming for hell.
Thierse schrieb:
Actually, we’d prefer to avoid building. Unfortunately, existing properties within a 20-meter (12-mile) radius have become quite expensive, and affordable rental houses with small gardens are simply rare.A 20 km (12 mile) radius is a bit ridiculous, says someone who commuted 35 km (22 miles) from the suburbs to the city for 15 years, investing half an hour each way. That was normal, not long, not bad. That’s reasonable to expect from any main earner. For someone on a 450-euro (€) mini-job, it’s disproportionate and, in my opinion, not expected.
As a latecomer and quiet onlooker here, I can’t help but smile at statements that building a house cost only half as much 10 years ago and that a hairdresser earning 2,300 gross plus taxable tips nets 2,000. Well then.
More or less, I can agree with the opinions that people are greedy. (K+K)
Whether it concerns the house standard (a house under 160 sqm (1,722 sq ft), child bathroom, rain shower, and a brick double garage) which is considered social housing, the location (cheap land in the city, but it must be traffic-calmed), or giving up on a detached or semi-detached house, possibly only divided by homeowners’ associations, it’s all increasing significantly.
My first construction loan was at over 6%. At that time, the lower-earning wife had to bring in extra money from an evening side job in addition to her part-time work.
Building was cheaper then than now, but wages didn’t stand still either.
I believe many people could adapt to their environment if they wanted to. A city dweller who earns twice or even three times as much as a bus driver from Friedrichskroog doesn’t have to dream of the same living environment. Or vice versa.
Likewise, childcare outside the home is better in the city than in the countryside, where the wife and mother can stay at home more often because building a house is cheaper there. Somehow, everyone could be happy if it weren’t for greed or envy. I know not everyone is like that. People just like to keep up. Those who work hard should be able to enjoy the fruits of their labor and have a choice.
But people somehow always remain dissatisfied. This was true for the 35-hour workweek as well as parental leave.
And if everything is perfect, you still wonder why a colleague drives a more expensive car or how the neighbor funds all their vacations.
By now, people push themselves out of the middle class if they don’t keep up with iPhones, Weber grills, Thermomix, or Audis. (Of course, there are alternative brands that are considered insider tips.) Anyone who still travels to Turkey can’t afford a proper vacation. We put pressure on ourselves. Those who manage to be at peace with themselves deserve admiration. That’s my opinion.
"That doesn’t make you any happier either, because you still don’t have a house, and taking money to the grave only makes sense if you’re aiming for hell."
And in old age, I’ll be eating roof tiles because the meager pension isn’t enough to cover the necessary repairs. Many people underestimate the costs of maintaining a house. You only realize this over the years as the building gets older. Owning a home is rarely a profitable investment, and sugarcoating the numbers won’t change that.
"A 20 km (12 miles) radius is also a bit ridiculous, says someone who commuted 35 km (22 miles) from the suburbs to the city for 15 years and spent half an hour on a one-way trip."
Mobility is expensive. And especially in rural areas, you often need a second car. Or the kids might need one as well to get to their training or education.
And in old age, I’ll be eating roof tiles because the meager pension isn’t enough to cover the necessary repairs. Many people underestimate the costs of maintaining a house. You only realize this over the years as the building gets older. Owning a home is rarely a profitable investment, and sugarcoating the numbers won’t change that.
"A 20 km (12 miles) radius is also a bit ridiculous, says someone who commuted 35 km (22 miles) from the suburbs to the city for 15 years and spent half an hour on a one-way trip."
Mobility is expensive. And especially in rural areas, you often need a second car. Or the kids might need one as well to get to their training or education.