ᐅ Is the construction boom still ongoing?

Of course, interest rates used to be higher, but construction costs and purchase prices were lower relative to income. Even in rural areas and with every possible cost cut, it’s hardly possible today to build for under a total budget of 500,000 (five hundred thousand) including house, land, kitchen, landscaping, and additional costs. With 20% equity (still a solid 100,000), that leaves a loan of 400,000. At 3.5% interest, that’s about 14,000 in interest, and over a 25-year term, a monthly payment of 2,500. This is unaffordable for well above the median income.

And yes, of course, you can only compare today’s new builds to the standards of the 1970s to a limited extent, when uninsulated 30cm (12 inch) walls were built and tens of thousands of liters of heating oil were used every winter. Just like any budget compact car today compares favorably in features to a car from back then. But it’s not true that only luxury homes are being built nowadays and that’s why building has become too expensive. This also applies to basic Town & Country level specifications.

WilderSueden schrieb:

Of course, interest rates were higher back then, but construction costs and purchase prices were lower relative to income. Even in rural areas and with minimal features, it is now almost impossible to build a complete project under a total budget of 500,000 euros (house, land, kitchen, landscaping, additional costs…) (approximately $540,000). With 20% equity (which still means about 100,000 euros (about $108,000)), that leaves a loan of 400,000 euros (about $432,000). At a 3.5% interest rate, that means roughly 14,000 euros ($15,000) in yearly interest, and for a 25-year term, a monthly payment of 2,500 euros ($2,700). This is no longer affordable for incomes far above the median.

And yes, of course, you can only compare today’s new builds to the standards of 1970 to a limited extent, when uninsulated 30 cm (12 inches) walls were common and tens of thousands of liters of heating oil were used every winter. Just like the cheapest small car today is much better equipped than a car from back then. But it’s not true that only luxury houses are built today and that is why construction has become too expensive. It is also the case for basic packages like Town & Country.

By saying this, you contradict your original statement that it is only due to the higher interest rates and confirm mine, all good 🙂

In the short term (around 2 years), it is mainly the interest rates rather than the construction costs that matter. An extra loan of 80,000 at 0.7% interest is still somewhat manageable if you haven’t financed at the absolute limit. But with the current interest rates, I probably wouldn’t build anymore even without price increases. That would be pushing the financing limit way too much for me.

In der Ruine schrieb:

When I see how building is done nowadays, it's no surprise. Everyone wants columns in front of the door and small villas instead of houses. I financed at about 3.5% but was modest. In the past, financing was done at 7%.
Just because interest rates were unnaturally below 1% for a while, this is not the end.

My parents also financed at 9% and were not necessarily wealthy. But that was a different time. In rural areas, everyone knew people who could help, and a lot was done DIY. Technically, construction back then was not as demanding either, in my opinion. And there was no construction accident insurance fund sending mail to everyone involved on site. 😀 On Saturdays, a whole group of private helpers from friends and family were fed, but as a result, we built almost at material cost.
My mom recently said that with the way we build now (general contractor, large loan), they wouldn’t have been able to build back then. Their income just didn’t allow it. I think it’s really hard to compare this regardless of the interest rate.

Mycraft schrieb:

As the title suggests, what’s the situation like for you? Is there still a lot of building going on, or less?

Entire fields being developed, or just scattered projects?

And so on. Please share your observations and experiences. My feeling is that the forum has become a bit quieter lately.

At least prices for existing homes have dropped significantly. This is partly due to interest rates and partly because 99% of these houses use gas or oil heating, and everyone is now trying to quickly sell their buildings with renewable heating systems before the market really “crashes.”
When the market is flooded with listings and demand decreases, prices naturally fall.
My contractor told me that building materials are getting more expensive—concrete, steel... there is also currently a lot of uncertainty in the window industry, and roof tiles are also unavailable (luckily I ordered mine three months ago).

xMisterDx schrieb:

That’s true. You mentally reduce the size of the desired house by 10-20%, leave out the double garage, and suddenly the price increases from recent years are covered again, making it affordable once more.

And then you build a carport yourself. The flooring and paint either way... The outdoor landscaping comes later. We’ve all been through this before.