ᐅ Is Buying a House a Wise Decision in the Current Market Situation?
Created on: 23 Sep 2020 14:32
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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
B
Bertram1001 Dec 2020 14:01Let me defend the idea of a mid-terrace house: I think you might have the impression that a mid-terrace house is cramped and dark. I have one that measures 6 x 11 meters (20 x 36 feet), and there is nothing dark about it.
On the contrary, it combines “enough light” with “cozy/lived-in/normal.” My visitors feel comfortable and are always surprised at how practical everything is.
Where an end-terrace house has windows, a mid-terrace house usually has space for storage.
A direct access to the garden would be nice (I have that, but I had to grant my neighbor a right of way to their garden. A 1.80-meter (5.9-foot) wide path cuts through my garden).
If you have enough money, just look for something that suits you. If not, take some time to reconsider your (pre)judices about terrace houses.
Terrace houses are often located in urban and central areas. For me, location is part of the quality of life: I don’t need a car and don’t waste a lot of time in traffic. These might also be important arguments for you.
What does quality of life mean to you? The type of house, the location, the neighbors, your commute to work, daycare, hobbies? I would base my decision on whether the house is an interesting candidate for you on those factors.
Thinking that “500k” for a mid-terrace house is out of reach is just a mental barrier and doesn’t lead to a well-considered result.
On the contrary, it combines “enough light” with “cozy/lived-in/normal.” My visitors feel comfortable and are always surprised at how practical everything is.
Where an end-terrace house has windows, a mid-terrace house usually has space for storage.
A direct access to the garden would be nice (I have that, but I had to grant my neighbor a right of way to their garden. A 1.80-meter (5.9-foot) wide path cuts through my garden).
If you have enough money, just look for something that suits you. If not, take some time to reconsider your (pre)judices about terrace houses.
Terrace houses are often located in urban and central areas. For me, location is part of the quality of life: I don’t need a car and don’t waste a lot of time in traffic. These might also be important arguments for you.
What does quality of life mean to you? The type of house, the location, the neighbors, your commute to work, daycare, hobbies? I would base my decision on whether the house is an interesting candidate for you on those factors.
Thinking that “500k” for a mid-terrace house is out of reach is just a mental barrier and doesn’t lead to a well-considered result.
Have you actually seen the house in person? Your gut feeling also matters. I would never rely solely on the brochure.
It has to be right. Just because it’s the only "feasible" option doesn’t mean you should make such an investment. You’re not under any time pressure at the moment, which is a good advantage.
It has to be right. Just because it’s the only "feasible" option doesn’t mean you should make such an investment. You’re not under any time pressure at the moment, which is a good advantage.
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Alibert871 Dec 2020 14:19Altai schrieb:
Have you actually seen the house in person? Your gut feeling says a lot. I would never decide based only on a brochure.
It has to be the right fit; just because it’s the only "feasible" option doesn’t mean you should make such an investment. You’re not under time pressure yet, which is a good starting point. Unfortunately, only from the outside. Since everything is still quite recent, there isn’t even a brochure yet. It just looks like a mid-terrace house, narrow and tall 🙂 ...
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Alibert871 Dec 2020 14:20I would like to thank everyone here for all the assessments, opinions, and thoughts! Also, for thoroughly considering our project from every angle (including hard facts, which is very helpful). We are waiting for the property details and will take a look inside the house. Have a great rest of the week, everyone 🙂
Schimi17911 Dec 2020 18:52I find these kinds of discussions very interesting because they show how others think and, ultimately, it helps you feel less alone. We (three people plus four rabbits) have been living in our own home for 10 months, having previously rented. We didn’t build new because we were lucky enough to purchase a relatively young existing property, which we wouldn’t have divided differently even if it were a new build. It’s just practical. Also, we couldn’t identify with these standard houses built today in the current construction style, but that is another topic. Of course, the house (about 180 square meters (about 1,940 square feet) of living space plus approximately 900 square meters (about 9,700 square feet) of land, double garage attached to the house, basement, etc.) was renovated according to our wishes (bathrooms, floors, etc.), and some changes are still to come (front door 🙂 ). The feeling of being in your own home is clearly different from being a tenant, especially when the house matches your ideas and everyone has their own space.
But (!) it also means more responsibility and often more work. Okay... anyone building a house nowadays will usually want a low-maintenance garden. That’s not the case with us. While we don’t have a jungle, the approximately 900 square meters (about 9,700 square feet) of land still need to be maintained. In addition, four rabbits have moved in, but they live outside on their "own" 25 square meters (about 270 square feet) 🙂 ... Anyone with a fireplace has to take care of the wood (which I do together with the neighbor). Since buying or building a house usually means more living space to look after, one should not underestimate the time commitment. One should also not forget that you have to cover ALL costs yourself. This not only includes a washing machine that might break down but also maintenance costs for the heating system, etc. Therefore, it is necessary to have a reserve for such expenses. From a purely financial point of view, a property will probably not pay off, but the gain in quality of life is—in our case—immense. In my opinion, a good, functioning neighborhood is also very important. We have craftsmen living nearby who can occasionally help with their expertise. Anyone who finances a property with a loan should keep in mind that they have received value for that money and haven’t “just wasted it” (on alcohol, drugs, parties, women, etc.). And finally: it usually ends up costing more than planned 🙂 You just have to stay grounded!
At least for me, life has fundamentally changed as a homeowner 🙂
But (!) it also means more responsibility and often more work. Okay... anyone building a house nowadays will usually want a low-maintenance garden. That’s not the case with us. While we don’t have a jungle, the approximately 900 square meters (about 9,700 square feet) of land still need to be maintained. In addition, four rabbits have moved in, but they live outside on their "own" 25 square meters (about 270 square feet) 🙂 ... Anyone with a fireplace has to take care of the wood (which I do together with the neighbor). Since buying or building a house usually means more living space to look after, one should not underestimate the time commitment. One should also not forget that you have to cover ALL costs yourself. This not only includes a washing machine that might break down but also maintenance costs for the heating system, etc. Therefore, it is necessary to have a reserve for such expenses. From a purely financial point of view, a property will probably not pay off, but the gain in quality of life is—in our case—immense. In my opinion, a good, functioning neighborhood is also very important. We have craftsmen living nearby who can occasionally help with their expertise. Anyone who finances a property with a loan should keep in mind that they have received value for that money and haven’t “just wasted it” (on alcohol, drugs, parties, women, etc.). And finally: it usually ends up costing more than planned 🙂 You just have to stay grounded!
At least for me, life has fundamentally changed as a homeowner 🙂
Alibert87 schrieb:
Exactly! That’s the goal, and I want it that way because I believe most people want the same... that’s what I’m working towards. Without sounding too naive, why should I settle for significantly less? But I appreciate your honest words. If you can’t fulfill your wish, then you have to settle for less. There’s no other way. I understand you, but I also have to accept that I won’t get my all-in-one solution. So it’s about setting priorities 🙂