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
A
Alibert8731 Mar 2022 11:48Benutzer200 schrieb:
1, 2, or 3. None of these really suit you, do they?
My advice is always to adapt your wishes to the circumstances. So, option 2.
You don’t like option 1 (your equity doesn’t disappear—it just changes from cash to property value. If you then finance a house with the same bank, they might be able to take a secondary charge on the condominium). Option 3 hasn’t worked for three years now. The chances of suddenly finding something exactly as you want there are extremely low. That leaves only option 2—but you are standing in your own way. You keep going around in circles and can’t break out. It might sound a bit blunt, but it’s the reality: I can’t move into a neighborhood that doesn’t appeal to me or where I don’t feel comfortable. But you’re right, that makes the probability very low.
The condominium idea still has a redeeming aspect—sometimes houses are offered for exchange, like trading a house that’s too big for a smaller apartment.
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Alibert8731 Mar 2022 11:52rick2018 schrieb:
You should have found something by now. It will never be perfect.
Prices just went up by 30–40% (30–40%) recently. You’ve already had to absorb that increase.
Back then, it was already unrealistically high for you. Your equity should be higher now.
In prime locations, only top incomes will get you in.
It won’t get any cheaper anytime soon. There are plenty of current threads about this. We found quite a lot (we've been very active and creative), but the compromises were always too big (way too big), or we were unlucky (in the end, the property still went to an agent).
What should we do now—just keep renting?
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Myrna_Loy31 Mar 2022 11:55Alibert87 schrieb:
It might sound arrogant, but it’s simply a fact: I can’t move to a residential area that doesn’t appeal to me or where I don’t feel comfortable. But you’re right that this makes the chances very slim.
There is a somewhat appealing side to the condominium idea, as sometimes houses are offered for exchange—too big a house, wanting to swap for an apartment. It doesn’t sound arrogant, but rather like a refusal to face reality. I also have colleagues who would rather live as permanent campers than leave the greater Starnberg area. But does it really make you happy to be confronted every day with the bitterness of never belonging to the fortunate group of homeowners?
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Bertram10031 Mar 2022 11:55Alibert87 schrieb:
but the compromises were always too big (way too big)That’s probably the reason: you’re very attached to your ideas. That’s not necessarily a problem, but then renting might be the only option left. And that’s not a problem either. Actually, you don’t really have a problem, since none of the options are bad or problematic. People are different: I would probably compromise on the house size and garden size and also somewhat on the location. Others can’t live without a large garden. So, it probably doesn’t help much if others here say what they would do.
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Benutzer20031 Mar 2022 11:58Alibert87 schrieb:
There is a somewhat charming aspect to the idea of a condominium unit swap; occasionally, houses are offered for exchange, for example, if a house is too large and the owner wants to trade it for an apartment. However, managing two properties and two families under one roof is about as likely as winning the lottery 😉
Alibert87 schrieb:
This may sound arrogant, but it’s unfortunately true: I can’t move to a neighborhood that doesn’t appeal to me or where I don’t feel comfortable. You’re basically exchanging a rental apartment (which isn’t suitable anymore due to family expansion) for a house that fits the space requirements but whose location you don’t like. At least you would have the right type of property.
But please keep in mind that houses and apartments can be bought and sold just like a car. If you had compromised three years ago, by selling now you would have enough equity to afford a suitable house in the right location. Hindsight is always 20/20, I know...