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 13:17Pinkiponk schrieb:
We are not exactly in your situation, but were in a similar position until three years ago. So I hope I am allowed to share my thoughts. Otherwise, please feel free to ignore my comment without any hard feelings.
Do you see no chance at all, or do you objectively have no chance anymore?
Have you considered buying a condominium (apartment) that you could move into yourselves? I haven’t read the entire thread, so I don’t know whether you are specifically looking for a detached single-family house or if a condominium might also be an option for you.
There are absolute preferred locations, acceptable preferred locations, and approximate preferred locations. We decided on an approximate preferred location.
I miss option 4: making larger compromises. But maybe you are already willing to do that, and it simply wasn’t mentioned in your post. We still see some chances, but the likelihood is just low, and the timing factor is also working against us.
In principle, a condominium would also be an option, but such properties are just as rare as houses. The idea was rather to continue renting for the time being and buy a condominium to rent out initially.
Regarding preferred locations, there are 3–4 areas that are suitable. We are truly city people, so we don’t want to drive by car all the time.
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Alibert8731 Mar 2022 13:20WilderSueden schrieb:
Then you gave the answer. Look for an apartment of the right size and invest the retained equity.We have already done that / are already doing that. It’s quite difficult here as well, since we would then need a 5-room apartment.B
Benutzer20031 Mar 2022 13:20Myrna_Loy schrieb:
Well, good schools, good sports, music, and extracurricular programs, swimming pools, climbing gyms, etc. are also very valuable once the children are no longer toddlers. I didn’t assume that the original poster would suddenly move 150 meters (approximately 500 feet) out into the middle of nowhere. Rather, they just don’t want to give up their current conveniences.
Alibert87 schrieb:
We are real city folks, so we don’t want to drive by car every time. That’s probably the problem...
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Alibert8731 Mar 2022 13:22Benutzer200 schrieb:
They don’t care about the location. But that changes when they have to be "cramped" in a small rental apartment instead of being able to go out into a garden.
However, you don’t seem to be thinking about the kids right now, but only for the kids and for yourself.
At least, that’s how it reads. We’re not that cramped either (4 rooms, about 120m² (1300 sq ft) plus 2 basement rooms). Playground and green spaces nearby 😉
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Alibert8731 Mar 2022 13:25Myrna_Loy schrieb:
Well, good schools, sports, music and support programs, swimming pools, climbing gyms, etc. are also very valuable once the kids are past the sandbox stage.I grew up on the outskirts of town and really hated having to take a 20-30 minute bus ride into the city during my teenage years or having to catch the night bus as early as 2 a.m.
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Alibert8731 Mar 2022 13:28neo-sciliar schrieb:
Hello @Alibert87,
Back in 2020, I expressed some doubts about whether this would work out. Now, 18 months have passed – has your equity increased by 18 times your monthly repayment, or are you extending the end of your financing by 18 months (considering retirement starting), or have you increased the monthly payment? I recall you were already calculating things very tightly back then (given that one income source would be lost) – plus both prices and financing costs have risen significantly over the last 18 months.
I haven’t read all 18 pages here, but it seems to me that your plan isn’t feasible as it stands. “Accept it, change it, or leave it.” You’re not willing to compromise, so the only option left is to give up your plan. I don’t know exactly where you want to build or buy, but if there is simply nothing suitable available there, then that’s the reality.What do you mean by equity increasing by repayment? Of course, we have continued to build equity.
Giving up the plan is the issue, yes. >But what alternative do we have?