ᐅ Is Buying a House a Wise Decision in the Current Market Situation?
Created on: 23 Sep 2020 14:32
A
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
Alibert8724 Sep 2020 15:37nordanney schrieb:
... and even more than the interest, you pay rent to the landlord. Money is practically given for free. Renting living space is not. And it is also a fact that homeowners are better off in retirement than tenants (though tenants have – necessary? – flexibility, which comes at a high cost).
Even if there is no increase in property value, it doesn’t matter. Because in the worst case, as a retiree, you live in a property that is worth nothing anymore, whereas, for example, friends still pay high rent. As a homeowner, you can only win. Yes, but that’s a bit one-sided. As a tenant, I obviously have to invest my savings or find other opportunities. If we only look at profit, then as a tenant investing 30 years in an ETF with about 8% return, I "win" (I obviously do not own a house – homeownership is pure luxury).
A
Alibert8724 Sep 2020 15:40Please don’t get me wrong. I also do not want to deepen this discussion here in a house-building forum.
Alibert87 schrieb:
Yes, but it's a bit one-sided. As a renter, I have to invest my savings or find other opportunities. If we only look at profit, then as a renter investing for 30 years in an ETF with about 8% return (of course, I don't own a house – homeownership is pure luxury)...that's why everyone who has rented for the last 40 years also has a portfolio of $400k and up
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nordanney24 Sep 2020 15:41Alibert87 schrieb:
As a renter, of course I have to invest my savings or find other opportunities.Well, that's just human nature. Money people get their hands on tends to be spent, or excuses are made along the way to dip into their savings (great vacation, camper, new furniture, car/motorcycle, etc.). Owning a home forces you to save. There are exceptions, but they are rare.
Alibert87 schrieb:
Please don’t get me wrong. I don’t want to deepen this discussion here even in a house building forum. Ownership is not necessarily a luxury, but a single-family home is. However, the price levels are what they are, and the interest rate factor has already been mentioned. In my opinion, waiting doesn’t make much sense either. Prices are high, interest rates are low. Maybe it will be the other way around again sometime, and then you just pay more to the bank.
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Alibert8724 Sep 2020 15:46nordanney schrieb:
Well, that's how people are. Money that a man or woman gets their hands on is spent, or excuses are found along the way why savings are being used (great vacation, camper van, new furniture, car/motorcycle, etc.). Owning a home is forced saving.
There are exceptions, but they are rare. This is how I would do it. In addition to my equity, we also have an ETF portfolio (about 10,000€ (approximately $10,000) – yes, not much, because the desire for a property is there).