ᐅ Plot of land

Dirk Grafe schrieb:
Ok. If you guarantee that the house the original poster will buy in Bersrod will be worth double the inflation-adjusted value in 30 years, then you surely won’t mind if the original poster includes a corresponding notarized clause in the purchase contract at your expense, right?

Let’s keep it short: if you sign that, you wouldn’t sleep peacefully for 30 years, and rightly so.

Well, that’s complete nonsense now. No one here is speculating that the value of the house will double; it’s about whether the house will lose value with normal maintenance and care. I supported this with a real example from my experience and still believe that you can’t generally say a house there “loses a lot of value” and is only good to “live out.” You are probably right that a house in a small village is certainly not a “value appreciation investment,” but that’s not what it’s meant to be in my understanding!

My father bought his building plot 30 years ago for 34 DM/m², and I recently paid 86 €/m² (around 8.0 US$/ft²) in the same village. Just as the land today costs or is worth more, property prices in our village have developed upward as well.
Basically, it is not unusual today for a house to be on the market here for 400,000 €; however, I strongly doubt that these houses cost 800,000 DM to build 30 years ago. Of course, this varies regionally. My partner is from the new federal states where some villages are almost dying out, and houses that were expensive to build 30 years ago are sometimes worth almost nothing today. I don’t know the original poster’s area but assume that is not the case near Gießen.

In my opinion, the decision to build in a village or not also depends on what kind of house you want to build. The higher the price of the house, the harder it will be in future to find someone willing to pay that price. That is definitely easier in the city. If you build a house with standard quality, I assume that with normal development the house will not lose value.

It has to be said that, Dirk Grafe, you seem quite narrow-minded when it comes to living in rural areas – for whatever reason.

Just as no one can guarantee that a house will double in value in 30 years, you can’t claim that a village location is “catastrophic” in terms of value retention. That’s equally unreliable...

Recently, there was a report suggesting that the urban exodus is slowly reversing – partly because prices there have simply become unaffordable. You more or less dismissed that as just a report...

I would suggest approaching the argument a bit less aggressively, because this is slowly becoming a red flag for you. And this has nothing to do with “I just want to help people avoid mistakes” 😉.

Of course, I’m writing this from a subjective perspective, as I am a villager by choice... since then, the growth in new construction in the village has actually increased “massively” compared to previous years 😉

PhiTh schrieb:
Well, that’s complete nonsense now. No one here is speculating that the value of the house will double; the discussion is about whether the house loses value with normal maintenance and care. I supported this with a real example from my experience [...]

Yes – and when I look at your example from a professional perspective for just 3 minutes, I see 10 points where the examples are not comparable or where your basic claim does not hold.

That’s not a problem; non-experts have every right not to know. But this is not about opinions, it’s about value assessment. This can certainly be influenced by opinions and interpretations – but you can’t turn a workhorse into a racehorse. And Besperde is a workhorse, which you can tell simply by looking at the local land value benchmark.

and I still maintain that you can’t generally say a house there “loses a lot of value” and that it’s only suitable for “living down.” You’re probably right that a house in a small village is certainly not a “value appreciation asset,” but as I understand it, that’s not what it’s supposed to be!

It’s not a matter of opinion. If the maximum local land value in the town is €80 per square meter (about $85 per square yard), there are reasons for that. There is a current thread here in the forum where a buyer is offering €1,300/m² (about $120 per square foot) for a building plot but expects not to win any bid under €1,400/m² (about $130 per square foot). Do you seriously want to discuss whether these two comparison values represent different demand levels?

My father bought his plot 30 years ago for 34 Deutsche Marks per square meter, and I recently paid €86/m² (about $90/yd²) in the same village. Just like the land costs more (or is worth more) today, real estate prices here in the village have also increased.

Let’s assume that is actually the case (though I’d have 10 immediate questions about your example that you probably won’t be able to answer on the spot, so your statement is unsupported), then that is the development ... where you live. That tells us nothing about what is happening in Besperde, especially since you don’t even say where your or your father’s house is located!?

Basically, a house on the market here today for €400,000 (about $420,000) is not unusual, but I seriously doubt these houses cost 800,000 Deutsche Marks to build 30 years ago.

Which is nonsense, because 30 years ago these houses would have had to be worth around €200,000 (about $210,000), calculated as 400,000€ / 1.025^30, which is just about 400,000 Deutsche Marks. Maintenance and depreciation apparently do not exist in your example – so you have to ask how much would have had to be invested in the last 30 years to justify a €400,000 valuation today for a house that originally cost 400,000 DM.

Of course, this varies regionally.

Correct. What does (almost) not vary regionally, however, is a local land value of €80/m². €80 means an (upmarket) village. Period. End of story.

You won’t find a single spot in Germany nationwide where you can buy a building plot in a purely residential area for €80/m² with a streetcar or commuter rail station within walking distance.

My better half is from the new federal states, and some villages there are almost dying, and houses that were expensive to build 30 years ago are often worth almost nothing today. I don’t know the area of the original poster but assume this is not the case in Gießen.

What is shocking is that you clearly know the process yet exclude this risk for Besperde. That is irresponsible – the scenario you know from the new federal states is definitely real for Besperde. I fail to understand how anyone can ignore that!? If Besperde cannot keep pace with neighboring towns, then the place will die permanently – how else do you explain that there is a newly developed residential area there with properties that have been on the market for several years (!!!) without being sold?

In my opinion, the decision between village or not village also depends on the kind of house you want to build. The higher the price of the house, the harder it will be in the future to find someone willing to pay that price. That’s certainly easier in a city. If you build a normal standard house, I assume that with normal development, the house will not lose value.

If you built a normal standard house 30 years ago in the “wrong” location, you’re already ruined or limited to living in it yourself – even in the “West.” Some residential areas were built 30 to 40 years ago and today are ghost towns with vacant houses.

You need to consider and communicate that, even if it hurts – the original poster asks a totally legitimate question about value retention of a potential property in the stated location. To answer that one can build nicely for €400,000 there and in 30 years will almost certainly (or with high probability) have double the value (adjusted for inflation) …

… is simply:

… nonsense.

Anyone buying a building plot in Besperde today must want to live there or have a specific strategic location advantage to realize. Anyone who only targets value retention there is mistaken. Value appreciation is simply a risky gamble.

Regards,
Dirk Grafe

Sebastian79 schrieb:
It has to be said that you, Dirk Grafe, seem very "narrow-minded" when it comes to living in the countryside – for whatever reason.

Not at all. I grew up in a village, now live (centrally) in a small town, and deal with "village" issues professionally every day. Villages have their advantages, but you shouldn’t tell people who come from Canada and have “forgotten” how things really work here that "village life" equals "value retention," just because there happens to be a highway on-ramp nearby. That’s just as ridiculous as telling people they don’t need a LAN cable anymore because there’s Wi-Fi. On that point, you are – quite rightly – uncompromising, since that is nonsense.

Just as no one can guarantee that a house will be worth twice as much in 30 years, you can’t claim that village locations have "catastrophic" value retention. That’s equally unreliable…

No. We could easily make a short-term bet on the value retention of a square meter in Besperde. Notarized, each of us deposits 1,000€ on an escrow account, and after 30 years we will compare how Besperde performed against any high-price index of choice.

The winner takes it all, the loser pays the notary fees – you will lose with more than 99.5% probability.

I realize you don’t understand this, but I still must point it out to the OP. Just as users need to be reminded that Wi-Fi is not the same as LAN.

Recently there was a report suggesting that urban flight is slowly reversing – partly because prices there have become unaffordable. You more or less dismissed that report as just a report…

I did not dismiss the report; rather, I pointed out that it needs to be viewed in a nuanced way: you have to look closely at which villages are seeing newcomers and which are not. And above all… why are people a) moving away and b) moving specifically where?

A brief report in a magazine like Der Spiegel cannot cover that, especially since the article itself cites a couple leaving Hamburg (artist couple) for cost reasons (meaning they didn’t really want to leave Hamburg but cannot find affordable housing there), while simultaneously showing a rising trend graph for Hamburg. This is because migration and refugees still overcompensate for the departures.

I would suggest a less confrontational approach as that seems to be a red line for you. And this has nothing to do with "I just want to help people avoid mistakes" 😉.

Of course, I write this subjectively because I, as a villager, consciously chose this lifestyle... and since then, new building activity in the village has increased "massively" compared to previous years 😉

I am aware that I write aggressively and provocatively – but it is simply unacceptable to sell "village life" in Germany to an OP coming from Canada and associating it with double returns.

That is unprofessional, highly so.

If someone wants a village lifestyle and knows what they’re getting into, they are free to buy in a village. As I said, I grew up in a village, I know what village life is. But I also know what it is not.

Best regards
Dirk Grafe

I also think preserving property value in a village can be challenging. Unless it is so close to the outskirts of a city that it’s only a matter of time before the commuter train stops nearby.

In our village, everything is available: school, daycare, after-school care, kindergarten, library, doctors, banks, supermarkets, gas station, hairdresser, one café, one pub, one pizzeria, bakery, playground, basketball hoops, quarter pipes, tennis, soccer, etc.
It’s 10 minutes to the highway and 15 minutes to the nearest town,
and we have a huge vacancy of properties that are 40 years old or more.

We are building there—once the demolition gets underway—because it suits us. However, I don’t believe the vacancy will decrease in the next 30 to 40 years.
The basic conditions are not right. Just looking at my old primary school class, half of them have moved away.

I believe location is the most important factor. I live in a genuine village: about 400 inhabitants, one church, and a pub—nothing else. No bakery, no supermarket, no bank, no highway access, nothing. No public transportation except school buses. The nearest town (20,000 inhabitants) is 3m (2 miles) away, with a hill in between that makes cycling difficult. You need a car for almost everything, and teenagers get a moped or scooter as soon as possible. The nearest highway entrance is a 20-minute drive.

But the village is "booming"; every available building plot is currently being developed, and there are efforts to open up new parcels. We have gained many families over the past few years. The reason: we are located between Augsburg and Munich, and especially people from Munich are moving to our area—including our very rural but also very idyllic village.
I was born in this village and, even when I lived in Munich, I always wanted to return here and build nowhere else. Other young people from our village also prefer to stay here. The downside of the "boom" for us locals is that we often can no longer afford to build here. So, many choose to extend their parents’ homes or build on their parents’ land (my approach). But I simply want to live here, and the future value of my house doesn’t matter to me.