ᐅ Renting a house or buying/building one? How did you decide?

Traumfaenger schrieb:

Just last weekend or the one before, there was a major article in Süddeutsche or ZEIT explaining why today’s generation, despite well-paid jobs, can hardly build up wealth compared to their parents’ generation. It’s certainly due to high social security contributions and the late start in their careers, but also because of the high consumer spending on cars, clothes, vacations, food, and more. The previous generation saved on these expenses to build their wealth.

Personally, I see it this way: even a self-used property in a growing region is better for me than spending all the money on consumption. And you don’t have to live in it forever. Once the kids have left, selling the property can be a solid source of capital for a rental property and retirement provision.

We’re not that far apart. Yes, it’s a problem that Germany has the highest tax and contribution burden in the world, and it keeps rising because our politicians want to save the world and spend a lot on something that is not realistically achievable with the available resources. There is also a lack of political will in Germany to shorten training periods. But when it comes to consumption, everyone is responsible for themselves. I know people with similar incomes who spend 2000 to 3000 Euros more per month. And I don’t get the impression they are living poorly.

HilfeHilfe schrieb:


I wouldn’t agree with that. Homeownership is a different kind of saving. It’s not money in savings accounts, funds, or stocks—it’s the four walls. Most people with equity end up spending it on useless things or just staring at their accounts. Here I am, sitting with my beer on my terrace, letting the sun bake my bald head. You could argue that renters are more flexible if finances aren’t stable or jobs change.

Yes, and exactly when comparing with other investments, owning your own home is a poor choice. Compared to other ways to spend money on consumption, though, I agree with you: it’s an option. I will do it as well. But I won’t try to convince myself it’s a good investment by sugarcoating it.

Nordlys schrieb:
Lost returns, Steffen, on the stock market—you might as well compare real estate with a casino, where returns are probably even higher. That doesn’t convince me. Stock market. Never.

I’ve rarely read such nonsense. Investing in the stock market has NOTHING to do with gambling when you invest in a diversified portfolio. In many respects, this is even safer than your savings account, your property, or your life insurance. Unfortunately, this attitude is one of the reasons why the wealth situation of Germans remains relatively poor despite high incomes.

[RARELY have I read such nonsense. Investing in the stock market has NOTHING to do with gambling when you invest in a diversified portfolio. From many perspectives, this is even safer than your savings account, your property, or your life insurance. Unfortunately, this attitude is one of the reasons why the wealth situation of Germans is relatively poor despite high incomes.]

Yes, but stocks and funds don’t only move in one direction — you have to actively manage them, which not everyone wants or is able to do. A house can certainly lose value. So what? Just keep living in it.

In the end, owning a home is a luxury rather than an investment (excluding land value appreciation). Just one example: I was at the hardware store at least five times last week and probably spent more than 1000 EUR (about $1100) on a bit of gardening. On top of that, there’s a 2000 EUR (about $2200) Husqvarna lawn mower. I probably wouldn’t have these costs if I were renting. Instead, I could have invested 3000 EUR (about $3300) in the stock market and held it for more than seven years. Seven years is the statistical threshold after which you would always have made at least a 2% annual return (at least historically).

Steffen80 schrieb:
In the end, owning a home is a luxury and not an investment (excluding the basic value increase). Just as an example: I was at the hardware store about 5 times last week and probably spent over 1000 EUR on a bit of gardening. On top of that, there is the 2000 EUR Husqvarna for the lawn. I probably wouldn’t have these costs in a rental apartment. I would have invested the 3000 EUR in the stock market and held it for more than 7 years. Seven years is the statistical threshold beyond which you would always (at least in the past) have achieved over 2% annual returns.

For your 4 million house, it’s about right — that is luxury, while for others it is a utility or a form of security (instead of other assets). Spring is extreme if you want everything to look nice. We also always invest a lot of money. I estimate at least 300–500 EUR (300–500 USD). But there is also a negative example: neighbors of ours have an extra-large garden and only mow when the grass reaches 50 cm (20 inches); they don’t care about the lawn. Meanwhile, the husband occasionally buys an excavator for his business.

HilfeHilfe schrieb:
For your 4 million house, that makes sense—it’s luxury, while for others it’s just a practical asset or an investment (instead of other assets). Springtime is intense if you want everything to look nice. We also spend a lot of money, I’d estimate at least 300–500€ (330–550 USD). But there’s also the opposite example: neighbors of ours have an extra-large garden and only mow when the grass reaches 50 cm (20 inches); they don’t care much about the lawn. Instead, the man occasionally buys an excavator for his business.

In Germany, homeownership is always a form of luxury. At least in the Germany where I live, especially here in the eastern part. Take a walk around the country and ask ordinary workers if they rent and, if so, why that might be.