ᐅ Stay here (and build) or move away (and build/buy elsewhere)
Created on: 21 Mar 2022 01:47
H
Hitokiri-1978
Hello everyone,
I don’t even know where to begin. There is an older thread, but since links are considered taboo, you’ll have to search for it yourselves if you’re interested. In short, since 2018!!! we have been aware of two new residential development areas in our town, with plots allocated based on a scoring system. And as it stands, we are currently ranked 52-55 (four others have the same score and would then be drawn by lot on the allocation day) out of a maximum of 59. I don’t want to blame the municipality here for leaving four years to pass without reason, ignoring two official land value assessments amid an exploding price level, and so on. Then came Corona, now “Crazy Ivan,” no more KfW funding, skyrocketing construction costs for prefab houses, rising interest rates, and generally increasing prices. In short… it’s totally insane to build now! But... who says it won’t be even worse in three years?
Additionally, we simply want to move to a bigger place (second child), and rental apartments in the Munich suburbs are outrageously expensive. For retirement, we want to have a certain amount of value as assets.
In general, about €30,000 (approximately $32,000) would come as a gift from our families, about €60,000 (around $64,000) as an interest-free loan from various wealthy Swiss relatives, and €10,000 (around $10,700) from us as equity. We already have a financial advisor who calculated everything, and a mortgage would be possible with a monthly payment of €1,770 (around $1,880). Everything would be tight, though: gym membership canceled, no spontaneous dining out, no spontaneous activities... best if I cook lunch at home.
So… soon (unless someone files another lawsuit) the plots will be allocated. By then, we need to decide if we want to stay here in the familiar neighborhood (with all its advantages, like close proximity to the in-laws) and manage the estimated €750,000 to €850,000 (about $800,000 to $900,000)—€350,000 ($375,000) for the land and the rest for the house—without getting overwhelmed. (Net income is about €4,400 ($4,670), with €2,700 ($2,865) fixed expenses and living costs.) Alternatively, we have considered moving away from Bavaria. The Upper Franconian provinces near the Czech border are significantly cheaper for used properties, ranging roughly from €200,000 to €500,000 ($215,000 to $530,000), and we would have a lot more room and money for living there.
We have already crossed out the plots that are definitely not an option for us. Oh, and half of them are for sale, the others are assigned as leases with all their possibilities but also many problems!
It’s a painful, nagging question whether it’s better to stay here and hope for an increase in value (plus living close to the parents), make use of leasehold rights and slowly lose value, or move somewhere else entirely where prices are reportedly much lower according to Immo24. Also, my wife is assuming the current situation will continue, while I am hoping to finally get a better paying job within the next one to two years.
Clearly, we don’t want to leave, but the price level is just so insane that we have to ask ourselves if it’s really worth it anymore. This whole situation just causes headaches, with the feeling that we have to choose between bad and worse.
I don’t even know where to begin. There is an older thread, but since links are considered taboo, you’ll have to search for it yourselves if you’re interested. In short, since 2018!!! we have been aware of two new residential development areas in our town, with plots allocated based on a scoring system. And as it stands, we are currently ranked 52-55 (four others have the same score and would then be drawn by lot on the allocation day) out of a maximum of 59. I don’t want to blame the municipality here for leaving four years to pass without reason, ignoring two official land value assessments amid an exploding price level, and so on. Then came Corona, now “Crazy Ivan,” no more KfW funding, skyrocketing construction costs for prefab houses, rising interest rates, and generally increasing prices. In short… it’s totally insane to build now! But... who says it won’t be even worse in three years?
Additionally, we simply want to move to a bigger place (second child), and rental apartments in the Munich suburbs are outrageously expensive. For retirement, we want to have a certain amount of value as assets.
In general, about €30,000 (approximately $32,000) would come as a gift from our families, about €60,000 (around $64,000) as an interest-free loan from various wealthy Swiss relatives, and €10,000 (around $10,700) from us as equity. We already have a financial advisor who calculated everything, and a mortgage would be possible with a monthly payment of €1,770 (around $1,880). Everything would be tight, though: gym membership canceled, no spontaneous dining out, no spontaneous activities... best if I cook lunch at home.
So… soon (unless someone files another lawsuit) the plots will be allocated. By then, we need to decide if we want to stay here in the familiar neighborhood (with all its advantages, like close proximity to the in-laws) and manage the estimated €750,000 to €850,000 (about $800,000 to $900,000)—€350,000 ($375,000) for the land and the rest for the house—without getting overwhelmed. (Net income is about €4,400 ($4,670), with €2,700 ($2,865) fixed expenses and living costs.) Alternatively, we have considered moving away from Bavaria. The Upper Franconian provinces near the Czech border are significantly cheaper for used properties, ranging roughly from €200,000 to €500,000 ($215,000 to $530,000), and we would have a lot more room and money for living there.
We have already crossed out the plots that are definitely not an option for us. Oh, and half of them are for sale, the others are assigned as leases with all their possibilities but also many problems!
It’s a painful, nagging question whether it’s better to stay here and hope for an increase in value (plus living close to the parents), make use of leasehold rights and slowly lose value, or move somewhere else entirely where prices are reportedly much lower according to Immo24. Also, my wife is assuming the current situation will continue, while I am hoping to finally get a better paying job within the next one to two years.
Clearly, we don’t want to leave, but the price level is just so insane that we have to ask ourselves if it’s really worth it anymore. This whole situation just causes headaches, with the feeling that we have to choose between bad and worse.
C
Costruttrice21 Mar 2022 09:25I understand the desire to build a family home and the frustration with prices in the Munich area.
But to build a house that means leaving your familiar social environment, family, and friends behind and starting over somewhere entirely new? To me, that sounds like a desperate move.
Aside from that, no matter where, your financial starting point remains the same. Even if you pay significantly less for the land, you still have to finance a house on it and be able to manage the payments comfortably. Others may be better suited to assess how this could work given your situation.
Or do you have a better job opportunity lined up?
You should really be honest with yourselves and not let the desire to own a house override everything else.
But to build a house that means leaving your familiar social environment, family, and friends behind and starting over somewhere entirely new? To me, that sounds like a desperate move.
Aside from that, no matter where, your financial starting point remains the same. Even if you pay significantly less for the land, you still have to finance a house on it and be able to manage the payments comfortably. Others may be better suited to assess how this could work given your situation.
Or do you have a better job opportunity lined up?
You should really be honest with yourselves and not let the desire to own a house override everything else.
H
HansDampf8821 Mar 2022 09:39Myrna_Loy schrieb:
The areas around Munich and the Bavarian lakes are simply no longer affordable for average earners without an inheritance who want to build a house. That is not going to change.No longer? Was it ever affordable for "average earners" in the first place?
M
Myrna_Loy21 Mar 2022 09:46Yes, you definitely needed a good income, but until about 10 years ago it was still possible to build in many communities with commuter rail nearby, especially in the north or northeast, for 500,000 to 600,000 (approx. 500,000 to 600,000). At first, we were considering whether to build or buy, and several areas were possible options. However, the commute to work would have been too long given the expected traffic jams and the poor condition of the commuter rail system. We were even offered a specific property, which we did not take because at the time it seemed too expensive for a place immediately associated with a concentration camp. If only we had known about the increase in value back then... 😱
askforafriend21 Mar 2022 09:55What you’re imagining is absolutely unrealistic. Just move away and live more relaxed. Otherwise, the dream house will turn into a nightmare. Is the “1978” in your nickname your birth year? That would make you 44. The median income (not average!) in Munich is around 54,000 euros. With a net income of 4,400 (about $4,700) per month, you won’t even get on the property ladder as a single person. Either you’re lucky enough to have inherited a few hundred thousand, or you’re out of luck. That’s just how simple and real it is. But at least then you’re among your own kind 😉 I can only recommend moving to more affordable areas. The nature of your job is also extremely important here (keyword: working from home or similar). I know many people who now earn as much as in Munich but live in rural regions where you can still realize your dream.
You’ll also feel less social pressure if you don’t move to an area where everyone can easily afford a fancy car parked next to their house because grandma left them the property in Munich or something like that – you don’t want to be the poorest person on the street, believe me. Someone with 4 million in the bank is very poor in Hollywood or Starnberg, if you know what I mean. But if you have 4 million in a small Upper Franconian village, you’re the king. It’s always about perspective.
It’s pretty tough for everyone without an inheritance who wants (or has) to upsize and has to accept new rentals. There’s nothing left over. I mean, if you already have to pay over 2,000 euros ($2,200) for a semi-detached house rental, how do you even think about building? Just thinking about it is totally unrealistic.
Either you can afford it comfortably, or you struggle for every dollar. If I were you, I wouldn’t even start that fight – you can’t win it.
From Wirtschaftswoche last year:
“But even with an income at this level, buying property here is hardly possible. With 100,000 euros ($107,000) it’s extremely tight. Employees in middle management already face a problem there.”
Expenses and income no longer matched for candidates, says Sabine Märten, who advises clients from the finance and real estate sectors. “Even academics like civil engineers and senior-level asset managers with a gross annual salary of 80,000 to 100,000 euros ($85,000 to $107,000) no longer live in the city but far outside. Sometimes as much as about 100 meters (about 62 miles) away. Because rents and property ownership are affordable for them there.”
And you come in with a household net income of 4.4k (about $4,700) 😉
You’ll also feel less social pressure if you don’t move to an area where everyone can easily afford a fancy car parked next to their house because grandma left them the property in Munich or something like that – you don’t want to be the poorest person on the street, believe me. Someone with 4 million in the bank is very poor in Hollywood or Starnberg, if you know what I mean. But if you have 4 million in a small Upper Franconian village, you’re the king. It’s always about perspective.
It’s pretty tough for everyone without an inheritance who wants (or has) to upsize and has to accept new rentals. There’s nothing left over. I mean, if you already have to pay over 2,000 euros ($2,200) for a semi-detached house rental, how do you even think about building? Just thinking about it is totally unrealistic.
Either you can afford it comfortably, or you struggle for every dollar. If I were you, I wouldn’t even start that fight – you can’t win it.
From Wirtschaftswoche last year:
“But even with an income at this level, buying property here is hardly possible. With 100,000 euros ($107,000) it’s extremely tight. Employees in middle management already face a problem there.”
Expenses and income no longer matched for candidates, says Sabine Märten, who advises clients from the finance and real estate sectors. “Even academics like civil engineers and senior-level asset managers with a gross annual salary of 80,000 to 100,000 euros ($85,000 to $107,000) no longer live in the city but far outside. Sometimes as much as about 100 meters (about 62 miles) away. Because rents and property ownership are affordable for them there.”
And you come in with a household net income of 4.4k (about $4,700) 😉
H
HansDampf8821 Mar 2022 10:20Myrna_Loy schrieb:
Yes, you definitely needed a good income, but until about 10 years ago, it was still possible to build in many communities with a commuter train nearby, especially in the north or northeast, for 500,000 - 600,000. At first, we considered whether to build or buy, and several areas were an option, but the commute to work would have been too long given the usual traffic jams and the poor condition of the commuter trains. We were even offered a specific property, which we declined because it seemed too expensive for a place immediately associated with a concentration camp. If only we had known about the increase in value back then... 😱 So, more of a “high earner” after all 🙂
I’m in the same situation, but not in a metropolitan area—rather in a rural village. Prices here have also become incredibly high.
Three years ago, I could have bought a house—but I didn’t because it was too expensive for its rather run-down condition.
Today, even still needing renovation, it easily sells for more than 50% above the price back then. Hindsight is always 20/20...
Regarding this specific case—I honestly don’t think any bank would even finance it.
We are financing €410,000 (almost half of the loan amount mentioned here) with a household income of €4,700, and in my opinion, that is already pushing the limits of reason. Keep an eye out for existing properties a little farther out, or look for a nice, affordable rental—either way, you can definitely be happy. Owning your own house does not determine your happiness in life; that’s something you should always keep in mind 🙂