How does Germany handle retirement? In the US, your home is seen as an investment, one that can partially fun retirement or depending on the market, pre-retirement income.
Most Germans don’t buy their homes, they rent
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Re: Most Germans don’t buy their homes, they rent
#32Being German I want to pPoint out that the article leaves out one cruicial detail: Building your own home puts you into debt for quite literally the rest of your life. We do not like debt.
If I am not mistaken the word "debt" either has the same root or derives from the word "sin" in Protestant tradition.
Re: Most Germans don’t buy their homes, they rent
#33Earlier quoted context omitted.
Yup. Germany has one of the lowest adoption rates of credit products such as the humble credit card out of nearly all Western nations. Debt is not liked. Edit: From the same site, the linked article at the bottom has the answer: http://qz.com/262595/why-germans-pay-cash-for-almost-everyth... A better link: http://www.businessinsider.com/you-have-to-understand-german...
Never seen credit cards outside of the US/UK/Canada...
Here in the Netherlands credit cards are used almost exclusively for online purchases. If you're a (brick) store owner and you would like to accept credit cards at your payment terminal you pay a hefty premium for that transaction. It's usually around 5% of the total amount.
Debit cards, that's another story. Most people pay with their debit cards instead of cash. It's convenient, even more so since the introduction of contactless bank cards.
Re: Most Germans don’t buy their homes, they rent
#34I am a German CS-Student and currently renting in a shared flat with 4 other students. We call it WG (living-community) and its really popular not only with students, but i know a lot of young professionals and even middle aged ones that share an apartment (it gained popularity in the 60s, so i think its more of an culture thing that older do not share a flat). If you are in a partnership, you can move out and share…
To each their own. After graduating from school, the last thing I had any interest in was a shared living arrangement.
Re: Most Germans don’t buy their homes, they rent
#35Earlier quoted context omitted.
Yep. "Don't buy things if you can't pay for then." sounds reasonable, but some other countries seem to disagree. Not surprised that those countries suffer from government shutdowns over how much the debt ceiling is raised.
>suffer from government shutdowns over how much the debt ceiling is raised On the other hand: The government shutdown because of the debt ceiling seems just like "Stop hitting yourself" on the playground. And Germany's budget is far from balanced.
>And Germany's budget is far from balanced.
"Germany recorded a Government Budget surplus equal to 0.70 percent of the country's Gross Domestic Product in 2015. "
While it's true that the budget is not balanced, a 0.7%/GDP surplus is pretty darn close.
Re: Most Germans don’t buy their homes, they rent
#36Being German I want to pPoint out that the article leaves out one cruicial detail: Building your own home puts you into debt for quite literally the rest of your life. We do not like debt.
What about cars? Are Germans more likely to buy or lease a new car? Or do more people buy used cars with cash?
You can also buy new cars with cash!
Re: Most Germans don’t buy their homes, they rent
#37Being German I want to pPoint out that the article leaves out one cruicial detail: Building your own home puts you into debt for quite literally the rest of your life. We do not like debt.
Pretty much agreed.
My rather simple (and completely argumentative) explanation is that Germans generally are less enthusiastic about taking on debt to finance things. Psychologically I'd say it's rooted in the fact that the results of hyperinflation are very much in the minds of people and there's a tendency of "don't borrow if you can save for it". Since the only realistic option for buying houses is taking on debt, less people do it. I feel this mindset is slowly going away though. Another point in favor of this "theory": credit cards are relatively uncommon compared to other countries (that's also changing imo).
I feel like home ownership is even less of a useful concept these days with ever shifting jobs so I think we accidentally stumbled upon the right strategy.
Edit: There's also quite a few buildings that are owned by a "Wohnungsbaugenossenschaften" (basically a https://en.wikipedia.org/wiki/Cooperative for housing)
Re: Most Germans don’t buy their homes, they rent
#38The only liberty that renting provides is the protection from the whims of the housing market. Aside from that it takes liberties right left and centre. I cannot structure my house and life as I want from painting and shelving through pets and kitchen appliances. I cannot fix something without causing a hassle and days off work. I cannot register a business here. I am at the whim of my landlord. Renting in the UK is…
German renters have a _lot_ more rights than UK ones do.
http://www.telegraph.co.uk/expat/expatlife/11417359/Germany-...
Re: Most Germans don’t buy their homes, they rent
#39The Germans seem to be far ahead of the curve here. From a financial planning perspective, buying a home results in:
1) The vast majority of your assets becoming concentrated in a single plot of land, in a single neighborhood, in a single city
2) Your future mobility to pursue jobs in other cities, becoming significantly constrained
If you want to invest your savings, then invest them in the stock/bond markets. If you really love real estate investments for some reason, invest in a REIT fund where your assets will be diversified across thousands of properties, and fully managed by others on your behalf. Pursuing a national policy of home-ownership makes little sense.
Re: Most Germans don’t buy their homes, they rent
#40Earlier quoted context omitted.
Yep. "Don't buy things if you can't pay for then." sounds reasonable, but some other countries seem to disagree. Not surprised that those countries suffer from government shutdowns over how much the debt ceiling is raised.
Using credit cards does not preclude being able to afford the thing you are paying for. I regularly use my credit card for every day purchases despite having ample money in my checking account. The regular payments allow me to develop a good credit history without much worry.
Bingo. Unfortunately the common assumption is that you're not paying it off monthly and paying high interest.