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Most Germans don’t buy their homes, they rent

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Re: Most Germans don’t buy their homes, they rent

#141

Post by standel »

coldtea wrote: post #58
standel wrote: post #42

It's an interesting article. I'm from Belgium, one of the highest house owners countries. Even though it's true it's a life-long debt and it might be risky (in case of crisis), housing is still considered as a Long Term Investment so that you can pass that investment to your children (after heavy tax deduction :)). I find interesting the article does not mention who actually owns all these houses and who benefits in…

> After all, renting has a guaranteed zero ROI. A guaranteed zero ROI is better than a negative ROI which you can get with buying a house (e.g. the house you can resell it drops due to the market and you can't afford the mortgage for some reason...)

negative ROI on investment is the risk component of your investment. This is true of any investment. Stock being certainly higher risks than housing and still people invest a lot in stocks.

But I should have said renting is a sunk cost. There is no investment component at all in renting.

Re: Most Germans don’t buy their homes, they rent

#142

Post by josefresco »

fwn wrote: post #84
josefresco wrote: post #40

Earlier quoted context omitted.

Bingo. Unfortunately the common assumption is that you're not paying it off monthly and paying high interest.

Which, by the way, sounds like an awful concept of how creditworthiness is created. Signing into some unnecessary additional financial product with comically obsolete interest rates, just to manually repay it in the random timeframe in which the (still unnecessary) credit is free sounds like a bad idea. It's probably only there to nudge people into paying interest on money they already have.

Credit history is just a history of making payments on-time. You can build a history by making student loan payments, car payments, health care payments etc. Obviously it's only one factor in someone's credit worthiness, however it's not a bad metric. If you pay your bills on-time, it makes sense that a lender would value you higher/safer than someone who does not.

Re: Most Germans don’t buy their homes, they rent

#143

Post by standel »

cm2187 wrote: post #97
randiantech wrote: post #90

Earlier quoted context omitted.

So are you recommending to invest savings on stocks and bonds rather than a house? I mean, I wont argue / refute you reasoning, I just simply dont have the knowledge to do a proper analysis. Ill just say that my 78 years old parents, that not even finished high school, always told me to first buy a house, then think about the rest. Being an owner feels like the best decision Ive ever made. If something happens to me,…

You could have savings and investment you could use to cover a lower rent the rainy days. House prices are only high because everyone is over-bidding to buy them. And that's driving rents up. Now this is different to the question of whether you should individually follow the crowd in a country where everyone over-bids on property. If you don't, you still pay a high rent to repay the massive mortgage of the guy who bo…

so as a society, it would be better to have a handful of house owners collecting the rent of everyone else? Is that a good allocation to you?

Re: Most Germans don’t buy their homes, they rent

#144

Post by pchm »

usrusr wrote: post #120
wil421 wrote: post #10

Earlier quoted context omitted.

What about cars? Are Germans more likely to buy or lease a new car? Or do more people buy used cars with cash?

New cars tend to be leased, but more often than not (at least in the price ranges "family sedan" and up) this is formally a company car, even if it is not used for business purposes at all. This is primarily driven by a full set of smoke and mirrors on the taxation level, that probably grew because it's what keeps the domestic market going for German car giants. In the case of "formally a company car", leasing is not…

Can you elaborate a little more on the "company car" thing? It sounds interesting. Does it mean that you basically get a car from your employer as part of the job benefits, but in reality you cover the cost (which is deducted from your salary)? How does it work?

Re: Most Germans don’t buy their homes, they rent

#145

Post by aianus »

standel wrote: post #143
cm2187 wrote: post #97

Earlier quoted context omitted.

You could have savings and investment you could use to cover a lower rent the rainy days. House prices are only high because everyone is over-bidding to buy them. And that's driving rents up. Now this is different to the question of whether you should individually follow the crowd in a country where everyone over-bids on property. If you don't, you still pay a high rent to repay the massive mortgage of the guy who bo…

so as a society, it would be better to have a handful of house owners collecting the rent of everyone else? Is that a good allocation to you?

Yes. Owning your own home is like cooking your own food. It might be cheaper but only if you don't value your own time or have anything better to do.

There's a reason why even rich, successful businesses rent office space instead of buying. They just can't manage a property as efficiently as the companies that focus on that.

Re: Most Germans don’t buy their homes, they rent

#146

Post by aianus »

Normal_gaussian wrote: post #28

The 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…

It gives you the liberty to move for a better job. That's enormous when you're early in your career and switching jobs results in huge pay increases.

Even within the same city, it's really nice to move near your new job and not have a commute.

Re: Most Germans don’t buy their homes, they rent

#147

Post by whack »

coldtea wrote: post #69
whack wrote: post #39

The 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 yo…

> Your future mobility to pursue jobs in other cities, becoming significantly constrained Perhaps the idea of people who haven't adopted this is that, unless they like doing so, humans should not have to live like nomads moving here and there to pursue this or that financial opportunity, but instead should be allowed to grow roots in some place, help shape it and improve it, connect with their neighbors, etc.

Nobody is forcing anyone to move or "live like a nomad." But why take steps that will make it much much harder for you to change your mind later? 5 years from now, if you've been unemployed for a long time and a great job opportunity opens up in a city 2 hours away, you may realize that moving 2 hours away in exchange for a paycheck, is a perfectly valid choice to make.

Re: Most Germans don’t buy their homes, they rent

#148

Post by rmc »

jamesdelaneyie wrote: post #109
rmc wrote: post #64

Earlier quoted context omitted.

> Serious question: Why is it not very popular in other countries? Because some countries have much, much worse tenants rights. I moved from Ireland to Germany and in Ireland: * There is basically no protection for rent increases, some people are being told their rent is increasing by 50% * Can't change your apartment. Not allowed to paint the walls, nearly all come with furniture, better make sure you don't damage a…

Rent increases can only be performed every two years in Ireland from Dec 2015. And you must have 90 days notice of a rent increase. More info on this link: http://www.citizensinformation.ie/en/housing/renting_a_home/... The landlord's relatives issue is however the easiest way to get someone out of a property and increase rent.

> Rent increases can only be performed every two years in Ireland from Dec 2015. And you must have 90 days notice of a rent increase. More info on this link:

Yep that's a new law and step in the right direction. But it doesn't really limit the amount. So landlords can just batch up 2 years of increase in one go.

Re: Most Germans don’t buy their homes, they rent

#149

Post by Normal_gaussian »

AdrianB1 wrote: post #105
Normal_gaussian wrote: post #50

Earlier quoted context omitted.

Unfortunately they still don't approach those of an owner

That's called ownership: if it is yours, you should have right on it, is it?

Yes. That is what I am saying, to my mind ownership is vastly superior to renting. Renters are second class citizens in their homes.

Re: Most Germans don’t buy their homes, they rent

#150

Post by rmc »

fwn wrote: post #94
rmc wrote: post #64

Earlier quoted context omitted.

> Serious question: Why is it not very popular in other countries? Because some countries have much, much worse tenants rights. I moved from Ireland to Germany and in Ireland: * There is basically no protection for rent increases, some people are being told their rent is increasing by 50% * Can't change your apartment. Not allowed to paint the walls, nearly all come with furniture, better make sure you don't damage a…

All of this affects you less if you are in a shared flat compared to renting it alone. The flat can be vastly more expensive as you are pooling the money and flexibility is higher as you have less furniture per person and tend to be able to join/leave shared flats on less rigid schedules. (You can find many in the middle of the month, depending on the holidays etc.) I lived in a shared flat in Germany which got a ren…

> All of this affects you less if you are in a shared flat compared to renting it alone. The flat can be vastly more expensive as you are pooling the money

It can still be a massive impact, because the increase can be split between all tenants. So you might have budgeted €800 per month, and now it's going up to €1,000. You've still had a 20% increase.

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