Most Germans don’t buy their homes, they rent • Hacker News Board

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

#211

Post by Scarblac » Mon, Oct 24, 2016, 7:32 PM UTC

dasmoth wrote: post #185

cm2187 wrote: post #130

Earlier quoted context omitted.

> Namely, it is very difficult to raise a family of four in a mutual fund. It is difficult to ski without skis. But most people don't buy skis, they rent them. Renting skis do not mean that no skis will be manufactured. There is a need for house, houses will be constructed, irrespective of whether people will over-bid on them or not. > A paid off home is a social safety net against homelessness Stocks and savings are…

> > A paid off home is a social safety net against homelessness > Stocks and savings are equally a safety net against loss of primary income. Landlords and letting agencies can be kind-of funny beasts, they're not necessarily happy to have an unemployed guy as a tenant even if he owns a pile of shares.

So? It's not as if they can kick you out of the house you live in. Not in Germany, anyway.

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

#212

Post by pluma » Mon, Oct 24, 2016, 7:32 PM UTC

stevoski wrote: post #49

atmosx wrote: post #32

Earlier quoted context omitted.

If I am not mistaken the word "debt" either has the same root or derives from the word "sin" in Protestant tradition.

Not so much Protestant tradition as Germanic languages. The German word for debt "Schuld" also means guilt, fault, and blame.

Note that in German the word is generally used in plural when talking about debt and singular when talking about guilt/blame.

"My fault" -> "Meine Schuld"

"My debt" -> "Meine Schulden"

I think both also behave as mass nouns, so there's rarely any ambiguity.

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

#213

Post by mamon » Mon, Oct 24, 2016, 7:33 PM UTC

thesimon wrote: post #76

Noseshine wrote: post #26

Earlier quoted context omitted.

From the PoV of someone who once co-owned a small business in Germany that accepted card payments: The reason they are "evil" is that they charge the dealer the by far largest fees. Cache: no fee. EC card: small fee. Credit card: large fee. And of course I can't ask the customer to pay for it, I must have one price for all. It was something like 1% vs. 3% (approximately(!), just to give an idea of magnitude). It's no…

>Cash: no fee Because it just magically transfers from your register to your bank account? :) >It was something like 1% vs. 3% (approximately(!), just to give an idea of magnitude). I know, but by now it is down to 0.9% for most retailers so not accepting credit cards is always an interesting decision. >most credit cards cost a yearly fee of 20-70 Euros or so When you get a card to collect airline miles or get the ca…

> Regular cards still don't support contactless

Oh, I realy miss this. In my country it is impossible to find a normal card, all are contactless by default. Even if you'd like to get a normal one for security reasons you can't - banks don't offer them.

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

#214

Post by Scarblac » Mon, Oct 24, 2016, 7:35 PM UTC

SyneRyder wrote: post #119

Noseshine wrote: post #26

Earlier quoted context omitted.

From the PoV of someone who once co-owned a small business in Germany that accepted card payments: The reason they are "evil" is that they charge the dealer the by far largest fees. Cache: no fee. EC card: small fee. Credit card: large fee. And of course I can't ask the customer to pay for it, I must have one price for all. It was something like 1% vs. 3% (approximately(!), just to give an idea of magnitude). It's no…

That's really intriguing. The fees you're describing are the same in Australia (2.9% on AmEx) and don't seem particularly evil at all. A few stores do charge a credit card surcharge here, but the majority of retailers don't anymore. As a near-annual visitor to Germany, it drives me nuts that I can't use my Australian credit card everywhere (especially at Saturn). I would LOVE to have an EC card, but it seems there's…

In the Netherlands it's something like 2.8% for credit cards and a ~0.05 euro flat fee per transaction for EC cards. Huge difference.

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

#215

Post by nommm-nommm » Mon, Oct 24, 2016, 7:37 PM UTC

kriro wrote: post #61

webkike wrote: post #23

Earlier quoted context omitted.

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.

Why can't you use a debit card for that? Isn't having enough money in your checking account to reasonably afford all stuff you need to live basically proof of a good credit history? Isn't the best credit history one where you never need credit in the first place?

You would think, wouldn't you? It's an interesting concept.

If I'm going to loan you $1,000 I'd like to get references, talk to all the other people you've borrowed money from and ask them if you paid it back to show you are able to handle debt. You get other people to vouch for you that you are good on that $1,000. If you have nobody to vouch for you I'd be more hesitant to loan you money. Or ask you for a higher interest rate.

This gives you an incentive to borrow money and always pay it back. In fact just having an open line of credit you aren't using makes you look better. "I have the opportunity to max out my cards but I am not."

Its perverse but it does make logical sense. Its a different kind of responsible.

The other reason people use cards is many cards, as an incentive to get you to use them, give you perks. For example, airline miles, hotel points, cash back, warranty extension, price protection, purchase protection, rental car insurance, etc, etc.

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

#216

Post by MagnumOpus » Mon, Oct 24, 2016, 7:38 PM UTC

cylinder wrote: post #83

buro9 wrote: post #3

Earlier 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...

And yet the public debt of Germany is just as high as these credit addicted nations, what does that say?

Gross debt is as high. Net debt is way lower than in the US let alone in the UK, Japan or Club Med countries. (The German Feds and the states own parts of a lot of strategic income producing companies - KfW state investment bank, Deutsche Bahn, Volkswagen etc).

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

#217

Post by eloisant » Mon, Oct 24, 2016, 7:44 PM UTC

cm2187 wrote: post #5

So in Germany, the interest on a mortgage is non tax deductible. The article doesn't mention it but I understand that property owners are also liable for capital gain tax if they hold the property less than 10 years. I think that makes sense. There is no reason to favor individuals investing into an unproductive investment (property) over productive investments (stocks and bonds, which enable companies to raise money…

Well rent doesn't create any wealth either, you're just paying monthly a landlord so he doesn't have to work.

If you want to create value, you should make sure that housing prices (both renting and buying) stay low. This way not only wealth can go to other investments, but more people can take the risk to start a business if they don't have the risk to be unable to pay their rent or mortgage.

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

#218

Post by acchow » Mon, Oct 24, 2016, 7:46 PM UTC

darkhorn wrote: post #197

andreasklinger wrote: post #9

Earlier quoted context omitted.

+1 To explain cultural difference: - In the US you are considered financially stable if you are always paying your debt/credit on time. - In the germanic countries you are considered financially stable if you have none. My US Bank clerk needed a few meetings to convince me that it is good to build go into monthly credits (creditcard) to support my credit score.

>My US Bank clerk needed a few meetings to convince me that it is good to build go into monthly credits (creditcard) to support my credit score. Uhmm, can't a bank see your salaries? Because in Turkey they want to see your salaries. You enter to www.turkiye.gov.tr and print out your last 12 months salaries with a validation number and then hand it to your bank. Or you ask from your employer, he ask it from Social Sec…

The US system is kind of broken. They don't equate high salary with high creditworthiness - maybe it's because of the american culture of consumerism (which implies that you might make lots of money, but if you spend it all and are going into debt to fund your lavish lifestyle, then you're not creditworthy). So the American system rates creditworthiness by a history of paying off debt on time (usually credit cards, mortgage, car loan, etc.).

It's stupid.

It would obviously be better if we judged creditworthiness by your bank balance history. But this is apparently hard/impossible to show.

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

#219

Post by pluma » Mon, Oct 24, 2016, 7:46 PM UTC

wil421 wrote: post #10

DocTomoe wrote: post #2

Being 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?

It's culturally frowned upon to buy expensive cars or other luxury goods on credit unless absolutely necessary.

My grandmother taught it to me this way: credit is for necessities; for everything else you save. Also: low quality products are more expensive than high quality products in the long run (because you have to replace them more often).

So as an example, if you're in a tight spot and an expensive household appliance (or your car that you need for your job) breaks, it's okay to take out a loan or financing. But if you're already good and it's just a quality of life thing (e.g. a bigger TV when you already have a working one) you save money until you can afford it.

That said, in recent decades a lot of young people have started getting financing for things like bigger TVs or mail order products. This is generally seen as a lower-class problem and has been prominently featured on TV programmes about indebted teenagers and such (a decade earlier when TV was more relevant).

I'd say lifestyle financing is a thing these days, but it's still frowned upon by most people because it's not considered sustainable and basically a form of delayed personal bankruptcy.

(A note on "lower class": the term probably has different connotations in different cultures (and even in different parts of society); I'm specifically talking about people from a low educational background who make minimum wage in low prestige jobs or rely on social welfare.)

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

#220

Post by kodablah » Mon, Oct 24, 2016, 7:47 PM UTC

nommm-nommm wrote: post #184

kodablah wrote: post #174

Earlier quoted context omitted.

Your points miss both the financial incentive to make things better for your own asset and long term incentive since oftentimes renting makes one more nomadic. Point by point: - You might not garden w/ no equitable return on house value (or at least not build a large gardening setup), and landlords feel the same way in reverse (no benefit to them to do anything beyond the minimum once it's inhabited) - Maintain != im…

When I rented I gardened. I haven't the slightest clue why you believe someone wouldn't garden when they rent. In fact the place I rented I picked because I could garden.

Hence "might" and the parenthetical "or at least not build a large gardening setup". To rephrase, without ownership of the asset, the renter (and landlord after contract signed) is less incentivized to "work the land" for whatever definition of that you have. Sometimes the setup (irrigation, structural changes, etc) is not worth it or not allowed to the renter. Also unfair to use your anecdotal opinion of whether or not to garden to keep from having the slightest clue why other renters might not.