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

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

#231

Post by pluma » Mon, Oct 24, 2016, 7:58 PM UTC

bogomipz wrote: post #66

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.

There are two way to look at what you are calling "debt" though. In the United States you are allowed to write off the interest on your mortgage from your taxes. This often has the effect of making what you pay for housing every month either cheaper or very close to the same amount you would pay to rent a house. Housing is a constant expense. If you rent practically speaking you are in debt to your landlord every mon…

Home ownership is actually seen as a long-term investment in Germany (although I feel that recently more people come to realize the numbers don't really add up). Land ownership in particular is considered a good thing and most people have a strong aversion to selling off land they inherit.

However home ownership is also considered a luxury. Not only is there not as much of a tax incentive as in the US and not only does it require you to take on life-long debt, but there are also a lot of expenses the landlord would have to pay for but a homeowner has to pay out of their own pocket.

The obvious example are routine maintenance like roofing and plumbing, but also drainage or the cost of public works: if the house sits on a street corner and both streets get modernized, you may end up having to pay for both.

The expenses when renting on the other hand are much more predictable: you just pay the rent and utilities and whatever one-off costs come up have to be spread out via an increase in the utilities bill or swallowed by the landlord.

So if you want to build or buy a house, you're expected to save money for paying for these fun surprises as well -- because having to take out a loan is a sign of poor planning, if the bank even grants you one on top of the financing for the house itself. Add everything together and home ownership becomes nothing more than a luxury.

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

#232

Post by pluma » Mon, Oct 24, 2016, 8:04 PM UTC

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.

In Germany there's a legal limit to how much the rent can be increased in addition to the time limit. And the limit depends on the location, so there are network effects. Additionally rent increases always have to be justified.

And even so tenants can sue against rent increases and occasionally win, resulting in no increase or a lower increase. There's even a Renter's Association that can provide legal aide to its members when there are disputes between tenants and landlords.

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

#233

Post by jpetso » Mon, Oct 24, 2016, 8:04 PM UTC

standel wrote: post #141

coldtea wrote: post #58

Earlier quoted context omitted.

> 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.

You could also look at it the other way and say you have sunk costs either way, either on rent or on running costs for your (owned) property: mortgage interest, property taxes, maintenance, opportunity cost for your down payment.

The question is how do you invest the extra leftover money: in home equity tied to the property with running costs, or in other investments (stocks, bonds, your own business)?

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

#234

Post by gumby » Mon, Oct 24, 2016, 8:04 PM UTC

The idea that owning a home is a great investment is an article of faith, not evidence.

Imagine if large public companies owned most of the housing stock and rather than buying a house you invested in these companies. Instead of bearing all the location and liquidity risk of owning a house, you would spread that risk over large numbers of markets. In fact being stuck owning a house in an unfavorable market can keep someone from moving, which reduces labor mobility.

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

#235

Post by baq » Mon, Oct 24, 2016, 8:06 PM UTC

aianus wrote: post #191

Jtsummers wrote: post #169

Earlier quoted context omitted.

If you strictly want to maximize your money , you're probably making the best choice for yourself. For many of us, time with family, friends, hobbies, is a relaxing and physically/mentally/emotionally healthy thing to engage in, rather than trying to exploit every waking hour for income.

So instead of spending time with the family, friends, and hobbies you'd rather slave away in front of a stove to save $600/mo?

preparing food is one of the more social activities and one which people have been doing together since before they called themselves people. maybe you should try changing how you go about it?

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

#236

Post by cmdrfred » Mon, Oct 24, 2016, 8:07 PM UTC

gumby wrote: post #234

The idea that owning a home is a great investment is an article of faith, not evidence. Imagine if large public companies owned most of the housing stock and rather than buying a house you invested in these companies. Instead of bearing all the location and liquidity risk of owning a house, you would spread that risk over large numbers of markets. In fact being stuck owning a house in an unfavorable market can keep s…

It really depends on where you live. I live outside of Philadelphia. My mortgage, taxes and insurance is less than $1200 dollars for a 3 bedroom house. I'd pay at least $1200 to rent a crappy 2 bedroom apartment and rent just keeps going up around here. Consider, even If my homes value stays completely static (according to Zillow it went up a 5 percent this year), in ten years time I will be paying considerably less mortgage than what that apartment will rent for.

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

#237

Post by [deleted] » Mon, Oct 24, 2016, 8:11 PM UTC

cmdrfred wrote: post #236

gumby wrote: post #234

The idea that owning a home is a great investment is an article of faith, not evidence. Imagine if large public companies owned most of the housing stock and rather than buying a house you invested in these companies. Instead of bearing all the location and liquidity risk of owning a house, you would spread that risk over large numbers of markets. In fact being stuck owning a house in an unfavorable market can keep s…

It really depends on where you live. I live outside of Philadelphia. My mortgage, taxes and insurance is less than $1200 dollars for a 3 bedroom house. I'd pay at least $1200 to rent a crappy 2 bedroom apartment and rent just keeps going up around here. Consider, even If my homes value stays completely static (according to Zillow it went up a 5 percent this year), in ten years time I will be paying considerably less…

[deleted]

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

#238

Post by beguiledfoil » Mon, Oct 24, 2016, 8:13 PM UTC

Having lived in jurisdictions that limit annual rent increases via a rental index and jurisdictions that do not, I prefer the former. In America such action is dismissed as a price control, unfortunately for me.

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

#239

Post by jessedhillon » Mon, Oct 24, 2016, 8:14 PM UTC

cmdrfred wrote: post #236

gumby wrote: post #234

The idea that owning a home is a great investment is an article of faith, not evidence. Imagine if large public companies owned most of the housing stock and rather than buying a house you invested in these companies. Instead of bearing all the location and liquidity risk of owning a house, you would spread that risk over large numbers of markets. In fact being stuck owning a house in an unfavorable market can keep s…

It really depends on where you live. I live outside of Philadelphia. My mortgage, taxes and insurance is less than $1200 dollars for a 3 bedroom house. I'd pay at least $1200 to rent a crappy 2 bedroom apartment and rent just keeps going up around here. Consider, even If my homes value stays completely static (according to Zillow it went up a 5 percent this year), in ten years time I will be paying considerably less…

Yes, but there's a reason why the crappy 2br costs as much as your house. That reason might not appeal to you, but it exists and has a specific monetary value.

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

#240

Post by hx87 » Mon, Oct 24, 2016, 8:14 PM UTC

Spooky23 wrote: post #180

kgermino wrote: post #164

Earlier quoted context omitted.

How does anything on your list stem from owning vs renting? Presumably if you were renting - you would still garden and you or your landlord would still maintain the lawn - your landlord would still maintain the house - you would still be living in the community and therefore motivated to participate in it's government - I don't understand this one at all. Why would a second family suddenly move in if the house was r…

Residential properties usually have short term leases. You have minimal incentive as a tenant to plant flowers, buy shrubs, etc. You have minimal inventive as a landlord to make the house look any more attractive than it needs to be. Landlords don't maintain property to the same standard as an individual homeowner, when they do, they use more efficient service models (ie. a single crew with a single set of tools) to…

> Residential properties usually have short term leases. You have minimal incentive as a tenant to plant flowers, buy shrubs, etc. You have minimal inventive as a landlord to make the house look any more attractive than it needs to be.

That's because homeownership is a norm for long-term residents here in the USA. If long term renting were as much (or more) of a norm, an average renter would experience the same incentive to keep the place in an aesthetically pleasing state as an average owner, and landlords would have to make their properties much more attractive in order to have tenants.