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

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

#321

Post by MandieD » Mon, Oct 24, 2016, 10:22 PM UTC

bogomipz wrote: post #114

I would be curious to know or hear if anyone thinks this trend has been altered since 2008. For close to a decade now we have had extremely low or in some case negative(in Europe) interest rates. Thats a lot of cheap financing. As the article points out the data is from 2004.

I would be shocked if it hasn't. Here in the greater Nuremberg area, prices have been going up steadily for the past 3 years or so. It took us a year to make the winning offer on a reasonably-priced house. We got a 15 yr mortgage at 1.6% from the local Sparkasse (think Savings and Loan), though we did put down a traditional (high) down payment.

So why did we buy? My (German) husband's fear of inflation finally surpassed his fear of debt to accommodate my Anglo-American need for my own pied a terre :) Rents are going up around here, and even though there's the 15% over 3 year limit, that's still a lot over the long term.

It was nice not to feel like we had to buy a house, though. That gave us time to save up, to know what we really wanted in a house and to be really certain that we wanted to stay in this region.

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

#322

Post by Grishnakh » Mon, Oct 24, 2016, 10:30 PM UTC

standel wrote: post #151

aianus wrote: post #145

Earlier quoted context omitted.

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.

Facebook, Google, Apple, Microsoft, IBM, HP and many others would certainly not agree with you. They cook their own food, own lot of real estate and I am pretty sure they don't think it's time they lost. These big companies do not manage one single house (office). They manage a real estate portfolio. Most of big companies have a mix of rented and acquired office space. Ultimately, owning real estate or not is an inve…

It's not just real estate. I'm not sure about today, but in the 2000s when I worked at Intel, they owned their own jet planes. They had so many employees flying between certain cities they had locations in, that it was more cost-effective for them to operate their own mini-airline.

Outsourcing stuff always costs more, because you have to pay for the profit of the company you're outsourcing to. It's worth it when it's something you don't do that much of, or aren't very good at, but if you do a lot of it, it's worth it to do it yourself.

For an extreme example, think about printing: is it worth it to outsource all your computer printing needs to a specialized printing company? Or should you just buy a laser printer for $100-500 and do it yourself? It doesn't take very much printing for it to be a massive waste to pay someone else to print stuff for you.

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

#323

Post by pjlegato » Mon, Oct 24, 2016, 10:38 PM UTC

riprowan wrote: post #126

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…

> There is no reason to favor individuals investing into an unproductive investment (property) over productive investments (stocks and bonds). I beg to differ. I think that real estate, like farming, has critical societal benefits that are worthwhile to develop and maintain. Namely, it is very difficult to raise a family of four in a mutual fund. Investing in a home may is absolutely "productive." See, there are sign…

Most brokers allow you to borrow money against stocks. It's typically called "margin."

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

#324

Post by pjlegato » Mon, Oct 24, 2016, 10:42 PM UTC

paganel wrote: post #306

nommm-nommm wrote: post #194

Earlier quoted context omitted.

>1. A paid off home is a social safety net against homelessness for an entire family and many of their social circles. Even if all of them are unemployed, all of them have a roof over their heads. Until you can't afford to pay the taxes, utilities, insurance, and maintenance. My grandma bought her house outright with my grandpa's life insurance money. No mortgage ever. It was a terrible choice because she didn't have…

> Until you can't afford to pay the taxes, utilities, insurance, and maintenance The utilities it's what gets to you first. My parents used to be middle-class people in the late-1990s Eastern Europe until they both lost their jobs when the one big steel-factory in my home-town got closed down. In a matter of a just a couple of years they had to sell our family car and our city apartment (where we were all living), be…

> Western country... very big societal changes...

It's already happened. Contrary to popular belief, Western countries are not uniformly rich and successful places where everyone drives a Ferrari and owns three houses.

This stereotype is really annoying to those of us who suffered through the industrial collapse and saw the society of whole regions destroyed (larger than most eastern European countries.)

* https://en.wikipedia.org/wiki/Rust_Belt * https://en.wikipedia.org/wiki/Deindustrialisation_by_country... * https://en.wikipedia.org/wiki/Stagflation * https://en.wikipedia.org/wiki/History_of_the_United_States_(... * etc.

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

#325

Post by analog31 » Mon, Oct 24, 2016, 10:45 PM UTC

riprowan wrote: post #126

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…

> There is no reason to favor individuals investing into an unproductive investment (property) over productive investments (stocks and bonds). I beg to differ. I think that real estate, like farming, has critical societal benefits that are worthwhile to develop and maintain. Namely, it is very difficult to raise a family of four in a mutual fund. Investing in a home may is absolutely "productive." See, there are sign…

5. In a time when wealth is centralizing as never before, investments in real estate distributes wealth locally. I think there are valid arguments against public policy to distribute wealth, but there is a societal logic here.

I think this is a good point. Honestly, I don't know the economics of how property ownership is distributed in the US, but as a result, I can't say why we aren't all renting from a small handful of giant land owners, who can control entire cities or even regions. For this reason, though I know that the homeowner subsidy is regressive in many ways, and that home ownership isn't necessarily the most productive investment strategy, I'm hesitant to just get rid of it.

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

#326

Post by LeChuck » Mon, Oct 24, 2016, 10:47 PM UTC

fwn wrote: post #102

mrottenkolber wrote: post #56

Germany is a two-class society divided into landlords and renters. A landlord will usually not own only one but ~3-20 houses that total to ~15-100 flats. The landlords often are renters themselves. When compared with big housing companies, private landlords require bigger profit margins, leading to low quality maintenance of existing houses and ex-orbital rents. Especially in crowded cities, rent regulation is non ex…

Spending 70% of your income on rent is far from inevitable in Germany.

Not only far from inevitable but impossible in a lot of cases. When I was looking for an apartment in Germany most (all? I can't remember) landlords wanted to verify that my income was at least three times the rent.

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

#327

Post by walshemj » Mon, Oct 24, 2016, 10:48 PM UTC

eloisant wrote: post #217

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.

In the UK a mortgage if you can get one is way cheaper than renting for the equivalent property.

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

#328

Post by dnissley » Mon, Oct 24, 2016, 10:54 PM UTC

pjmlp wrote: post #173

petra wrote: post #82

Earlier quoted context omitted.

So what happens to people when they are old , and maybe they're pension isn't that good ?

Sadly they might land in the streets, if they don't have a family to support them. But this can also happen if you own a house, because there are running expenses for municipal taxes, validating the plumbing every X years, renewal of the boiler system before every winter starts, cleaning the snow or paying someone to do it....

True, but then you can sell it and potentially have enough money to live out the rest of your days (or a significant portion of them).

There was a comment I read here recently about how a mortgage is in some ways a vehicle for forced savings. Not enough to retire on alone of course, but a big check if you ever need it.

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

#329

Post by pjlegato » Mon, Oct 24, 2016, 10:56 PM UTC

LeanderK wrote: post #29

I 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…

This is called "having roommates" in the US, and it's quite common, especially among students and younger people.

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

#330

Post by mioelnir » Mon, Oct 24, 2016, 11:02 PM UTC

pchm wrote: post #144

usrusr wrote: post #120

Earlier quoted context omitted.

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?

If you have a company car that is free for full personal use, driving around, on holiday etc. then the car is paid for and given to you by your company. Insurance, service and often gas is paid by the company.

On the flipside, 1% of the car's list price as well as 0.03% for every km distance between your residence and place of employment is taxed per month. So for 20km distance, it would be 1.6% of the car's list price. That is added as income onto your monthly salary for tax calculation, and those taxes then deducted from your actual cash salary.