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

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

#391

Post by tptacek » Tue, Oct 25, 2016, 4:16 PM UTC

cmdrfred wrote: post #390

tptacek wrote: post #375

Earlier quoted context omitted.

My experience and intuition suggests that the opposite is true, and that you'll generally end up in nicer places and in better neighborhoods if you rent. Looking at current house rental listings in Oak Park, I see several in nicer neighborhoods that are less than my rent; in other words: I believe I pay a premium to to own here. That was my experience in Ann Arbor as well.

This isn't the case in most of New Jersey or Pennsylvania. Cost to rent a crappy 2 bedroom apartment (with the people below blowing smoke up into your bedroom) is the same as a 3 bedroom house, property taxes, and insurance. It really is location, location, location as they say.

Can we test this? I'm ready to be convinced with evidence! Let's use a specific market, and just look at the listings.

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

#392

Post by cmdrfred » Tue, Oct 25, 2016, 4:19 PM UTC

shostack wrote: post #377

techthroway443 wrote: post #274

Earlier quoted context omitted.

Could you explain the reason?

I'd guess it was referring to the fact that there are geographical, cultural preferences etc., not to mention employment opportunities that cause the Bay Area, NY, and other extremely expensive cities to be much more popular compared to Philly. Not to knock your choice, but many people including myself would never consider living there.

I don't think that explains why the apartment building 5 minutes away in a worse town (higher crime, access to lower rated schools) rents a 2 bedroom for more than the cost of my mortgage, taxes and insurance. My belief is that the people in that building don't have the access to capital to buy a home, and thus the landlord is able to arbitrage his access to capital via a bank in order to charge rents that are rather high in comparison.

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

#393

Post by cmdrfred » Tue, Oct 25, 2016, 4:40 PM UTC

tptacek wrote: post #391

cmdrfred wrote: post #390

Earlier quoted context omitted.

This isn't the case in most of New Jersey or Pennsylvania. Cost to rent a crappy 2 bedroom apartment (with the people below blowing smoke up into your bedroom) is the same as a 3 bedroom house, property taxes, and insurance. It really is location, location, location as they say.

Can we test this? I'm ready to be convinced with evidence! Let's use a specific market, and just look at the listings.

Well in my home town you can look at Zillow to see home prices (http://www.zillow.com/homes/for_sale/Warrington-PA/56739_rid...) all of these are priced to give around or below $1200 mortgage all told (taxes,fees,insurance even if you went in with a low down payment). Here are the apartments that are available (http://www.apartmentguide.com/apartments/Pennsylvania/Warrin...)

$1200 is really the minimum for a 2 bedroom apartment here. There are a few that are maybe $100 - $200 lower, but I wouldn't want to live there.

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

#394

Post by linkregister » Tue, Oct 25, 2016, 4:50 PM UTC

camiller wrote: post #380

linkregister wrote: post #280

Earlier quoted context omitted.

Companies often issue common stock long after IPO. Tesla famously did this earlier this year in order to finance an accelerated release schedule for the Model 3. Companies undergoing temporary financial trouble also issue common stock. The major banks issued large amounts of common stock during the 2008 financial crisis. Most have not yet repurchased the issued stock. Technically and in the extremely specific case, y…

Yeah, I purposely ignored the edge cases of selling treasury stock or existing companies making new issues. An existing company making a new issue is kind of unusual because it dilutes the value of existing shares which is harmful to existing shareholders. generally a bad thing. Selling Treasury stock does get new cash in the hands of the company, but usually that was because at some point the company had excess cash…

I agree with everything you said.

I wanted to mention liquidity because I (wrongfully) thought your post implied it wasn't particularly important; is indeed paramount for the stock market to work at all.

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

#395

Post by gsnedders » Tue, Oct 25, 2016, 5:38 PM UTC

hx87 wrote: post #385

gsnedders wrote: post #320

Earlier quoted context omitted.

Cards without a chip require a signature; cards with a chip have their own preference as to whether they prefer chip-and-signature or chip-and-PIN (i.e., it's a preference of the card, not the terminal).

Chip-and-signature cards are annoyingly common in the USA, but I though chip-and-PIN cards were standard in that part of the world.

Chip-and-PIN are absolutely the common thing. Hence why the terminal informs the staff member that a signature is needed (because of being presented a chip-and-signature card) they get confused: they aren't used to it happening, at all!

I've had the exact opposite in the US, getting asked if I'm sure I'm okay with entering my PIN having presented a chip-and-PIN card, seemingly expecting me not to know my PIN.

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

#396

Post by seanp2k2 » Tue, Oct 25, 2016, 5:46 PM UTC

ythl wrote: post #312

eloisant wrote: post #217

Earlier quoted context omitted.

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.

Being a landlord sucks, you don't know what you are talking about. Tenants are terrible for wear and tear on your house. Since they don't own the house they don't treat it with care. Lots of maintenance and tenant problems that need solving.

$2400 a month for a 1br apt built in the 60s covers a lot of wear and tear, especially when you have maintenance staff making $10/hr doing all the work. If I add up all of my maintenance costs over the past 5 years, I'd be very surprised if it totaled over $1k (paint that they charged me for, a small window, a small drywall patch, carpet that they charged me for) .

It's also hard to feel bad for home owners renting half of the property they live in to cover their mortgage while their property values increase 10% a year. Apartment residents meanwhile are building zero equity and eroding their chances of ever owning property.

Real estate is a hugely profitable business due to the perpetual license granted by the government to extract infinite rent from the property.

I have friends who just pay professional management companies to do billing, maintenance, and lease management for their properties. All they do is write a check to the management company and they get to keep all the profits. No, I don't think what they're doing is a real job, they just happened to have enough money to afford a few down payments on houses, and now they're getting something for nothing.

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

#397

Post by tw04 » Tue, Oct 25, 2016, 5:50 PM UTC

philipodonnell wrote: post #113

camiller wrote: post #65

Earlier quoted context omitted.

Buying stock on the open market also doesn't create any job for anyone, it just transfers wealth to the hands of the seller. Basically, unless you are investing in an IPO, the company doesn't see a dime from the ongoing trading of it's stock. So the vast majority of investors are not creating jobs by buying stock. Similarly, most bond investors are not buying new issue bonds, they are buying bonds from the current ow…

In isolation, sure. In aggregate though, increasing demand raises the value of stock, which reduces borrowing costs and encourages companies to expand, which can sometimes create jobs. Not just stock: companies are constantly comparing alternative sources of capital. Any increase in demand from investors for any particular source of capital (bonds, stocks, loans, etc...) will tend to make that capital available at a…

How do you figure the value of stock increasing reduces borrowing costs? I don't know of ANY financial institution that bases the interest rate of a loan on the value of a company's stock. It is, in every case I've seen, based on their credit rating.

You could have a stock that's through the roof, but if you don't pay your bills on time that means absolutely nothing to me as a financial institution. On the flip side your stock could be in the gutter, but if you are financially viable and pay your bills on time, I couldn't care less.

Generally speaking there is a correlation between stock price and "health of the company", but not always.

Finally - stock price increasing creates jobs???? Source? I have never, in my life, heard of a company of any size hiring people because their stock went up. That's the most ludicrous thing I've ever heard.

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

#398

Post by tiatia » Tue, Oct 25, 2016, 6:07 PM UTC

Sure. Housing prices in metropolitan areas are sky high, thanks to the asset price inflation of the ECB. Hey, even a house in a tiny village easily sets you 300k Euro back. The secret of the German export"wunder" is extremely low wages.

"Most Germans don’t buy their homes, they rent."

Yes. Because they can't fucking afford a house. Riddle solved. Move on.

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

#399

Post by pjlegato » Tue, Oct 25, 2016, 6:14 PM UTC

paganel wrote: post #365

pjlegato wrote: post #324

Earlier quoted context omitted.

> 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…

I know about the Rust Belt meltdown and also about what happened to Northern England and Scotland during the Thatcher years, but trust me when I'm telling you that high inflation and the whole damn country (nor merely a region) being on the brink of collapse feels at least a hundred times worse.

Yes, I'm sure the collapse of the state was quite terrible. Nobody is trying to diminish the horror of that experience.

The point is that "westerners," even HN readers, are not all a bunch of naive rich people who have never experienced and cannot understand large scale social change.

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

#400

Post by gumby » Tue, Oct 25, 2016, 6:33 PM UTC

cmdrfred wrote: post #392

shostack wrote: post #377

Earlier quoted context omitted.

I'd guess it was referring to the fact that there are geographical, cultural preferences etc., not to mention employment opportunities that cause the Bay Area, NY, and other extremely expensive cities to be much more popular compared to Philly. Not to knock your choice, but many people including myself would never consider living there.

I don't think that explains why the apartment building 5 minutes away in a worse town (higher crime, access to lower rated schools) rents a 2 bedroom for more than the cost of my mortgage, taxes and insurance. My belief is that the people in that building don't have the access to capital to buy a home, and thus the landlord is able to arbitrage his access to capital via a bank in order to charge rents that are rather…

It's the opposite: the cost of mortgage is fake-subsidized via tax exemption and since everyone thinks ownership is the "goal" the supply of rental properties asymptotes to the equivalent price. Plus because of the bias to home ownership there is less rental stock.

The reason I say it is "fake-subsidized" is straightforward: say you make $100K per year. A reasonable expense on housing is 25% of your income -- 25K per year or about 2K/month. Luckily for you, you can use the full 25K because you won't be paying income tax on the money when you buy the house. So you can buy more house...except all other buyers making 100K can do the same. If you had to pay after-tax dollars you could only pay, say, $1500/month -- but so would everyone else you're competing with. In essence the tax subsidy only helps real estate agents and those who want to live off the appreciation of their house...which is a risk (yes the long term trend is upwards, but not necessarily where you live, and not necessarily when you plan to retire).

And let's not forget that almost all the mortgages are held by the US government. It's a highly distorted market, and while I believe it developed with good intentions, it's not at all clear it's good for the majority of citizens.