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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

#71

Post by ghaff »

WA wrote: post #46

On the other hand, many Germans believe: renting is paying someone else, buying is paying yourself (which is nonsense). Especially in more rural areas, buying/building a house is considered a big achievement in life. People are even willing to move from a smaller city to little towns just to be home-owners. Buying a house can be a net loss over the years, if you're not located in a major city. Especially in East Germ…

>It boils down to lifestyle decision

Exactly.

My philosophy is, to a first approximation, forget the financial aspect. Yes, depending upon tax policies, rent/buy ratios, etc. it may make more or less sense to rent vs. buy in a given location. But, for me, it really comes down to flexibility on the one hand and stability/ability to modify things to your liking on the other. Neither is the "right" approach but IMO it's what most people should be focusing on rather than whether it's a good investment or whether they're "throwing money away" on rentals.

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

#72

Post by tcbawo »

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…

I had heard that the mortgage deduction was designed to incentivize the population to settle down. A population that is settled is more invested in the community, less likely to cause trouble, and more likely to pay taxes. Although, in today's workforce, lack of mobility can be a liability.

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

#73

Post by burkaman »

ricksplat wrote: post #52
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…

That's all well and good as long as you're a student, or partying your twenties away and as long as everybody in the house gets on .... I've done this, and while it is good fun in parts the downsides become downright tiring.

You don't have to party every weekend. Generally you choose to live with people who roughly share your lifestyle.

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

#74

Post by cm2187 »

camiller wrote: post #65
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…

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…

I am not sure that is true as even for stocks, on the other side you have asset managers, hedge funds or insurance companies who participate both in the primary and secondary markets. Of course, you will have similar bubbles forming in stocks than you have in property. But overall it is a way more productive investment.

Bonds barely trade on the secondary markets. When you invest into a fund that buys bond, it's pretty much 100% primary market (i.e. new issuances).

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

#75

Post by ethanbond »

webkike wrote: post #23
premium-concern wrote: post #6

Earlier quoted context omitted.

Yep. "Don't buy things if you can't pay for then." sounds reasonable, but some other countries seem to disagree. Not surprised that those countries suffer from government shutdowns over how much the debt ceiling is raised.

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.

Also worth pointing out that some credit cards carry huge perks if used as your daily spending method. For example, the Chase Sapphire Preferred card extends some warranties by a year, also covers purchases for 120 days against damage/theft, also will pay back the price difference on an item if the price goes down within 90 days of purchase.

Similar cards carry similar benefits, I'm sure. All you have to do to reap them is get the card, use it instead of your debit, then pay it off appropriately.

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

#76

Post by thesimon »

Noseshine wrote: post #26
thesimon wrote: post #11

Earlier quoted context omitted.

>such as the humble credit card out of nearly all Western nations Of course using your overdraft is totally fine, but using the evil credit cards even when paying in full is just like declaring bankruptcy. Doesn't help payment services in Germany that Visa/MasterCard is always considered an evil credit card and debit brands aren't too common.

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 card from your bank. Most other banks (Advanzia, Barclaycard, LBB) charge nothing for it, but make up by charging high interest rates. Still most have an interest-free period, which can be beneficial for consumers.

> zero reason to point to convenience.

Regular cards still don't support contactless. Just tapping your card is vastly better than entering your PIN or signing. A lot of retailers in Germany support it.

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

#77

Post by ygra »

josefresco wrote: post #31

How does Germany handle retirement? In the US, your home is seen as an investment, one that can partially fun retirement or depending on the market, pre-retirement income.

You pay into a retirement fund as long as you work (Rentenversicherung). When you retire you then get a monthly payment from there. By now, due to more old people and fewer young people, the amount you'd get is getting lower. To combat that there are various ways people invest money for retirement. Betriebliche Altersvorsorge is one, where a part of your income is deducted before taxes. There is Riester-Rente, which is state-sponsored to some degree.

Of course, some people choose to invest into property, but there are lots of other options with varying flexibility and payoffs. In general, even if you don't do anything towards your retirement (apart from working your working life), you still have some security as you age. But such provisions are probably one very major difference between the US and Germany.

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

#78

Post by lmedinas »

WA wrote: post #46

On the other hand, many Germans believe: renting is paying someone else, buying is paying yourself (which is nonsense). Especially in more rural areas, buying/building a house is considered a big achievement in life. People are even willing to move from a smaller city to little towns just to be home-owners. Buying a house can be a net loss over the years, if you're not located in a major city. Especially in East Germ…

> On the other hand, many Germans believe: renting is paying someone else, buying is paying yourself (which is nonsense). Especially in more rural areas, buying/building a house is considered a big achievement in life. People are even willing to move from a smaller city to little towns just to be home-owners.

People change to small towns because they want stress free life and a better/larger home for the same price of a small apartment in big cities. Living in cities brings also disadvantages!

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

#79

Post by imtringued »

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…

On the other hand it eliminates the NIBMY problem. Since the tenants do not own their home they don't have the pressure to protect their investment. The landlord receives returns on his investment through rent on a monthly basis which lessens the risk of a sudden development reducing the value of the home. Home owners that live in their own home on the other hand face the full risk since they can only recoup their costs when they sell the property.

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

#80

Post by Noseshine »

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…

  > Because it just magically transfers from your register to your bank account? :)
No, there is no fee on that transfer. And please don't tell me "but the effort!". Small businesses gladly go through that "effort". Not everybody is Amazon. You just empty the cash register and bring it to the bank. Not exactly dangerous around here either.

  > Regular cards still don't support contactless
That is not exactly something worth mentioning as great "convenience". Even if you find a store where that is used at all, that's like 0.001% of the effort of going shopping.
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