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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

#91

Post by 6DM »

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…

A big reason why I don't want to share a room with anyone anymore is because they don't clean. Every roommate I've ever had (so far ~11 different people), has never actually cleaned. No matter how many times I'm getting upset or having a talk. It just ends up with them washing the dishes/taking out the trash once and I'm stuck cleaning 75% of the apartment. I'm not a clean freak I just hate when the trash is overflowing and there's no clean dishes.

Also, 1 almost never paid rent. Thanks to him knowing the laws better than me, there was effectively nothing I could do. We couldn't afford this at the time so we forced him out of his room and at least got another person in there for a while. Money is a huge concern for me thanks to student debt. So, when your roommate is screwing around and on the verge of getting fired it stresses me out. Right now I have another roommate who was fired and doesn't seem to care much about finding another job. They're paying rent but the landlord is pretty upset about them being chronically late and only paying $10 here and there.

Every year, "due to market forces" they try to raise my rent by $100 per month, $1,200 a year. So I've been forced to move basically every year because why should I pay more when, magically, getting the exact same (but different) apartment in the same building is cheaper...

Thank god this is my last roommate. I'm buying a house and I can finally sit in one spot for more than 365 days.

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

#92

Post by vilhelm_s »

tcbawo wrote: post #72
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.

According to Priceonomics,

> the deduction began as an unplanned technicality. When the federal government first levied income taxes in 1913, Congress allowed Americans to deduct from their taxes the cost of all interest payments. This is standard policy for corporations: the government only wants to tax profits—not money spent on loans for tractors or a new office. In 1913, the government allowed deductions on all interest—probably because all interest payments were business-related. No one took out car loans in 1913 or paid interest on credit card debt, and the majority of mortgages were for farms.

https://priceonomics.com/the-case-against-everyones-favorite...

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

#93

Post by bogomipz »

I realize that Berlin is nothing like the rest of Germany but I noticed that the rental housing stock there seems to be pretty tight. There's a fair amount of construction going on but it looked like a premium housing stock that was going up. I assumed these were probably for sale but maybe they are high end rentals?

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

#94

Post by fwn »

rmc wrote: post #64
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…

> 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…

All of this affects you less if you are in a shared flat compared to renting it alone. The flat can be vastly more expensive as you are pooling the money and flexibility is higher as you have less furniture per person and tend to be able to join/leave shared flats on less rigid schedules. (You can find many in the middle of the month, depending on the holidays etc.)

I lived in a shared flat in Germany which got a rent increase and other than all the young families in the building we really barely noticed it.

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

#95

Post by user5994461 »

mto wrote: post #19
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.

Same for Austria. Then considering that you might change jobs every few years... and the jobs are mostly in the cities, where you can't afford building a house. We live in a small to medium size flat for 380€/month, including some running costs. Buying it would cost roughly 250k. That just doesn't pay off. Most medium sized houses are about 700k€ in the region, with typical software developer wages at 2-4k€/month bef…

Interesting.

In France major cities outside Paris, I'd expect a 150-250k flat to be 600-800 euros/month in rent.

If you pay only 380€ per month for rent, it's really not worth buying.

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

#96

Post by Xixi »

coldtea wrote: post #48
thatfrenchguy wrote: post #18

Earlier quoted context omitted.

Never seen credit cards outside of the US/UK/Canada...

They are used all over the world, including in France. Not sure what are you talking about... Except if you live in some rural area...

I don't know many people who use credit cards in France. Practically everybody use the so-called CB which is a debit card (either immediate or deferred, usually deferred), not a credit card. It doesn't allow you to accrue debt: the balance is always re-paid in full, and the linked bank account (usually a checking account) will go red in case of overspending.

That said there are definitely credit cards, usually linked to big retailers (Auchan, etc.), but are they that popular?

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

#97

Post by cm2187 »

randiantech wrote: post #90
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…

So are you recommending to invest savings on stocks and bonds rather than a house? I mean, I wont argue / refute you reasoning, I just simply dont have the knowledge to do a proper analysis. Ill just say that my 78 years old parents, that not even finished high school, always told me to first buy a house, then think about the rest. Being an owner feels like the best decision Ive ever made. If something happens to me,…

You could have savings and investment you could use to cover a lower rent the rainy days.

House prices are only high because everyone is over-bidding to buy them. And that's driving rents up.

Now this is different to the question of whether you should individually follow the crowd in a country where everyone over-bids on property. If you don't, you still pay a high rent to repay the massive mortgage of the guy who bought the property. And in a country like the UK, there is a massive moral hazard: because so many voters are all-in into property, politicians will do anything it takes to ensure prices never go down, even if that means printing massive amounts of money, robbing savers from their investments, having negative interest rates, etc. In that world, it probably doesn't make sense to bet against the central bank.

But as a society I think it is a bad allocation of resources.

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

#98

Post by camiller »

cm2187 wrote: post #74
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…

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 pret…

For property you still have ongoing maintenance to pay for, and real estate agents, and the title company, etc. so there are jobs created due to the buying, selling, and ownership of property. If I by 100 shares of IBM in my self-directed account at Charles Schwab there likely isn't a single human being involved in that transaction after I click the buy button. Granted, somebody wrote the code that drives all of that.

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

#99

Post by geon »

randiantech wrote: post #90
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…

So are you recommending to invest savings on stocks and bonds rather than a house? I mean, I wont argue / refute you reasoning, I just simply dont have the knowledge to do a proper analysis. Ill just say that my 78 years old parents, that not even finished high school, always told me to first buy a house, then think about the rest. Being an owner feels like the best decision Ive ever made. If something happens to me,…

Owning a house might be good for you (risk free), but bad for society (low productivity). That's how I read it.

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

#100

Post by mistermann »

mto wrote: post #19
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.

Same for Austria. Then considering that you might change jobs every few years... and the jobs are mostly in the cities, where you can't afford building a house. We live in a small to medium size flat for 380€/month, including some running costs. Buying it would cost roughly 250k. That just doesn't pay off. Most medium sized houses are about 700k€ in the region, with typical software developer wages at 2-4k€/month bef…

> We live in a small to medium size flat for 380€/month, including some running costs. Buying it would cost roughly 250k.

Wow that's a pretty insane rent to purchase price ratio, seems not that dissimilar to Vancouver which is a gong show.

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