There are a lot of "nationality-comparison-channels" on youtube, but I especially enjoy watching your videos because you actually take your time and go in depth, while still keeping it entertaining. Keep up the good work.
@@TypeAshton What banking do you use to transfer funds from US to germany back and forth.... what troubles do you come across. CAN you make an episode about that? did bankers think you are laundering money? did you have to provide bunch of proofs that you are not laundering money? Please make an episode about banking!!
@@TypeAshton Home prices going up... you forgot to mention all the investment funds like BlackRock, Fidelity, even zillow that have bought up 18% of all private homes as investments. They snatch up homes at over asking, paying cash, depleting the market thus increasing demand and prices, and artificially inflating the prices of homes they bought months and years earlier. To have 1/5 of homes off market as investments is a massive impact on home availability and pricing.
Thank you guys. I have been a real estate dealer and a condo builder in France for 25 years and you have just given a university level lecture on housing that left me speechless. Bravo ! Keep going.
When I was still in high school, years ago, I studied abroad and stayed with an American host family for a year. I can vividly remember a conversation I had with my host sister about houses. While I'm very emotionally attached to the house I've grown up in my entire life, I found it disturbing to hear her say things like "well, if a house goes on fire, nobody really cares here. You have insurance for that. You simply go and buy a new house." For me, a house is much more than an object, it's memories and as mentioned in the video, something Germans buy for life. This talk made me realize that even wjen it comes to housing there are fundamental cultural differences. And that's okay :)
You're right, that's true in a lot of cases and a big cultural difference. However, when my parents sold my childhood home it was really a difficult thing to let go of. But, this could also be an attachment to childhood memories. As an adult, it has changed.
Yes this is the way many Germans feel. But it is sort of limiting. Attachment limits your freedom to pursue choices. If it was not much more financially convenient to buy with current interest rates I would rather much prefer to rent. You can much easier follow a good job offer, adjust the size and arrangement of housing to your changing needs. My kids probably „suffered“ when we sold the house they grew up in. But this was just one of the thousand mini-traumata you have in life and which are by and large unavoidable.
another thing I just thought about that kind of perpetuates the post war renting necessity is the laws that protect renters here: Many have contracts that are open end and do not include ANY increase in rent. this is less common now but used to be almost the standard. I know families that have been living in the same Appartement for many years and sometimes actually decades and NEVER saw their rent increase! not even adjustment for inflation. so by todays standards and wages they almost live there for free and it would a really bad decision financially to go and buy their own home. and as renters are protected by law, the landlord has basically no chance to get rid of them except if he wants to use the place himself (and can prove it as his primary residence). so as Germans don‘t move a lot anyway it can be very convenient to just rent forever for a steadily decreasing percentage of your disposable income.
Yes, my husband and I recently bought a house in Bavaria. My family and friends in the US kept referring to it as our starter home lol. No, this is likely our forever home. The cost is unbelievable.
The closing costs made us feel sick. Many years required to offset these closing costs compared to renting. The phrase "starter home" just makes us laugh now.
@@sebastiangeorge7714 to bad that because of the ever increasing life expectancy you might be able to raise a family in your great grandparents homes if that hasn't been rented out or sold by your grandparents or parents. Young families here can rarely rent or buy a house while many houses are owned by one or two pensioners
@@Alexx120493 this is so true! both my grandparents live in an own house by two. I'm now 31 years old while being pregnant, but my grandparents are in the mid-70ths, so (I hope) the will live for at least 10-15 more years. but by that time, I really would like to already have an own house. so inheritance would maybe work for my youngest cousin, but there really is no chance for my small family.
@@Alexx120493 We moved in with my in-laws. It's a big house separated into two apartments. And it's awesome - they take care of the kids whenever needed and we help out in the garden and many other little things.
Yeah we normally buy for life here In Germany but what might blow your mind even more: when it comes to the older generations like our parents or even grandparents they bought a house also as an investment for future generations, you’ll find a lot of families living in the house their parents bought a long time ago, it was a way to make sure your kids would have a better life than you did 🤷♀️
My parents and siblings are currently planning a small appartment building to live in and rent out. The land belongs to moms aunt. The plan is to form an LLC with the family members as shareholders. That way our parents set us up for the future.
What I learned out of my own experience: we built a home in Germany in 1993 and lived in it untill our son moved in when we left for the US in 2015. Coincidentally we bought a house in the US built in 1993 also and it was shocking to find out the differences of both houses. The house in the US was more expensive but due to the location I guess (the higher the population the more a house costs and I believe this goes for all over the world). But the real shock was the quality of the house and what was already being replaced by the previous owner and what we had to replace to bring it up to a better standard which was by all means still miles away of the house in Germany. The house in the US had already a new roof, we exchanged windows because the old ones would either not be able to open or would not stay open to let fresh air in, we improved the insulation, the water tank busted and more. The house in Germany on the other hand has still to this day all the original parts and needed only minor work which our son could do himself. I do not even want to know what the energy efficiency between those two houses might be. And what did I learn from that? Even when a house might cost less in the US over the years you have to put in way more money to maintain it. Therefore a house in Germany might cost more upfront but in the long run way less. The taxes for houses in Germany are also way less. And part of the lesser quality is also that we have to let the water drip when we have freezing temperatures in the winter so pipes do not freeze up which happened twice to us. It was even announced on TV that everybody should let the water drip. Unbelievable!!! Why in the world does one want to save even on insulation for pipes?
I live in Nebraska, cold climate. I’ve never heard of letting your water drip. Where do you live & what was the explanation for doing that? Our building materials and appliances used to last decades. Everything is cheap junk now.
It's totally not unusual for elderly people to move into a smaller space, often accommodated to their age-related needs, while renting out their own house (which is often designed for a family of four or five persons, sometimes even more) and use that money for their own rent. It actually works pretty well as a model and also is a safe way of "Altersvorsorge".
Regarding your questions in the video: having bought a house with my wife a couple of years ago, we sure felt like we had bought for life. That certainly was our intention. However, we ended up having 4 kids (twins in the middle) which put us in a position to reconsider out of need for extra room. However, that does not necessarily mean buying a bigger house. Renting is an option, maybe simply because single family houses of that size are rare in our urban enviroment. So we take the option that looks best, trying to settle the issue in time for the entry into school for our first-born. Property transfer tax is an issue for us. And we will categorially not sell our first house, as it has the right size once the kids move out. Enjoying your channel, thanks for sharing your experiences!
That is a major consideration for us as well. We also have a clause in our mortgage that if we sell it before 10 years, the banks was guaranteed interest income from the loan. So if we sell it after 8, we would still owe them 2 years of interest payments. It also really puts a damper on treating this house as a property ladder for us.
Agreed, the 10 years clause is a hurdle. That said, if you repay the loan, the interest amount owed must be calculated as if all options of early repaymemt were taken („Sondertilgungen“). That makes this a subject of your specific loan contract. In my experience, home owners learn this and other issues over time, but are generally unaware when they sign their contract. The whole setup with property in germany is just not made with the ladder in mind 😉
We had a similar situation, though from the landlords perspective. A young couple moved in with a newborn girl and lived in the house went rent for a few years. But when they had a second child and they both grew up a bit, they moved to a bigger house. Had they been owning a house, this would have put an impossible strain on their finances. But with renting it was very doable. But there is a flipside to this as well. If you own a house, you are at liberity to change it, which of course you can not do with rented property. The house I live in (own property) is over 200 years old and has seen several internal overhauls to fit the needs of the people living in it. For example I got a very big room and many kids were jealous of it, when I was small. The reason: My grandma had a sibling twin and they had adjacent rooms. So now I still got 2 windows and 2 heater, but no more wall in the middle and a new door instead of the 2 old ones, cuz I am an only child.
@@TypeAshton It sounds as if the housing finance market in Germany is not as competitive as it is in the US and Australia. Policies and practices which excessively discourage people from moving can lead to sclerotic employment and another barrier to adjusting for climate change. Almost overnight, the movement to working from home thanks to the pandemic has changed many people's housing needs. High transfer taxes and penalty interest payments are not good barriers to the needed adjustments.
@@TypeAshton In Germany there is also a tax on the difference between buying price and selling price within 10 years (Spekulationsfrist). So if you buy for lets say 250000€ and sell (for what reason ever) after four years (which is under 10 years) for 300000€ you have to pay tax for the generated difference which is your income-win on speculation: So you pay tax for the delta of 50000€. The speculation tax is the same hight as your individual income tax - lets say 25 to 50 percent. That fact also hinders short sell and buy in Germany a lot! Sell in under 10 years after buy you will not really do unless the building lost value or doesn't generate any value - which is somewhat unrealistic.
You forgot to mention one of the most important factors in the different home ownership percentages between Germany and the U.S., namely Germany's tenant protection laws. Once tenants have settled into an apartment and regularly pay their rent, they're are basically set up for life and there is virtually no way for the owner to ever get them out of the property. Even if a German property owner wishes to move into the property themselves, they have to prove their "objective need to live in this particular property" (Eigenbedarf) in a court of law, which is a complex and costly legal procedure with an uncertain outcome. This contrasts with the rather loose eviction practices under U.S. laws which are clearly tilted in favour of property owners. Similarly, German tenants are roundly protected against above-average rent increases and the list goes on and on. At the bottom line, paying your rent regularly is all it takes in Germany to enjoy the peace of mind that comes from "owning own home" in the U.S..
Yes thanks for pointing this out. We wanted to keep rentals out of this video and focus only on purchasing costs of a home. In the future we will make a dedicated video to cover the tenant protection laws, which you mentioned is very strong in Germany.
@@TypeAshton I think you still miss the factor of available space in your videos. The populations density is a big factor for owning a house. And on average there is more than enough space available to build a house in the US. For example Munich in Bavaria and Seattle in the USA have the same size of ground area - 370km², but in Munich has 1.5Mio people and Seattle 750 000 people. And if you check the average population density per km² in Germany you have to fit over 200 people in a km² .In the same time you have under 40 people per km² in the USA. Your land with the highest ownership rate has a density that is under 80 people/km²
Sorry, but this is not really the case - if you look at what's happening in the last 10 years, we can see that there are many ways to kick you out. One way - "Eigennutzung - own usage". Or if I own the whole building I can start playing the "renovation" shenanigans and make your life hell with noise and a year long construction site till you give up and move out. And my personal favourite - "Luxussanierung" - that is I change the tiles in the bathroom and put a huge mirror and a huge sink so that I can hike up your rent to 50%. Can't pay - sorry mate - you're out.
For me and my 5 siblings from a small rural german village it was clear that we need to get our own house. Meanwhile I learnt that people from larger cities did not have that wish and were happy with a rented appartment. By today 5 of us (all in the sixties) own a house, the sixth has 3 appartments in Munich.
Germany had in the past very low rents for appartments and houses, this made renting verry attractive and a house or appartment ownership made no profit, houses also often lost value. Many older in my family have build a house, but they live now (in their 70´s) in a appartment and rent out their house insted of selling them. Their kids have own families and taking care of a house with a garden is now replaced by intense traveling.
This “looser” attitude to home buying and selling was something I (German) found also in English culture. So, I guess, Germans are probably more conservative in this point than general Anglo-American cultures. I know a person who bought (built) a house near Munich (actually in your quoted Starnberg) and lived in it for a few years. Life happened. She rented houses in various places and then moved to another European country. However, she still owns this house and rents it out. It is often the case that people buy houses and rent them out until they are of penison age, then move there.
I consider owning my apartment and taking up a credit a "savings account". When I need to move into a senior residence, it will help pay for that. I didn't want the risk of being asked to move out. A move kills a lot of money. Twenty years ago I was lucky to buy for €95,000 plus taxes and fees for 65 square meters and a lot in the garage and a room in the basement. The rule for getting a credit was that no more than 35% of the net income should be used for the mortgage. Having a life insurance and a nice pile of stock helped. It costs a lot of effort to build a home in Germany and the way houses are built in Germany is much more expensive than building a wood frame. Guys, never forget that the whole of Germany encompasses the size of two mainland US states (my estimate: California and Nevada together), with roughly 80 million people. There is not that much space between neighbors. It's not only the pure cost of building, you'll need to take into account the utility bill (heating, water, electricity) and there is the property tax which includes garbage disposal. The American attitude is also different: As you mentioned, Americans consider their current housing as temporary. I have lived in California from 1977 to 1980 and I hardly understood then that American houses are built like a shed and due to the way they are built they need a lot of maintenance. I'm not judging here. Americans are much more mobile. Don't like it anymore where you live? OK, pack up and go. People don't move that often in Germany and they keep their jobs longer. I have moved six times in my life, I'm 62 now, and that is quite a lot.
Found your channel a couple of months ago. My husband is German, we are planning to retire to Germany (from US) in a few years, really appreciate these well-researched information, still in the process of watching your other videos. Keep up the good work, what a wonderful family you are!
Haha yeah, I was just about to write a comment about how much I liked the quality of sound, image, and editing in this video. Watching it just felt good.
Many people can not afford to buy a house, so most of the people rent. In addition, germans dont like to take a risk. So they typically dont like to take the risks asscociated with the home loan. You never know if you still have your job in a few years , so they fear not to be able to pay the rates. If you plan to have children you typically do even harder to afford a home. Switching homes after you bought it may happen but is not standard. Main reason is the very high cost for selling and buying. You will have to pay etstate agents, Grunderwerbsteuer, notary etc... This adds up to about 10-15% of the costs for the house. If you have to pay like 900 Euro per squaremeter for the land plus another half million for any acceptable house this can easily costs you another 75.000 Euro just to get the selling and buying done. This is about 1 year of work given away for nothing! No one does this just for fun. So typically you choose wisely where you buy a house and many people really do it for life. And to the topic of older people: many have to sell their houses to be able to afford a small room at a retirement- or nursing -home.
@@mrx2062 This totally depends on your region, there are areas where you get land for 100-200 Euro in others you pay way more than 1000 per sqm.There is a certain north/south difference but way more important is the urban/rural difference. On the countryside where you have limited infrastructure you get houses and land quite cheap, but who wants to live there if he has a job far away. This may change in the next years, when home offices get more common.
@@mrx2062 There's more going on in the south than Munich and the Alpine region, you know? Areas like the countryside in Lower Bavaria have almost laughably low property prices. My grandparents' entire property (including the house) near Passau is worth about the same (or probably less) than a 1-bedroom apartment in Munich.
This was super interesting for me. Looking forward to the energy costs video, too. I would have bought sooner, but the mindset here of one house, one lifetime stopped that happening. We‘re both musicians and for a long time we moved around for work. But as a Brit, I always saw rent as money thrown out of the window. Also, my pension won’t be comparable to fixed employees, so I am absolutely thrilled that we managed to build a house -finally! But honestly, I had to really look to find the German bank guy who understood why I wanted to own. I have never understood how people can be relaxed about not owning their own home and relying on the government for their old age. Or dealing with the risk of being evicted for „Eigennützung“.
If Germans like to rent rather than buy, where do the landlords come from? Are the price increases which your study shows are a recent western world phenomenon? Why are folk with a history of crippling inflation not conscious of preserving their capital in assets rather than a currency? I know Germans valued the stability of the Deutschmark, but house price increases are inflation by another name. Despite having personal knowledge of it, I find it hard to believe that a house I bought in Sydney in 1974 for AUD 19,000 is now valued by the taxing authorities as being worth AUD1,900,000 land value only! The land in a harbour suburb is 158m2. Homeownership rates across OECD countries are fairly consistent. But the increase in homeownership over time is most marked in Britain where at 5.42, having been close to the European numbers is now much higher. Is this the future for Europe? Energy costs seem like petty cash in the light of these figures.
@@listohan house price increases are not inflation by another name. inflation in germany is much lower than in the US right now, and house prices here in the US are exploding. germany is a very small place with a high population density. very similar to the UK. if you were right we would see MUCH higher inflation both in germany and the US. home prices going up by 20% a year is simply supply and demand. With covid and supply chain issues affecting building rates in both countries, prices of existing homes have exploded, much more so than prices of new homes. i feel that this will level off once the backlogs clear.
@@uliwehner Inflation is usually measured in terms of consumer prices for regular purchases. But why should the price of houses be excluded? After all, housing is probably the biggest single item in the family budget. If the house you bought ten years ago now costs twice as much to replace at a similar location, isn't that a halving of the purchasing power of your housing euro? Some people (renters?) like to say that is a capital "gain" and should be taxed. But aren't transfer taxes high enough already? The population density question is often mentioned but does not necessarily mean much. Australia is a large country with a small population but house prices in the capitals have gone through the roof and beyond, so clearly there are other factors at play. The number of houses under construction at any time is a small percentage of the total housing stock so do construction issues account for 20% price increases? Price increases for existing houses is more a function of their preferred location than it is the cost of building them.
@@listohan i think we are noticing the same thing, i just don't believe that a temporary labor or supply shortage causing increases is the explanation rather than long term things like inflation. inflation is an overhang of money. that overhang only exists in a small area not across the country. food prices going up across the country and people having to pay more across the board is inflation, high home prices in Munich have been a thing as long as i have been alive, and i have been around for some time... :) same here in the US, California has high income and little space on the wet side of the state. High home prices are a result. here in Georgia houses are WAY cheaper. by multiples.... 30 minutes of extra driving will save you hundreds of thousands of Dollars for the same house, and you get more property. that is not inflation, that is supply and demand.
@@uliwehner If item A costs €X today and €2X at a later time, why is that not inflation by another name when you need more € to buy the same thing? In other words, a reduction in the purchasing power of the €. "Inflation" isn't the cause, it's the effect.
I'm over 60, so it may be different with the younger people now, but it is true, that when we bought a house it was meant for life. More often than not it turned out not to be the case, but that was generally unplanned (divorce, relocation for a new job, sudden accidents / chronical disease, etc.). People who expect to have to move around a lot because of their job usually rent and don't buy. Frequently buying and selling houses is not a thing in Germany. It is not very common, but it happens that people live in a rented house or apartment and rent out their own property. Before the last financial crisis and the end of interest for loans it was from a tax view of point in fact much more lucrative and a recommended path to accumulate wealth than to live in your own property. Today this is not that recommended anymore, because low interest means low deductibles. It is true, that today paying mortgages generally leads to lower monthly payments than paying rent. The problem for today's first buyer generation is, that banks usually demand a very high down payments of 25 to 30% and higher. On the other hand, since 1980 the average net income and pensions of Germans after inflation has decreased (!) by approx. 20%. In the 80s, you could get a mortgage without any down payment (although you had high interest rates of sometimes more than 10% p.a.), but today you have to save up a significant sum (usually 6-figure), despite having less net income, just to become eligible for a mortgage. That leads to the fact, that most younger people (younger than like 50) simply don't have a chance to buy a home and are forced to pay today's high rents, since it is not possible for them to save up more than 100,000 € besides raising a family and paying high rents. So, for 90% of all German households, renting or buying is not a matter of choice, they have to rent out of necessity since buying is no option.
I'd guess a significant amout of Germans that rent their property out and live in a rented apartment themselves most likely inherited that property from their grandparents or other relatives. It kinda reminds me of our own family's situation. My grandparents' house is located a 2 hour drive away in a small 70s residential development in the countryside in Lower Bavaria, where you basically need a car for everything since the nearest town is about 8 km away. We probably wouldn't want to sell it since owning a house is quite a privilege nowadays, but living there is not really an option right now since we'd be so far away from everything. The best option would probably be to rent it out.
Energy cost certainly has a lot to do with how you cool. Living in Hawaii, we currently pay 36c/kWh. We have a solar system and keep our home at 81F (27C) day/night as this ensures we usually do not have a power bill. When family visit from the mainland they always turn the temperature down to be comfortable. We've gotten used to 81F, but being faced with huge power bills certainly helped :)
For us, it's really only a financiall issue. As you said the down payment is a lot bigger to buy a house here in Germany compared to US. So you have to save up a lot longer to be able to buy a house. Second, when you have children you kinda want to be close to family, so they can be a part of your life and built a relationship with your kids too. That often restricts the area where you want to settle. Then ofc where you work (often in a city) plays a huge roll. Findingsingle family homes in citysbis almost impossible to afford for a normal family. If you go out further house prices might be a little cheaper but the infrastructure is worse. You have to have a car to get everywhere, activities, schools, shopping etc is all further away. It's more inconvenient than living in the city closer to your job, so a good option is often renting. It's more often a choice of lifestyle (city VS. country) than an economical choice. Also while housing costs might be cheaper in the long run then renting a lifetime, living further out the city requires a car (or most often two per family). Buying one, insurance, gas and repairs etc... It's basically adding to your monthly living cost. -> this is why so many rent! So in conclusion: mid 30s, location restriction, lifestyle, let's not forget buying/building a house is a huge stress factor - leaves people to buy for life. Once you bought a house, your kids grow up, go to school, make friends, you're close to family etc... There most often really isn't a reason to move once you settled. Maybe once the kids are grown and have families of their own, but by then most people are in retirement and their is no need really to move out their home the spent most their life in. They have their friends and family around etc... You have a significantly lower retirement income which is when it comes in handy that you have a cost free living place. - > this is why germans buy a house for life
11:10 It's all about taxes. Buying a house to live in is mostly a lifestyle decision in Germany. For some it is also a hedge against rising rent when one goes into retirement and could also be a choise for a "forced" monthly saving. But a private house is rarely considered to be an investment here in Germany. This is because, as far as I understand, in contrast to the US, you can't write off your private house on/from/of your income taxes, not even the intrest on your mortgage. Where as if buy property to rent out, you get all the benefits of running a 'business', deducting all expenses, including upkeep expenses, interest payments, and what not.
Not the mortgage payment but just the interest rate payment of the loan. Also consider 10-15% taxes and fees for a house sale which has to be payed by the buyer
One important difference between Germany and the U.S., which I would assume would impact the price of land/real estate, is population density. Germany is by far the most densely populated country in the West, let alone in a straight-up comparison with the U.S. I heard recently that Germany was about the size of Montana, with more than twice the population of California. It would seem to me that this would have a huge impact on price, as land available for development is a precious commodity with so little to go around, compared to the potential market.
If Germans like to rent rather than buy, where do the landlords come from? Are the price increases which your study shows are a recent western world phenomenon? Why are folk with a history of crippling inflation not conscious of preserving their capital in assets rather than a currency? I know Germans valued the stability of the Deutschmark, but house price increases are inflation by another name. Despite having personal knowledge of it, I find it hard to believe that a house I bought in Sydney in 1974 for AUD 19,000 is now valued by the taxing authorities as being worth AUD1,900,000 land value only! The land in a harbour suburb is 158m2. Energy costs seem like petty cash in the light of these figures.
"Germany is by far the most densely populated country in the West" Really? Netherlands and Belgium have 457 and 376 respectively people/km2, Germany is at 233. Not even close. Even United Kingdom is higher at 277. Your point remains valid though.
@@koffiegast Yeah, I probably should have been a little more careful with that statement. I was parroting something that I had heard, but never fact-checked.
One example for those insane rising prices for land in germany is the land my wife and I bought. It cost 120€/m² in 2019 when we signed the contract. But now even the Bodenrichtwert (official price which banks and official authorities work with) is now at about 300€/m² and the actual selling prices start at 400€/m². I know that this is a very special region in the aglomeration of Berlin, but it shows how insane this market is in and around german cities right now. Also my mother in law sells houses (not yet build) and due to the pandemic and war their construction prices nearly doubled. Her company started to buy back the building contracts for around 10-20k€ because du to the rising prices they will loose money building those house. Which is why now some companies make contracts with prices related to the materialprices when the house is build.
To build a house for your time being and pass it to your children was the thinking of my late parents (WWII generation) who lived nearly their whole live in the same area. We builded our first house in the 90s in Berlin because it was economical reasonable compared to the rent we had to pay. Because of work we moved (now with kids) to Lower-Saxony and bought a house there for the reason that buying a house was more reasonable than renting. So for us building/buying was not for a lifetime but always a economical decision.
You make extremely well informed and very high level videos on youtube. The main thing of that is the selected information source and naming the sources. I don´t know if Germans are more flexible in choosing where to live depending on where they work. But this flexibility makes buying a house or an appartment for some of them senseless.
I bought a house some decades ago and was offered different (good/better paying) jobs after that several times. One time I decided, not to take the new job, because I would have to leave my surroundings (house, friends etc). One time I could see, that the new job would only last a few years so I decided to move and only visit my family (and our home/house) at the weekends. So yes, this is the place I intend to die as well (as did my parents in their home/house - or the parents of my wife). These days things are changing a little bit, though. My neighbors children have their own home/houses and their father moved into assisted living. So that was a reason to sell a house to finance the cost of him living there (plus paying of their homes). I just noticed that I use the words home and house as interchangeable. So maybe that is the answer. We tend to buy a house and make it a home? And you do not sell your home.
For big portion of Eastern Europe, buying/building a house means lifetime commitment usually. For us is a sort of a milestone, you do it and a chapter of your life is closed. As you have seen building a solid house takes time, money and quite the effort.
I bought a house in 2018 (34 back then) and yes, it is a purchase for life. Not only your own but also your kids and their kids. The core plan is to create a base of operations for all future family developements. most of the time the kids leave their parents home, do their own stuff, parents some day die and they get the house. either they already did well for themselves and have their own (so renting or selling the exisiting one) or they move in their old home to cut their living costs by a huge amount. also most of the time you first marry, then buy a house and THEN get kids. this is kinda the traditionally accepted way of progressing in life
I think the difference here in Germany is the sence of comunity. Where I grew up, neighbors were an important part of life. We had cleaning efforts where the whole neighborhood came together and worked. We had street parties, everybody was available if one needed help. I was going shopping for my elderly neighbor, who was living alone and was not able to walk long distances due to his war injuries. He had a skat round once a week meeting with his friends from the neighborhood, where they exchanged their storries from the war etc. When I left for studying, it was a very weird experience leaving all the people I had close relations to, and lived together with for all my life then. Whenever I come back to my parents, neighbors know and show up for coffee to meet and greet, and to hear how it is going. This is priceless, and make me feel belonging to. Moving away from there would feel like getting unrooted.
Relationships with neighbors was a huge part of our childhoods in the United States. Having a strong community was very important. We hope to have something similar at our new house... plus it will be great German practice for us.
The thing about buying a house and renting it out is that maintenance costs for that house can then reduce your taxes. So you get the rent and have to pay less on maintenance. And have to pay only your own rent and the maintenance for the house you're living in is paid by your landlord. In total if your rent matches the rent you get from the people renting your house, all you're paying are the reduced maintenance costs.
Great video! I'm from Montreal, have been living south of Stuttgart with my German husband and 2 teenagers for 27 yrs now. There's also a huge difference whether you're building your own home or buying an existing one in Germany. If you put your blood and sweat into building your own home then a German will NEVER sell it. We were lucky and bought a triplex (built in 1960s) when it was a buyers mkt in 2010. So we have been renting out two apts and living in one. Most Germans want a one family home, like my husband did, but I fell in love with this triplex. And yes, I hope my kids take over the other two apts so we can all live together, forever😉 I wouldn't think of selling it even if we moved away. It's an investment. LG
Nice job with what you are trying to do with this series! Not sure if you are going to cover financing/banking and the exchange rate, but this is important due to the ever changing exchange rate. We bought a home in Germany in 2016 and have a bank account that I strategically exchange dollars for Euro. One must keep a careful eye on the exchange rate due to market fluctuations. Also, we financed a home loan with a German bank, yet even here there are quite interesting differences from the US housing market (eg, interest rates and mortgage timeline).
Yeah that is a great point. We keep a very close eye on the exchange rate and move money back and forth to cover payments which we still have in both countries. For Jonathan, it was a difficult one when he moved to Germany in 2013 and had a direct exchange for his salary from USD to EUR. Back then the EUR was extremely strong and then quickly lost value. Student loan payments quickly became much more expensive. We can find a way to cover the exchange rate with banking/financing in the future. Thanks for the suggestion!
Very interesting. Two key numbers were missing: German and American mortage rates. German rates are 3-4 times lower, allowinf you to take 3-4 times higher loans.
We thought about including this because that is absolutely right... today. We hesitated because these things can change frequently which would make our video outdated.
@@TypeAshton another thing I'd be interested in: Is it still true than in us mortgages you risk only the mortaged asset? In Germany liability is on all your present assets and future income. This used to be one of the reasons Germans used to be risk averse. A sinking housing price leaves you without a house 🏠 and tons of debt. You can't just hand the keys to the bank and walk off in Germany
@@HelmutQ Filing for bankruptcy is one of the only ways we know you can get out of a home loss in America. If you have huge debt, you can file for bankruptcy and go back to zero... but this will destroy your credit and make any purchases in the future very difficult.
Hey, great video as always✌️! Our house is a completely developed barn. But on the same property is the original farmhouse too of course. It's the old farm from my grandparents. Because we can't live in two houses at the same time obviously 😄 we have rented it to a family. It's actually pretty cool because the two houses are just a few meters away from each other and both are part of the former farmyard. So we can experience friendship and neighborhood without "going down the street". And on top we earn money with the situation.🤗 Greetings from Hessen 👋
Yes, traditionally, Germans do buy a family home for life, often even having in mind that one of their children and maybe even grandchildren or great grandchildren will live there at some point! This has begun to change, though, in view of more mobility being required nowadays jobwise, there is a more recent trend for young families to build houses which are very standardized and almost ready-to-order (rather than the highly customized older buildings which kept being adapted multiple times throughout the owners' lifetime and according to their needs and the tastes of the era at any given time. With the newer houses, you might be able to sell them and build or buy an almost identical one somewhere else across the country. Singles or couples without children or with 1 or 2 children maximum who either prefer to live in a larger city would tend to buy a condominium instead. If they need more space at one point, they might sell or let it to somebody else. Might also serve as a welcome source of income in old age. And yes, real estate prices have skyrocketed in Germany over the past 10 years or so with ever-increasing speed. Affordable housing is hard to come by, so whoever is financially able to do so and is willing to take the risk involved in mortgages etc. has come to consider buying property rather than renting. But those who want more flexibility and are reluctant or unable to make this committment (financially and otherwise) might still consider renting.
If you sell the property before 10 years, you have to pay 42% tax. That's why people generally buy house in Germany if they want to live there for 10+ years. After 10 years, you do not have to pay any tax.
Yes, and depending on your loan - it is also common that if you have a mortgage on your home from a German bank - the bank wants a guaranteed interest income for at least 10 years. So if you sell before 10 years... say for this example, 6 years. Then you would also owe the bank 4 years of unpaid interest.
Thank you for your informative and entertaining video. Always a giggle with the bloopers at the end. In Melbourne when I bought my first home in the suburbs it was such satisfying feeling despite being the biggest financial commitment of my life. Fast forward 40 years and I now live in a modest unit close to family, close to services and easy to maintain . Here in Australia we still chase the dream of owning our own home, but it is definitely harder than ever before. The average price in Melbourne is just shy of $1 mill and . In Sydney the average is slightly higher than 1 mill. Property prices have been pretty strong even through the pandemic. It is interesting to hear about prices in Germany versus America . Thanks for your review👍
Thank you again for watching! Is it possible to live in suburbs on the outskirts of town for a reasonable cost? We have still never visited Australia but hope to someday in the future.
@@TypeAshton Yes it is possible but our infrastructure doesn’t keep up and the road traffic is horrendous in the outer suburbs. Working from home has been a big plus for those who have to battle the traffic from the outer suburbs .
That is VERY common practice in the US (esp in high real estate markets such as Los Angeles): Buy a house and rent it out, while the home owner themselves live in a cheaper home they rent for themselves. Because that creates positive cash flow.
Many years ago I also had my own house. After I sold it, I rented houses instead. On the face of it, that seems to be more expensive, but if the roof is broken today, my landlord has to pay for the repairs. If the heating is broken, my landlord has to pay for the repairs. Apart from the fact that the prices for building materials have risen sharply in recent years, it is above all wages in Germany that are driving up building costs. While the construction worker earns perhaps 18 euros net per hour, the client has to pay 65 euros per hour. This makes owning a house in Germany unaffordable for many young families.
Has nothing to do with this video but it is so great to see that you grow in subscribers and views so fast! Well deserved - your effort in time for research and production pays off! Maybe Ashton you should really consider this as your future job. More power!
Wow thank you for noticing! We've been really blown away by the growth in recent weeks and are REALLY excited. It makes us very motivated to continue putting out content.
I'm living in Germany from 2018. that sounds right, Germans buy it for life if not renting is so common. That's why you can see so many people that renting an apartment. Simply, you shouldn't even compare buying a house in U.S versus Germany. Here in Germany is like a dream for many that can not come true. Buying a house in Germany is ridiculously hard and super expensive compare to what you can get.
Wir kaufen in der Tat ein Haus fürs Leben und gestalten es nach unseren Bedürfnissen. Kaum zu glauben, dass es in den Vereinigten Staaten anders ist. Liebe Grüße
Wir haben auch die qualitativ höheren Häuser - Holzhäuser sind billiger, Häuser ohne Keller sind billiger und Häuser, die Energie verschwenden, sind auch billiger in der Anschaffung.
Thank you very much for the comparsion. Maybe one thing here in Germany is: our land is so small compared to the United States. I think Germany is ~ like the state New York as an comparsion how big it is. So there are less reasons to sell your own house in Germany. In the United States, getting a new job can often send you to another state. The distances are very, very bigger in the States. So you need to have homes that are not such as a risk on your foot?
You are guys are amazing with your research and well put in-depth arguments but also keeping it entertaining! I love this type of non-superficial cultural/social/economical/geographical differences videos! Having lived in both Germany and USA, I have wondered why something is this way here or why not this way there etc., and I'm so happy finding some answers in an in-depth manner with you guys! Subscribed! That said, my experience in both these countries is from the perspective of an Indian, where things are much different, but I feel in general, India has more in common (culturally and socially, also relating to home ownership trends) with Germany (and Europe overall) in many aspects than with the USA. And based on my travels around the world, there seems to be clear Old World and New World divide, where the way of doing things just completely changes across the Atlantic, whereas it's more a continuum from East Asia to Western Europe, so in general there are many more common cultural and social aspects.
yeah my co worker owns his own apartment but he has no interest in actually living there. mostly because he wants to live as close as possible to his job. he has a history of changing jobs every few years so he tends to live somewhere else every few years. his apartment is basically both investment and retirement / security personally i dont think i could afford my own house/apartment and even if i could i cant really see why i should.
Thanks for the great video! For next week, could you include aspects of the effects of renewable energy on costs, as well as preferences in both countries? Keep up the good work! Cheers, Doc.
I think one aspect why we have a smaller "turnover rate" concerning houses in Germany must be seen in the financing conditions. Of course most houses are funded by mortgages and loans. So if you would like to sell your house spontaneously before paying off your credit you would most liekly have to pay a prepayment penalty to the bank. This is something that would definitely prevent me from "trading" with my house too light-minded.
in Canada we have mortgage early termination fees but if you refinance the same OR LARGER mortgage there is NOT termination fees so "moving up" does NOT get hit with these fees as you are likely taking a BIGGER mortgage
Aside from mortgages the turnover costs from selling and buying added will be at least 10% of the price (for Austria, but probably similar in Germany). Not counting any adaptions needed. In special cases (new homes and short ownership) it might be even more with additional taxes. So even if the old house increased its value, the new one would also. And with each swap you loose a lot of money.
Such informative videos! I'm German and I'm currently renting and I don't plan on ever buying a house. I wouldn't do it unless I was 100% sure that I would want to stay in that area. But I like to keep my options open. I surely don't want to go into dept either.
Haha when you said you were building a house my first thought was "oh they are settling here, guess they are staying". I have had quite a few conversations with friends (around 30 years old) who built or bought a house about how they will be able to live there in their old age. One friend widened the doorframes in case they ever need a wheelchair. When I got my apartment the seller said that the toilet and bathroom could be connected to become one room down the line to make it wheelchair accessible. So I would say people really buy a house for the rest of their life.
Wow! I can't say we have ever had a conversation with a friend or relative in the United States who was looking this far down the road. Really interesting.
I live in Austria. In my area housing prices increased in the last decade significant. The prices doubled for the same house. Even with law changes and interest rises on the horizon, I think the homeownership isn't affordable for the majority of people.
Und schon wieder: klasse Video und sehr fundierte Daten. Ihr macht Euch so viel Mühe, das ist echt bewundernswert. Jedes Video ist lehrreich und toll gemacht. Danke dafür. 😘
Not sure if I left a comment before on this particular video but it’s EXCELLENT!!!!!!!!!!!! I am a real estate professional in South Florida and have family living in Germany and some other European countries and have noticed all of the differences you guys mentioned in this video (very accurate!). Interesting to note that as of 2021, the average homeownership duration here in the US has risen to roughly 10.5 years. Post-pandemic, people seen to want to live longer in the same place :)
Excellent video! I remember while living in Marco Island, FL our water bill (in the winter season, considered the dry months) was upwards of $200/month, however, when we lived in North Carolina we had no water bill because our house had a well installed. Well water was also by far the best water we have ever had.
You can tell from this video that you had to deal extensively with the topic out of your own interest as recently homeowners and Ashton is practically straight from the field. The quiz was also entertaining.
About renting a home and living in another rented home yourself: one example is when you inherit a house, the one your parents lived in and in which you grew up, maybe, but then decide not to move in yourself, because you live elsewhere in another town, got your family and/or jobs there... but you also don't want to sell the parents' house, because you prefer a security to fall back to just in case, only renting a home yourself. Or you prefer a monthly income over a once only payment when selling that parents' house. Maybe because of low housing prices like some years ago. Or you just plan to move in later after your retirement or when your own children leave your home or whatsoever. So: just one example with many varieties.
What I'm more interested in and think would be a fairer assessment is comparing the cost of construction materials of the standard German house to the standard American house of similar size and what the implications would be if America was to adopt the German housing standards. How would porotherm style brick constriction and ceramic roof tiles fare in the earthquake prone regions of the west or the tornado/hurricane zones of the east? Would they be sturdy enough to withstand that or is it better just to have a cheaply built house that could be easily replaced and do less damage to its surroundings in the event of?
Wow! First of all, great job editing the video. Did you do it yourselves? Second, it’s fun watching both of you guys and great job making a dry topic very entertaining to watch. I am curious about the efficiency of the HVAC system in Germany. In the short time I’ve lived there and Scandinavia, I’ve seen different systems with radiant floors, heated towel racks, solar, gas, solar water heaters, and combi-boilers like Vitodens. It was interesting to see some homes had a separate hot water storage from the boiler. It would be interesting to get an engineer’s and architect’s perspective on the difference in both countries’ HVAC systems and the associated IoT smart controls in them, they had some. I assume Jonathan is on a permanent contract with his employer so it looks like you guys are there long term which is probably why you chose to buy a home. Your content has been really helpful as I’m on track to moving either in Germany, Switzerland, Netherlands, or Norway to work and start my masters and PhD in engineering, and raise my kids - I find that most of these countries are safer and ranks higher than the US in various social, education, economic, and quality of life indexes. Big thing for me is school safety and quality of education especially in German primary schools. Keep up the great work! Love your content and how you keep your videos lighthearted and entertaining.
@@TypeAshton Don't forget to include "Fernwärme" and - yes! - "Fernkälte", the latter of which can be based on the former. Never heard of that? Well, they are more common in urban parts of Germany, and VERY rare in the US... E.g. in Berlin there's 2 regional / local Fernwärmeversorger, just in 2021 this market was liberalized so that there might be more competition in the future. But the new rules also impose a regulation on the providers in regard to how the "Wärme" / heat (essentially very hot water) is produced: by "green" energy...
To your Question about renting on minute 10. It´s often about need and cost. If you can rent out a flat for more money than you pay in rent for your own flat and don´t need a change, it is just a financial strategy to make a bit profit on the side. And some Banks provide shared ownership of real estate as a financial strategy.
yes, we bought our appartment for keeping it for life basically. If this will turn out as a fact we'll see. As for renting and living for rent by your own: There are some incentives in this. When you rent, you can account for repairs etc pp on your taxes. This is not possible when it's where you live in for whatever reason. So if you do a cross renting with someone both win and can subsidize each other.
Dear Ashton and Jonathan, there has been another regulatory factor in incentivizing the population to only buy one house for life in Germany - "AfA" for owner-occupied homes. AfA (Absetzung für Abnutzung - deduction for wear) is the income tax deduction over a period of years for businesses and other sources of income, e.g. buy a car for business and deduct 20% of the purchase price for five years. For rented houses in Germany, this is typically 50 years (for houses built pre WW2 40 years). And for homeowners, there is no such AfA, but there is "Sonderabschreibung" (special deduction) for homeowners (which makes it almost equal to rented homes), but it is granted only once per person (twice for a married couple). CU twinmama
Thanks for sharing this tax information. We are a little bit nervous to talk much about taxes because it's so complicated and we do not want to give incorrect advice. So, anyone who can help explain it to us is very helpful!
Well I live in germany and in my family, as well wirh my friends, if we buy a house we plan to have it for your whole life. It usually comes together with having a partner or marriage as well founding a famaly. My wife and I for example own already the land where we want to build our house and we think its important to keep it in the family so that even if we die, our kids (that we plan to have) can use it or rent it to others. Were both 27 btw as well as most of our friends. The husband of my best friend also owns an appartment for example, but its to small for them now especially after getting 2 cats. So they rent a new appartment and rent their own to others. This ist because of 2 reasons. 1. they dont want to move far from their original neighbourhood, where not many ppl are selling their appartments and because if you rent an appartment you get sth called "Vorkaufsrecht" if the current owner deciedes to sell his own which their new appartment owner promised to do in a few years. 2. the rent they get as income from the old appartment not only finances nearly the whole rent of their new appartment also it makes it easier to get money from a bank. A friend of mine for examples owns 2 appartments thx to his dad and with those he completly financed the appartment he lives in now. And he will definetly keep and not sell them and give them to his kids. So yeah I think keeping and renting is a much better investment for a family that works together on the long run then selling and buying new ones that you only use yourself. But I guess its only possible because its not that easy to be the owner of your first home in germany. But if you have at least one and can finance a second you can finance future property with those you already own and rent to others. It wont be a fast expanding business but it secures financial wellbeing for your family even though my wife, m friends and I want to build our own houses with our own loan.
Picture at 16:42 min: the picture shows Kloster Andechs (Andechs monastery), also called "the holy mountain of Bavaria" and home of the famous "Andechser" beer brand. In the background, you see the Ammersee. The scenic village of Starnberg is approx. 15 km to the east, located at the north side of the Starnberger See. Map 3 at 19:04 min: "Prices for building land...": what are the units? chicken? €/m²? And "Frequencies" - of what? Maybe, you add something, in particular I absolutely don't understand "Frequencies". Sorry, really don't want to be nitpicking, but it would help...
I think the one key factor overlooked on the affordability of houses in Hawaii, is what percentage of houses are Primary residences. I bet the higher-priced houses are bought by individuals (and corporations) as vacation houses for rent or clients. That would create a lopsided real estate market, with expensive houses on the high end that are not meant for the full-time residents of the state.
I just learned in a recent CNBC video that laws in the US could forbid sidewalks and required a minium size of the plot to generate those huge suburbs we know today. And, that there is some thinking now that suburbs are not helping to keep city centers alive.
I think one important point was missed, the investment of private equate firms and hedge funds investing in housing and being a big part of driving up prices. In short speculation is a bid piece of the puzzle that needs to be looked at.
@@TypeAshton I don’t know is it is loaded, but clearly the actors don’t want this to be exposed. Any look at the subject will be incomplete without looking ai such a fundamental influences. Better be prepared to bail out the bankers again when this blows up in their faces agin. Remember2008? We are on that path again, with only small changes.
Your videos are awesome ❗ I'm bi national (American /German) I live here in Germany. Your research on the topics of your videos is phenomenal ❗They're so informativ and also entertaining at the same time ❗Please keep up the outstanding work❗
To the "Buy to stay" thing. You need to stay at last a couple of years in your house atm because you have to pay speculation taxes if you benefit of selling the house again. So with all the costs to buy the house and make it nice and so on you dont want to pay even more taxes if you leave. In some cases you loose a lot of money this way. And that is the last thing you want if you want to move up the ladder :) But the most people that are buying houses these days are quite rich in the first place anyway because of the huge costs of building a home these days. A "average" family with an average german income can not afford this anymore.
Very interesting and informative video. Thumbs up! 👍 You surely put a lot of work and effort in you videos. Here my two cents I have to add: If you only take into account the last 10-15 years, yes it looks like prices permanently go up (recency bias). However over the 30 years before that prices dropped by 30% on average (including inflation). So this „boom“ was more like a recovery, at least for a while. It is quite questionable that the current trend will continue for the next 10 years. Especially if you look at how far prices for renting and buying have diverged. Imho a correction is due. Even the Bundesbank (German Federal Reserve) talks about homes being up 30% overpriced at the moment.
I hardly know any people who actually sold their houses just to buy or build a new one. People that sell their house usually move far away. Even if your house get's too small you wouldn't sell it - just add some rooms and be done with that problem this way - but selling? no way! 😀 yes, I'm german and by the way when I bought a house with my girlfriend, now wife, four years ago we totally had the mindset of buying for live (we were in our early 30s back then).
For the average German, buying to rent while living in a rented home rarely makes sense. My guess is that in most cases, people doing so didn't plan like this but got caught by a job change forcing them to relocate. There are some tax incentives to home ownership but they are now reserved and limited to people with relatively low incomes who can barely afford a home. Some people have already pointed out that due to the population density, more people live in flats and fewer in individual houses. That's true - and only since the 1950s, separate ownership of condos is possible in Germany - before, buildings and land could be only owned as a whole unit. So fewer flats are condos in Germany than they might be otherwise.
I've actually heard of this on multiple occasions - people buying to rent a house out and renting themselves, all due to the tax structure. On one occasion I even heard of two very good friends building houses 'for each other' (where they designed their own house, but had the other party build it and then rented it), so they could both profit from this. But mostly Germans do prefer living in their own houses - I just get the feeling it's less a financial decision, but rather a decision of the heart, people preferring to live in their own home, with all the rights and freedoms that entails.
Certain types of new houses are built to maximize efficiency in heating and cooling. In our country called " energy neutral homes." which are costly to build yet pay back their own due to low energy consumption.
Hard to say who has the lowest energy cost but the way your house is constructed (from what I could see in the videos) it seems very energy efficient, so you might end up on the lower side and at an average cost lower than the medium.
I had to smile a bit about your picks for the costs of detached houses. You picked some of the most expensive cities which is not very representable (representable?! or representative?), I think. For example my cousin bought an old farm (two buildings + land) for half a million € near the border to Poland. For comparison: a detached house built in the 80' near Karlsruhe costs also around half a million. A semi-detached house in the town I was born (in the Ruhrgebiet) costs around 260k Euros 🙂
Yes it is difficult to compare everything. Going for the major known cities can be a bit more relevant to our non-German watchers. Comparing San Francisco can also paint a much different picture on home costs in America.
I‘m enjoying this so much. I‘ve just stopped in the middle to comment- sorry if I have missed this - why don’t you offer a consultation service for Americans purchasing homes in Germany? Maybe this is already happening, and I missed it, getting caught up in your PhD content…?
@@TypeAshton you know, with your real in depth knowledge. You could explain why the heating systems are different, what’s better, so much information that would ease the stress and help people make the right decisions for them. Because you mentioned about a job in the future, this occurred to me. And it ties in with your channel.
I find this comparison and the way you do it quite interesting, although I'm neither American nor German (I'm Austrian) But I wonder, why you didn't mention the starting point of the insane house prices of the last few years - the "crisis" in 2008. In my feeling, up to that point an average person - at least in Austria - could relatively easily afford own property. But at that point many investors started to buy and pushed the prices.
Ah that would be an interesting approach to take to this! The housing bubble in 2008 is really interesting for me (Ashton) because it was also the year I started University. I distinctly remember the economy crashing and people telling me "Well, be thankful you are studying and not trying to get a job right now. Everything is going downhill". We tried to include a few bits of data on how much it has increased since 2015, but it would be good to look back a bit further and in more detail.
@@TypeAshton Ever heard of the housing / real estate bubble in Japan back in 1990? Mankind tends to repeat mistakes... As you are into movies, watch "Margin Call" (again)...
Another deeply researched, highly informative video. How you keep up with your daily schedule while delivering full-in-depth National Geographic level (or better) researched documentaries is beyond me. Wow. My parents were outliers in that they built (yes, built, not only bought) a total of three houses to live in during their life time. For them, it was actually possible to upscale each further home based on some skilled business acumen of my father plus some pretty high support from the German state for home owners at that time. Obviously my parents sold their previous houses when moving into the newer one. My parents were born just before WW2 and suffered through the near total destruction of their homes. They had both the misfortune to suffer through that period but also the good fortune to recieve such a chance to help rebuild the German housing market with massive financial incentives by the Federal government. Me and my two older siblings conform much more to the average German that we lived for quite some time in rent-based housing, until we each got our finances settled and bought, not built, houses in which we continue to live. Yes, for us the old adage of being a home-owner instead of renting still means a stepping stone towards a secured future relatively free of many financial cares.
Very interesting! Thanks for sharing your own families experiences with us and thank you for watching. Hearing the differences between your parents and you (and your siblings experience) is really quite interesting!
We bought our house (Berlin / Potsdam area) for life, but we are over 50! We wish we would have bought a house much earlier when they were more affordable.Thanks for the video. Lots of fun to watch.
regarding the heating.. id take a wild guess,.. and say with germany being far more north than the usa,.. id say heating rooms 1 by 1 over a long period of time is more important than cooling them over the relatively short summers. adding of top of that the differences in isolating the homes would make up another good argument.
Home ownership is more complex spectrum of arrangements than just owning a home or renting it. One could even say that if you have mortgage and the T&C of the loan gives some special position to the ban, the bank is the actual owner. Especially if the "owner" can just leave the property to the bank and by doing that get free of the loan.
It’s a pretty good asset to own a home with a decent property and it’s fairly rare to sell that asset instead of getting a monthly income from it, since larger homes are usually easier to rent out by now and they give you a steady income if you downsize or move for work. So both profit from it. Our family actually rented out homes when they moved for some reason or didn’t need the full space. We used to rent out our old home to a friend that was family and long time renters since my grandparents used the size of the family property to build a new house on it. And our other family home has had family members rent it since it would be really difficult to sell without tearing the house down based on size alone aside from the attachment, although it’s currently a longtime source of drama and tearing it down to split the property would be the easier option by now asset wise. It could be split into two to three properties comfortably. And usually family houses inherited down were built when it was cheaper to build large and thereby difficult to sell but easier to rent out when you live somewhere else. Although sometimes there is a rent to buy option, so either they rent till they can afford to buy it or they pay rent until they paid off the property price. Whenever you find stable renters it can be easier to work with them rather than finding new renters every few years just to get a few more bucks on a rural property.
I recently bought a house in germany too. Before I lived for rent, because I waited to have some money saved up to get the bigger bank loan. And also for my income to inrease. So at the age of 33 I bought a house, and of course (like its typical here) bought it to keep it until I die. For the bank loan I set up a plan so the house will be totally paid of by the time I'll be in pension. So that by the time I leave my job I don't need to pay any more monthly fees to the bank, and I have more money for me (regarding you first get less money because you don't work anymore). So a house is kind of an investment for the future. And if I ever plan on leaving for somewhere else, I can then sell the house and have all the money to spend for whatever I want to do with it then :D Or my future kids will get it once I die and can sell it to fund or pay off their own house. And I guess this is the way lots of german house buyers plan their future. But to be fair this works for me because I work in a department and have a very safe job.
We took a very similar approach. We got a loan what will expire before we retire. Plus we were approved on just one income so we could manage if we ever had any financial instability in the future.
Same for us, here in Austria. I agree 100%. I think the housing market is quite similiar to Germany and it‘s quite frightening what it leads up to since Covid kicked in. To us, buying a house (did it 4 years ago) came naturally. It simply is what you are supposed to do when you have a certain income, stable job + relationship and almost everyone I know does it. Plus, why pay rent when you could pay for something that is going to be yours once the loan is paid off? It feels like paying in your own pocket somehow - although taxes and bank fees are incredible. Also, it shall be my kid‘s house when I am dead. Especially concerning housing costs in the future (if it goes on like that), this owning hopefully provides financial security for my child one day.
I found it interesting that you said taxes weren't deductible in Germany if you live in your own house. In Switzerland we have something called Eigenmietwert which sounds similar. It is basically a virtual income tax you have to pay on the rent income of a property, even if you live in it yourself. Swiss parliament is now trying to remove it for your main house. Another thing I recently read about housing prices in Switzerland is that many older people would like to downsize but often can't afford it because their house would sell for less (this is due to significant Grundstücksgewinnsteuern you have to pay after living in a house for decades and prices having risen so much in that time) than what a much smaller house or apartment would cost. Which is really crazy if you think about it.. Due to that there have been movements like older people sharing their garden they can't tend anymore with people who don't have one and help with the upkeep in return.
I know a couple here in Berlin who are in their 30s, one of them English, the other German. They live in a rental apartment but also own an apartment that they rent out, as an investment. I bought an apartment here 20 years ago and live in it, and plan to stay here for the rest of my life. As a freelancer, I figured back in 2002 that I was unlikely to be able to be able to afford a decent apartment here if I ever retire, and I didn't know how correct that would prove to be. By the way, in 2002 the property purchase tax was only 3.5% in Berlin but as your graph showed, it is now 6%. Buyers had to pay the full real estate agent fee of 6.9%, however, in those days in Berlin and now buyer and seller share it. I am immensely glad I bought when I did because the prices both to rent and buy have skyrocketed as you note. One of the biggest differences I see between the US and Germany is property taxes. At the moment, the property taxes I pay are absolutely negligible (about €150 per year) in comparison to the hundreds or even thousands a month people pay in the US.
I have certainly heard of people holding onto a house and renting it when they relocate and renting at the new location. The reason to live in what you buy in the US is because mortgage rates for owner-occupied houses are better than for investments.
I bought a house in 2020 and at the moment houses are very expensive. Even though me and my wife are both engineers. So we bought a 20 year-old one which is OK as long as we live there with our children. But the house itself is not made for old people so the plan really is to sell it again when the kids moved out - and rent a flat in the city-centre where we don't need a car to get around.
Greetings Bad Homburg! I can only emphasise this,prices here are nuts...but the city is close to Frankfurt and all its financial institutions a certain clientele will not stay in the city...rather move north to the Taunus mountain range.Gald we paid off our apartment a while ago
You also have to mention salaries. For Example an engineer in Germany has an average salary after 10 years of 66.000€ (~75.000 $), but only 55% so 36.000€ (41.000$) net pay will arrive on your bank account. The average salary in the US (google) is ~63.000$ which will be a net pay of ~52.000$ per year, so almost 27% more income in the USA with at the same time lower house price tags. Thats also why there are fewer house owners in Germany. Personal story: I know a couple, he is an engineer, she is a lawyer, no kids, no depts, lowcost lifestyle, but they can't find an affordable house since years. Its just crazy.
We are a family of 5 and we own a flat in a touristic town that we rent out. We live in a rented one-family house in Germany where the market prices for houses are completely crazy due to the proximity of the Swiss border. So the income of our flat covers half the costs of our house rent. If we would have bought the house where we now live in instead of the flat, even with a personal contribution of 35% we would pay to the bank almost double the amount of rent we pay each month in order to have full ownership in no less than 20 years...
There are a lot of "nationality-comparison-channels" on youtube, but I especially enjoy watching your videos because you actually take your time and go in depth, while still keeping it entertaining. Keep up the good work.
Thank you so much. We enjoy the research aspect of the video making process. We learned a lot by making it.
@@TypeAshton What banking do you use to transfer funds from US to germany back and forth.... what troubles do you come across. CAN you make an episode about that? did bankers think you are laundering money? did you have to provide bunch of proofs that you are not laundering money?
Please make an episode about banking!!
@@TypeAshton Home prices going up... you forgot to mention all the investment funds like BlackRock, Fidelity, even zillow that have bought up 18% of all private homes as investments. They snatch up homes at over asking, paying cash, depleting the market thus increasing demand and prices, and artificially inflating the prices of homes they bought months and years earlier. To have 1/5 of homes off market as investments is a massive impact on home availability and pricing.
Thank you guys. I have been a real estate dealer and a condo builder in France for 25 years and you have just given a university level lecture on housing that left me speechless. Bravo ! Keep going.
Thank you for your kind words and for watching! We are glad you enjoyed it. Please share. :)
When I was still in high school, years ago, I studied abroad and stayed with an American host family for a year. I can vividly remember a conversation I had with my host sister about houses. While I'm very emotionally attached to the house I've grown up in my entire life, I found it disturbing to hear her say things like "well, if a house goes on fire, nobody really cares here. You have insurance for that. You simply go and buy a new house." For me, a house is much more than an object, it's memories and as mentioned in the video, something Germans buy for life. This talk made me realize that even wjen it comes to housing there are fundamental cultural differences. And that's okay :)
You're right, that's true in a lot of cases and a big cultural difference. However, when my parents sold my childhood home it was really a difficult thing to let go of. But, this could also be an attachment to childhood memories. As an adult, it has changed.
Yes this is the way many Germans feel. But it is sort of limiting. Attachment limits your freedom to pursue choices. If it was not much more financially convenient to buy with current interest rates I would rather much prefer to rent. You can much easier follow a good job offer, adjust the size and arrangement of housing to your changing needs. My kids probably „suffered“ when we sold the house they grew up in. But this was just one of the thousand mini-traumata you have in life and which are by and large unavoidable.
@@TypeAshton Where my heart settles, where my home is.
@@tom7000 Where ever i lay my hat, thatś my home;-)
another thing I just thought about that kind of perpetuates the post war renting necessity is the laws that protect renters here:
Many have contracts that are open end and do not include ANY increase in rent. this is less common now but used to be almost the standard.
I know families that have been living in the same Appartement for many years and sometimes actually decades and NEVER saw their rent increase! not even adjustment for inflation. so by todays standards and wages they almost live there for free and it would a really bad decision financially to go and buy their own home. and as renters are protected by law, the landlord has basically no chance to get rid of them except if he wants to use the place himself (and can prove it as his primary residence).
so as Germans don‘t move a lot anyway it can be very convenient to just rent forever for a steadily decreasing percentage of your disposable income.
Yes, my husband and I recently bought a house in Bavaria. My family and friends in the US kept referring to it as our starter home lol. No, this is likely our forever home. The cost is unbelievable.
The closing costs made us feel sick. Many years required to offset these closing costs compared to renting. The phrase "starter home" just makes us laugh now.
We don’t buy for live, we buy for generations.
@@sebastiangeorge7714 to bad that because of the ever increasing life expectancy you might be able to raise a family in your great grandparents homes if that hasn't been rented out or sold by your grandparents or parents. Young families here can rarely rent or buy a house while many houses are owned by one or two pensioners
@@Alexx120493 this is so true! both my grandparents live in an own house by two. I'm now 31 years old while being pregnant, but my grandparents are in the mid-70ths, so (I hope) the will live for at least 10-15 more years. but by that time, I really would like to already have an own house. so inheritance would maybe work for my youngest cousin, but there really is no chance for my small family.
@@Alexx120493 We moved in with my in-laws. It's a big house separated into two apartments. And it's awesome - they take care of the kids whenever needed and we help out in the garden and many other little things.
Yeah we normally buy for life here In Germany but what might blow your mind even more: when it comes to the older generations like our parents or even grandparents they bought a house also as an investment for future generations, you’ll find a lot of families living in the house their parents bought a long time ago, it was a way to make sure your kids would have a better life than you did 🤷♀️
Tricky when there is more than one child.
@@listohan then ther could sell it and split the profit.
My parents and siblings are currently planning a small appartment building to live in and rent out. The land belongs to moms aunt. The plan is to form an LLC with the family members as shareholders. That way our parents set us up for the future.
@@joshuakurzmann9257 Our one heir buys the others shares.
Same here in Italy
What I learned out of my own experience: we built a home in Germany in 1993 and lived in it untill our son moved in when we left for the US in 2015. Coincidentally we bought a house in the US built in 1993 also and it was shocking to find out the differences of both houses. The house in the US was more expensive but due to the location I guess (the higher the population the more a house costs and I believe this goes for all over the world). But the real shock was the quality of the house and what was already being replaced by the previous owner and what we had to replace to bring it up to a better standard which was by all means still miles away of the house in Germany. The house in the US had already a new roof, we exchanged windows because the old ones would either not be able to open or would not stay open to let fresh air in, we improved the insulation, the water tank busted and more. The house in Germany on the other hand has still to this day all the original parts and needed only minor work which our son could do himself. I do not even want to know what the energy efficiency between those two houses might be. And what did I learn from that? Even when a house might cost less in the US over the years you have to put in way more money to maintain it. Therefore a house in Germany might cost more upfront but in the long run way less. The taxes for houses in Germany are also way less. And part of the lesser quality is also that we have to let the water drip when we have freezing temperatures in the winter so pipes do not freeze up which happened twice to us. It was even announced on TV that everybody should let the water drip. Unbelievable!!! Why in the world does one want to save even on insulation for pipes?
water dripping? Are you kidding? :)
@@nyvokay I am afraid not.
Ja das passiert wenn ein Haus ein Konsumgut ist.....
I live in Nebraska, cold climate. I’ve never heard of letting your water drip. Where do you live & what was the explanation for doing that?
Our building materials and appliances used to last decades. Everything is cheap junk now.
@@1111pamo all over the southeast they have to let the water drip when it gets below freezing for a few days. They save wherever they can.
It's totally not unusual for elderly people to move into a smaller space, often accommodated to their age-related needs, while renting out their own house (which is often designed for a family of four or five persons, sometimes even more) and use that money for their own rent. It actually works pretty well as a model and also is a safe way of "Altersvorsorge".
Regarding your questions in the video: having bought a house with my wife a couple of years ago, we sure felt like we had bought for life. That certainly was our intention. However, we ended up having 4 kids (twins in the middle) which put us in a position to reconsider out of need for extra room. However, that does not necessarily mean buying a bigger house. Renting is an option, maybe simply because single family houses of that size are rare in our urban enviroment. So we take the option that looks best, trying to settle the issue in time for the entry into school for our first-born. Property transfer tax is an issue for us. And we will categorially not sell our first house, as it has the right size once the kids move out. Enjoying your channel, thanks for sharing your experiences!
That is a major consideration for us as well. We also have a clause in our mortgage that if we sell it before 10 years, the banks was guaranteed interest income from the loan. So if we sell it after 8, we would still owe them 2 years of interest payments. It also really puts a damper on treating this house as a property ladder for us.
Agreed, the 10 years clause is a hurdle. That said, if you repay the loan, the interest amount owed must be calculated as if all options of early repaymemt were taken („Sondertilgungen“). That makes this a subject of your specific loan contract. In my experience, home owners learn this and other issues over time, but are generally unaware when they sign their contract. The whole setup with property in germany is just not made with the ladder in mind 😉
We had a similar situation, though from the landlords perspective. A young couple moved in with a newborn girl and lived in the house went rent for a few years. But when they had a second child and they both grew up a bit, they moved to a bigger house. Had they been owning a house, this would have put an impossible strain on their finances. But with renting it was very doable. But there is a flipside to this as well. If you own a house, you are at liberity to change it, which of course you can not do with rented property. The house I live in (own property) is over 200 years old and has seen several internal overhauls to fit the needs of the people living in it. For example I got a very big room and many kids were jealous of it, when I was small. The reason: My grandma had a sibling twin and they had adjacent rooms. So now I still got 2 windows and 2 heater, but no more wall in the middle and a new door instead of the 2 old ones, cuz I am an only child.
@@TypeAshton It sounds as if the housing finance market in Germany is not as competitive as it is in the US and Australia. Policies and practices which excessively discourage people from moving can lead to sclerotic employment and another barrier to adjusting for climate change.
Almost overnight, the movement to working from home thanks to the pandemic has changed many people's housing needs. High transfer taxes and penalty interest payments are not good barriers to the needed adjustments.
@@TypeAshton In Germany there is also a tax on the difference between buying price and selling price within 10 years (Spekulationsfrist). So if you buy for lets say 250000€ and sell (for what reason ever) after four years (which is under 10 years) for 300000€ you have to pay tax for the generated difference which is your income-win on speculation: So you pay tax for the delta of 50000€. The speculation tax is the same hight as your individual income tax - lets say 25 to 50 percent. That fact also hinders short sell and buy in Germany a lot! Sell in under 10 years after buy you will not really do unless the building lost value or doesn't generate any value - which is somewhat unrealistic.
You forgot to mention one of the most important factors in the different home ownership percentages between Germany and the U.S., namely Germany's tenant protection laws. Once tenants have settled into an apartment and regularly pay their rent, they're are basically set up for life and there is virtually no way for the owner to ever get them out of the property. Even if a German property owner wishes to move into the property themselves, they have to prove their "objective need to live in this particular property" (Eigenbedarf) in a court of law, which is a complex and costly legal procedure with an uncertain outcome. This contrasts with the rather loose eviction practices under U.S. laws which are clearly tilted in favour of property owners. Similarly, German tenants are roundly protected against above-average rent increases and the list goes on and on. At the bottom line, paying your rent regularly is all it takes in Germany to enjoy the peace of mind that comes from "owning own home" in the U.S..
Yes thanks for pointing this out. We wanted to keep rentals out of this video and focus only on purchasing costs of a home. In the future we will make a dedicated video to cover the tenant protection laws, which you mentioned is very strong in Germany.
@@TypeAshton I think you still miss the factor of available space in your videos. The populations density is a big factor for owning a house. And on average there is more than enough space available to build a house in the US. For example Munich in Bavaria and Seattle in the USA have the same size of ground area - 370km², but in Munich has 1.5Mio people and Seattle 750 000 people. And if you check the average population density per km² in Germany you have to fit over 200 people in a km² .In the same time you have under 40 people per km² in the USA. Your land with the highest ownership rate has a density that is under 80 people/km²
So if you wanted to sell your home in Germany that had tenants living in it, you just couldn't ever do that as long as they pay their rent on time?
@@avamasquerade you could sell the house, you just couldn't evict the tenants living there just because you sold the house.
Sorry, but this is not really the case - if you look at what's happening in the last 10 years, we can see that there are many ways to kick you out. One way - "Eigennutzung - own usage". Or if I own the whole building I can start playing the "renovation" shenanigans and make your life hell with noise and a year long construction site till you give up and move out. And my personal favourite - "Luxussanierung" - that is I change the tiles in the bathroom and put a huge mirror and a huge sink so that I can hike up your rent to 50%. Can't pay - sorry mate - you're out.
For me and my 5 siblings from a small rural german village it was clear that we need to get our own house. Meanwhile I learnt that people from larger cities did not have that wish and were happy with a rented appartment. By today 5 of us (all in the sixties) own a house, the sixth has 3 appartments in Munich.
Germany had in the past very low rents for appartments and houses, this made renting verry attractive and a house or appartment ownership made no profit, houses also often lost value. Many older in my family have build a house, but they live now (in their 70´s) in a appartment and rent out their house insted of selling them. Their kids have own families and taking care of a house with a garden is now replaced by intense traveling.
This “looser” attitude to home buying and selling was something I (German) found also in English culture. So, I guess, Germans are probably more conservative in this point than general Anglo-American cultures.
I know a person who bought (built) a house near Munich (actually in your quoted Starnberg) and lived in it for a few years. Life happened. She rented houses in various places and then moved to another European country. However, she still owns this house and rents it out.
It is often the case that people buy houses and rent them out until they are of penison age, then move there.
I consider owning my apartment and taking up a credit a "savings account". When I need to move into a senior residence, it will help pay for that. I didn't want the risk of being asked to move out. A move kills a lot of money. Twenty years ago I was lucky to buy for €95,000 plus taxes and fees for 65 square meters and a lot in the garage and a room in the basement. The rule for getting a credit was that no more than 35% of the net income should be used for the mortgage. Having a life insurance and a nice pile of stock helped.
It costs a lot of effort to build a home in Germany and the way houses are built in Germany is much more expensive than building a wood frame. Guys, never forget that the whole of Germany encompasses the size of two mainland US states (my estimate: California and Nevada together), with roughly 80 million people. There is not that much space between neighbors.
It's not only the pure cost of building, you'll need to take into account the utility bill (heating, water, electricity) and there is the property tax which includes garbage disposal.
The American attitude is also different: As you mentioned, Americans consider their current housing as temporary. I have lived in California from 1977 to 1980 and I hardly understood then that American houses are built like a shed and due to the way they are built they need a lot of maintenance. I'm not judging here. Americans are much more mobile. Don't like it anymore where you live? OK, pack up and go.
People don't move that often in Germany and they keep their jobs longer. I have moved six times in my life, I'm 62 now, and that is quite a lot.
Found your channel a couple of months ago. My husband is German, we are planning to retire to Germany (from US) in a few years, really appreciate these well-researched information, still in the process of watching your other videos. Keep up the good work, what a wonderful family you are!
Wow thank you so, so much for the Super Thanks! I'm really glad that you found our videos helpful!
Wow your production value keeps rising and rising - even with really only a minimum of interest in the topic, this video is so fun to watch.
Thank you! We are learning as we go and always trying to improve each one.
Haha yeah, I was just about to write a comment about how much I liked the quality of sound, image, and editing in this video. Watching it just felt good.
Many people can not afford to buy a house, so most of the people rent. In addition, germans dont like to take a risk. So they typically dont like to take the risks asscociated with the home loan. You never know if you still have your job in a few years , so they fear not to be able to pay the rates. If you plan to have children you typically do even harder to afford a home. Switching homes after you bought it may happen but is not standard. Main reason is the very high cost for selling and buying. You will have to pay etstate agents, Grunderwerbsteuer, notary etc... This adds up to about 10-15% of the costs for the house. If you have to pay like 900 Euro per squaremeter for the land plus another half million for any acceptable house this can easily costs you another 75.000 Euro just to get the selling and buying done. This is about 1 year of work given away for nothing! No one does this just for fun. So typically you choose wisely where you buy a house and many people really do it for life. And to the topic of older people: many have to sell their houses to be able to afford a small room at a retirement- or nursing -home.
Totally agree, I think that's pretty much spot-on.
In the South you pay 900 Euro per squaremeter. In Northern Germany land is significantly cheaper, though prices are increasing there as well.
@@mrx2062 This totally depends on your region, there are areas where you get land for 100-200 Euro in others you pay way more than 1000 per sqm.There is a certain north/south difference but way more important is the urban/rural difference. On the countryside where you have limited infrastructure you get houses and land quite cheap, but who wants to live there if he has a job far away. This may change in the next years, when home offices get more common.
@@mrx2062 There's more going on in the south than Munich and the Alpine region, you know? Areas like the countryside in Lower Bavaria have almost laughably low property prices. My grandparents' entire property (including the house) near Passau is worth about the same (or probably less) than a 1-bedroom apartment in Munich.
@@BalduinTube Someone who does remote work for example.
This was super interesting for me. Looking forward to the energy costs video, too. I would have bought sooner, but the mindset here of one house, one lifetime stopped that happening. We‘re both musicians and for a long time we moved around for work. But as a Brit, I always saw rent as money thrown out of the window. Also, my pension won’t be comparable to fixed employees, so I am absolutely thrilled that we managed to build a house -finally! But honestly, I had to really look to find the German bank guy who understood why I wanted to own. I have never understood how people can be relaxed about not owning their own home and relying on the government for their old age. Or dealing with the risk of being evicted for „Eigennützung“.
If Germans like to rent rather than buy, where do the landlords come from? Are the price increases which your study shows are a recent western world phenomenon? Why are folk with a history of crippling inflation not conscious of preserving their capital in assets rather than a currency? I know Germans valued the stability of the Deutschmark, but house price increases are inflation by another name. Despite having personal knowledge of it, I find it hard to believe that a house I bought in Sydney in 1974 for AUD 19,000 is now valued by the taxing authorities as being worth AUD1,900,000 land value only! The land in a harbour suburb is 158m2.
Homeownership rates across OECD countries are fairly consistent. But the increase in homeownership over time is most marked in Britain where at 5.42, having been close to the European numbers is now much higher. Is this the future for Europe?
Energy costs seem like petty cash in the light of these figures.
@@listohan house price increases are not inflation by another name. inflation in germany is much lower than in the US right now, and house prices here in the US are exploding. germany is a very small place with a high population density. very similar to the UK. if you were right we would see MUCH higher inflation both in germany and the US. home prices going up by 20% a year is simply supply and demand. With covid and supply chain issues affecting building rates in both countries, prices of existing homes have exploded, much more so than prices of new homes. i feel that this will level off once the backlogs clear.
@@uliwehner Inflation is usually measured in terms of consumer prices for regular purchases. But why should the price of houses be excluded? After all, housing is probably the biggest single item in the family budget. If the house you bought ten years ago now costs twice as much to replace at a similar location, isn't that a halving of the purchasing power of your housing euro? Some people (renters?) like to say that is a capital "gain" and should be taxed. But aren't transfer taxes high enough already?
The population density question is often mentioned but does not necessarily mean much. Australia is a large country with a small population but house prices in the capitals have gone through the roof and beyond, so clearly there are other factors at play. The number of houses under construction at any time is a small percentage of the total housing stock so do construction issues account for 20% price increases? Price increases for existing houses is more a function of their preferred location than it is the cost of building them.
@@listohan i think we are noticing the same thing, i just don't believe that a temporary labor or supply shortage causing increases is the explanation rather than long term things like inflation. inflation is an overhang of money. that overhang only exists in a small area not across the country. food prices going up across the country and people having to pay more across the board is inflation, high home prices in Munich have been a thing as long as i have been alive, and i have been around for some time... :) same here in the US, California has high income and little space on the wet side of the state. High home prices are a result. here in Georgia houses are WAY cheaper. by multiples.... 30 minutes of extra driving will save you hundreds of thousands of Dollars for the same house, and you get more property. that is not inflation, that is supply and demand.
@@uliwehner If item A costs €X today and €2X at a later time, why is that not inflation by another name when you need more € to buy the same thing? In other words, a reduction in the purchasing power of the €. "Inflation" isn't the cause, it's the effect.
I'm over 60, so it may be different with the younger people now, but it is true, that when we bought a house it was meant for life. More often than not it turned out not to be the case, but that was generally unplanned (divorce, relocation for a new job, sudden accidents / chronical disease, etc.). People who expect to have to move around a lot because of their job usually rent and don't buy. Frequently buying and selling houses is not a thing in Germany.
It is not very common, but it happens that people live in a rented house or apartment and rent out their own property. Before the last financial crisis and the end of interest for loans it was from a tax view of point in fact much more lucrative and a recommended path to accumulate wealth than to live in your own property. Today this is not that recommended anymore, because low interest means low deductibles.
It is true, that today paying mortgages generally leads to lower monthly payments than paying rent. The problem for today's first buyer generation is, that banks usually demand a very high down payments of 25 to 30% and higher. On the other hand, since 1980 the average net income and pensions of Germans after inflation has decreased (!) by approx. 20%. In the 80s, you could get a mortgage without any down payment (although you had high interest rates of sometimes more than 10% p.a.), but today you have to save up a significant sum (usually 6-figure), despite having less net income, just to become eligible for a mortgage. That leads to the fact, that most younger people (younger than like 50) simply don't have a chance to buy a home and are forced to pay today's high rents, since it is not possible for them to save up more than 100,000 € besides raising a family and paying high rents.
So, for 90% of all German households, renting or buying is not a matter of choice, they have to rent out of necessity since buying is no option.
Es gibt drei Kriterien für den Preis eines Hauses oder einer Wohnung: Die Lage, die Lage, die Lage.
Die Baustoffe , die Baustoffe , die Baustoffe .
I'd guess a significant amout of Germans that rent their property out and live in a rented apartment themselves most likely inherited that property from their grandparents or other relatives. It kinda reminds me of our own family's situation.
My grandparents' house is located a 2 hour drive away in a small 70s residential development in the countryside in Lower Bavaria, where you basically need a car for everything since the nearest town is about 8 km away. We probably wouldn't want to sell it since owning a house is quite a privilege nowadays, but living there is not really an option right now since we'd be so far away from everything. The best option would probably be to rent it out.
Energy cost certainly has a lot to do with how you cool. Living in Hawaii, we currently pay 36c/kWh. We have a solar system and keep our home at 81F (27C) day/night as this ensures we usually do not have a power bill. When family visit from the mainland they always turn the temperature down to be comfortable. We've gotten used to 81F, but being faced with huge power bills certainly helped :)
For us, it's really only a financiall issue. As you said the down payment is a lot bigger to buy a house here in Germany compared to US. So you have to save up a lot longer to be able to buy a house. Second, when you have children you kinda want to be close to family, so they can be a part of your life and built a relationship with your kids too. That often restricts the area where you want to settle. Then ofc where you work (often in a city) plays a huge roll. Findingsingle family homes in citysbis almost impossible to afford for a normal family. If you go out further house prices might be a little cheaper but the infrastructure is worse. You have to have a car to get everywhere, activities, schools, shopping etc is all further away. It's more inconvenient than living in the city closer to your job, so a good option is often renting. It's more often a choice of lifestyle (city VS. country) than an economical choice. Also while housing costs might be cheaper in the long run then renting a lifetime, living further out the city requires a car (or most often two per family). Buying one, insurance, gas and repairs etc... It's basically adding to your monthly living cost.
-> this is why so many rent!
So in conclusion: mid 30s, location restriction, lifestyle, let's not forget buying/building a house is a huge stress factor - leaves people to buy for life. Once you bought a house, your kids grow up, go to school, make friends, you're close to family etc... There most often really isn't a reason to move once you settled. Maybe once the kids are grown and have families of their own, but by then most people are in retirement and their is no need really to move out their home the spent most their life in. They have their friends and family around etc... You have a significantly lower retirement income which is when it comes in handy that you have a cost free living place.
- > this is why germans buy a house for life
All great points! Thank you so much for this comment.
11:10 It's all about taxes.
Buying a house to live in is mostly a lifestyle decision in Germany. For some it is also a hedge against rising rent when one goes into retirement and could also be a choise for a "forced" monthly saving. But a private house is rarely considered to be an investment here in Germany.
This is because, as far as I understand, in contrast to the US, you can't write off your private house on/from/of your income taxes, not even the intrest on your mortgage. Where as if buy property to rent out, you get all the benefits of running a 'business', deducting all expenses, including upkeep expenses, interest payments, and what not.
Not the mortgage payment but just the interest rate payment of the loan. Also consider 10-15% taxes and fees for a house sale which has to be payed by the buyer
That's why you always have an "Einliegerwohnung" in your house 😉
One important difference between Germany and the U.S., which I would assume would impact the price of land/real estate, is population density. Germany is by far the most densely populated country in the West, let alone in a straight-up comparison with the U.S. I heard recently that Germany was about the size of Montana, with more than twice the population of California. It would seem to me that this would have a huge impact on price, as land available for development is a precious commodity with so little to go around, compared to the potential market.
If Germans like to rent rather than buy, where do the landlords come from? Are the price increases which your study shows are a recent western world phenomenon? Why are folk with a history of crippling inflation not conscious of preserving their capital in assets rather than a currency? I know Germans valued the stability of the Deutschmark, but house price increases are inflation by another name. Despite having personal knowledge of it, I find it hard to believe that a house I bought in Sydney in 1974 for AUD 19,000 is now valued by the taxing authorities as being worth AUD1,900,000 land value only! The land in a harbour suburb is 158m2.
Energy costs seem like petty cash in the light of these figures.
"Germany is by far the most densely populated country in the West"
Really? Netherlands and Belgium have 457 and 376 respectively people/km2, Germany is at 233. Not even close. Even United Kingdom is higher at 277.
Your point remains valid though.
@@koffiegast Yeah, I probably should have been a little more careful with that statement. I was parroting something that I had heard, but never fact-checked.
And also because the building Standards are WAY higher in Germany.
@@listohan Germans don't use the Deutchmark !
One example for those insane rising prices for land in germany is the land my wife and I bought. It cost 120€/m² in 2019 when we signed the contract. But now even the Bodenrichtwert (official price which banks and official authorities work with) is now at about 300€/m² and the actual selling prices start at 400€/m². I know that this is a very special region in the aglomeration of Berlin, but it shows how insane this market is in and around german cities right now.
Also my mother in law sells houses (not yet build) and due to the pandemic and war their construction prices nearly doubled. Her company started to buy back the building contracts for around 10-20k€ because du to the rising prices they will loose money building those house. Which is why now some companies make contracts with prices related to the materialprices when the house is build.
To build a house for your time being and pass it to your children was the thinking of my late parents (WWII generation) who lived nearly their whole live in the same area.
We builded our first house in the 90s in Berlin because it was economical reasonable compared to the rent we had to pay. Because of work we moved (now with kids) to Lower-Saxony and bought a house there for the reason that buying a house was more reasonable than renting.
So for us building/buying was not for a lifetime but always a economical decision.
124k for your first home!!! In the greater Boston area that won’t even buy you a decent garage😅 Well researched video. Very educational.
The middle (nearly) of Missouri so cheap, it hurts to even think about anymore.
Thanks so much for watching!
You make extremely well informed and very high level videos on youtube. The main thing of that is the selected information source and naming the sources. I don´t know if Germans are more flexible in choosing where to live depending on where they work. But this flexibility makes buying a house or an appartment for some of them senseless.
Thank you so much for watching.
I bought a house some decades ago and was offered different (good/better paying) jobs after that several times. One time I decided, not to take the new job, because I would have to leave my surroundings (house, friends etc). One time I could see, that the new job would only last a few years so I decided to move and only visit my family (and our home/house) at the weekends. So yes, this is the place I intend to die as well (as did my parents in their home/house - or the parents of my wife).
These days things are changing a little bit, though. My neighbors children have their own home/houses and their father moved into assisted living. So that was a reason to sell a house to finance the cost of him living there (plus paying of their homes).
I just noticed that I use the words home and house as interchangeable. So maybe that is the answer. We tend to buy a house and make it a home? And you do not sell your home.
For big portion of Eastern Europe, buying/building a house means lifetime commitment usually. For us is a sort of a milestone, you do it and a chapter of your life is closed. As you have seen building a solid house takes time, money and quite the effort.
I'm amazed! The quality and quantity of information in this video is just wow. I subscribed for the first time to a family channel! Great work!
Thank you so much for the nice compliment!
I bought a house in 2018 (34 back then) and yes, it is a purchase for life. Not only your own but also your kids and their kids. The core plan is to create a base of operations for all future family developements. most of the time the kids leave their parents home, do their own stuff, parents some day die and they get the house. either they already did well for themselves and have their own (so renting or selling the exisiting one) or they move in their old home to cut their living costs by a huge amount. also most of the time you first marry, then buy a house and THEN get kids. this is kinda the traditionally accepted way of progressing in life
I think the difference here in Germany is the sence of comunity. Where I grew up, neighbors were an important part of life. We had cleaning efforts where the whole neighborhood came together and worked. We had street parties, everybody was available if one needed help. I was going shopping for my elderly neighbor, who was living alone and was not able to walk long distances due to his war injuries. He had a skat round once a week meeting with his friends from the neighborhood, where they exchanged their storries from the war etc. When I left for studying, it was a very weird experience leaving all the people I had close relations to, and lived together with for all my life then. Whenever I come back to my parents, neighbors know and show up for coffee to meet and greet, and to hear how it is going. This is priceless, and make me feel belonging to.
Moving away from there would feel like getting unrooted.
Relationships with neighbors was a huge part of our childhoods in the United States. Having a strong community was very important. We hope to have something similar at our new house... plus it will be great German practice for us.
That stair construction looks great now that it’s more finished vs the last video!
We were so pleased to see how much progress they have made! It is finally starting to look like a house. :)
The thing about buying a house and renting it out is that maintenance costs for that house can then reduce your taxes.
So you get the rent and have to pay less on maintenance. And have to pay only your own rent and the maintenance for the house you're living in is paid by your landlord.
In total if your rent matches the rent you get from the people renting your house, all you're paying are the reduced maintenance costs.
Great video! I'm from Montreal, have been living south of Stuttgart with my German husband and 2 teenagers for 27 yrs now. There's also a huge difference whether you're building your own home or buying an existing one in Germany. If you put your blood and sweat into building your own home then a German will NEVER sell it. We were lucky and bought a triplex (built in 1960s) when it was a buyers mkt in 2010. So we have been renting out two apts and living in one. Most Germans want a one family home, like my husband did, but I fell in love with this triplex. And yes, I hope my kids take over the other two apts so we can all live together, forever😉 I wouldn't think of selling it even if we moved away. It's an investment. LG
Nice job with what you are trying to do with this series! Not sure if you are going to cover financing/banking and the exchange rate, but this is important due to the ever changing exchange rate. We bought a home in Germany in 2016 and have a bank account that I strategically exchange dollars for Euro. One must keep a careful eye on the exchange rate due to market fluctuations. Also, we financed a home loan with a German bank, yet even here there are quite interesting differences from the US housing market (eg, interest rates and mortgage timeline).
Yeah that is a great point. We keep a very close eye on the exchange rate and move money back and forth to cover payments which we still have in both countries.
For Jonathan, it was a difficult one when he moved to Germany in 2013 and had a direct exchange for his salary from USD to EUR. Back then the EUR was extremely strong and then quickly lost value. Student loan payments quickly became much more expensive.
We can find a way to cover the exchange rate with banking/financing in the future. Thanks for the suggestion!
Very interesting. Two key numbers were missing: German and American mortage rates. German rates are 3-4 times lower, allowinf you to take 3-4 times higher loans.
We thought about including this because that is absolutely right... today. We hesitated because these things can change frequently which would make our video outdated.
@@TypeAshton another thing I'd be interested in: Is it still true than in us mortgages you risk only the mortaged asset? In Germany liability is on all your present assets and future income. This used to be one of the reasons Germans used to be risk averse. A sinking housing price leaves you without a house 🏠 and tons of debt. You can't just hand the keys to the bank and walk off in Germany
@@HelmutQ Filing for bankruptcy is one of the only ways we know you can get out of a home loss in America. If you have huge debt, you can file for bankruptcy and go back to zero... but this will destroy your credit and make any purchases in the future very difficult.
@@TypeAshton ok very similiar to germany than. Thanks for the elucidation
Hey, great video as always✌️!
Our house is a completely developed barn. But on the same property is the original farmhouse too of course. It's the old farm from my grandparents. Because we can't live in two houses at the same time obviously 😄 we have rented it to a family. It's actually pretty cool because the two houses are just a few meters away from each other and both are part of the former farmyard. So we can experience friendship and neighborhood without "going down the street".
And on top we earn money with the situation.🤗
Greetings from Hessen 👋
Yes, traditionally, Germans do buy a family home for life, often even having in mind that one of their children and maybe even grandchildren or great grandchildren will live there at some point! This has begun to change, though, in view of more mobility being required nowadays jobwise, there is a more recent trend for young families to build houses which are very standardized and almost ready-to-order (rather than the highly customized older buildings which kept being adapted multiple times throughout the owners' lifetime and according to their needs and the tastes of the era at any given time. With the newer houses, you might be able to sell them and build or buy an almost identical one somewhere else across the country.
Singles or couples without children or with 1 or 2 children maximum who either prefer to live in a larger city would tend to buy a condominium instead. If they need more space at one point, they might sell or let it to somebody else. Might also serve as a welcome source of income in old age. And yes, real estate prices have skyrocketed in Germany over the past 10 years or so with ever-increasing speed. Affordable housing is hard to come by, so whoever is financially able to do so and is willing to take the risk involved in mortgages etc. has come to consider buying property rather than renting. But those who want more flexibility and are reluctant or unable to make this committment (financially and otherwise) might still consider renting.
If you sell the property before 10 years, you have to pay 42% tax. That's why people generally buy house in Germany if they want to live there for 10+ years. After 10 years, you do not have to pay any tax.
Yes, and depending on your loan - it is also common that if you have a mortgage on your home from a German bank - the bank wants a guaranteed interest income for at least 10 years. So if you sell before 10 years... say for this example, 6 years. Then you would also owe the bank 4 years of unpaid interest.
Thank you for your informative and entertaining video. Always a giggle with the bloopers at the end. In Melbourne when I bought my first home in the suburbs it was such satisfying feeling despite being the biggest financial commitment of my life. Fast forward 40 years and I now live in a modest unit close to family, close to services and easy to maintain . Here in Australia we still chase the dream of owning our own home, but it is definitely harder than ever before. The average price in Melbourne is just shy of $1 mill and . In Sydney the average is slightly higher than 1 mill. Property prices have been pretty strong even through the pandemic. It is interesting to hear about prices in Germany versus America . Thanks for your review👍
Thank you again for watching! Is it possible to live in suburbs on the outskirts of town for a reasonable cost? We have still never visited Australia but hope to someday in the future.
@@TypeAshton Yes it is possible but our infrastructure doesn’t keep up and the road traffic is horrendous in the outer suburbs. Working from home has been a big plus for those who have to battle the traffic from the outer suburbs .
That is VERY common practice in the US (esp in high real estate markets such as Los Angeles): Buy a house and rent it out, while the home owner themselves live in a cheaper home they rent for themselves. Because that creates positive cash flow.
Many years ago I also had my own house. After I sold it, I rented houses instead. On the face of it, that seems to be more expensive, but if the roof is broken today, my landlord has to pay for the repairs. If the heating is broken, my landlord has to pay for the repairs. Apart from the fact that the prices for building materials have risen sharply in recent years, it is above all wages in Germany that are driving up building costs. While the construction worker earns perhaps 18 euros net per hour, the client has to pay 65 euros per hour. This makes owning a house in Germany unaffordable for many young families.
Mir gefällt die Gestaltung der Info Grafiken. Optisch sehr ansprechend! Sieht super professionell aus.
Ich danke dir sehr! Es freut mich das es Ihnen gefallen hat.
Has nothing to do with this video but it is so great to see that you grow in subscribers and views so fast! Well deserved - your effort in time for research and production pays off! Maybe Ashton you should really consider this as your future job. More power!
Wow thank you for noticing! We've been really blown away by the growth in recent weeks and are REALLY excited. It makes us very motivated to continue putting out content.
I'm living in Germany from 2018. that sounds right, Germans buy it for life if not renting is so common. That's why you can see so many people that renting an apartment.
Simply, you shouldn't even compare buying a house in U.S versus Germany. Here in Germany is like a dream for many that can not come true. Buying a house in Germany is ridiculously hard and super expensive compare to what you can get.
Wir kaufen in der Tat ein Haus fürs Leben und gestalten es nach unseren Bedürfnissen. Kaum zu glauben, dass es in den Vereinigten Staaten anders ist. Liebe Grüße
Wir haben auch die qualitativ höheren Häuser - Holzhäuser sind billiger, Häuser ohne Keller sind billiger und Häuser, die Energie verschwenden, sind auch billiger in der Anschaffung.
@@franhunne8929 es geht doch nichts über Steinwände mit Isolierung, doppelt verglaste Fenster und PV auf dem Dach
@@Kloetenhenne dreifach verglast bitte :P
@@eltiburon1983 von mir aus auch das 😂 aber bei den Amis könnte man ja erst mal mit doppelter anfangen 😂
Thank you very much for the comparsion. Maybe one thing here in Germany is: our land is so small compared to the United States. I think Germany is ~ like the state New York as an comparsion how big it is. So there are less reasons to sell your own house in Germany. In the United States, getting a new job can often send you to another state. The distances are very, very bigger in the States. So you need to have homes that are not such as a risk on your foot?
You are guys are amazing with your research and well put in-depth arguments but also keeping it entertaining! I love this type of non-superficial cultural/social/economical/geographical differences videos! Having lived in both Germany and USA, I have wondered why something is this way here or why not this way there etc., and I'm so happy finding some answers in an in-depth manner with you guys! Subscribed!
That said, my experience in both these countries is from the perspective of an Indian, where things are much different, but I feel in general, India has more in common (culturally and socially, also relating to home ownership trends) with Germany (and Europe overall) in many aspects than with the USA. And based on my travels around the world, there seems to be clear Old World and New World divide, where the way of doing things just completely changes across the Atlantic, whereas it's more a continuum from East Asia to Western Europe, so in general there are many more common cultural and social aspects.
yeah my co worker owns his own apartment but he has no interest in actually living there. mostly because he wants to live as close as possible to his job. he has a history of changing jobs every few years so he tends to live somewhere else every few years. his apartment is basically both investment and retirement / security
personally i dont think i could afford my own house/apartment and even if i could i cant really see why i should.
Thanks for the great video! For next week, could you include aspects of the effects of renewable energy on costs, as well as preferences in both countries? Keep up the good work! Cheers, Doc.
This is great! We will try to include this! Thanks for the feedback.
I think one aspect why we have a smaller "turnover rate" concerning houses in Germany must be seen in the financing conditions. Of course most houses are funded by mortgages and loans. So if you would like to sell your house spontaneously before paying off your credit you would most liekly have to pay a prepayment penalty to the bank. This is something that would definitely prevent me from "trading" with my house too light-minded.
in Canada we have mortgage early termination fees but if you refinance the same OR LARGER mortgage there is NOT termination fees so "moving up" does NOT get hit with these fees as you are likely taking a BIGGER mortgage
Aside from mortgages the turnover costs from selling and buying added will be at least 10% of the price (for Austria, but probably similar in Germany). Not counting any adaptions needed. In special cases (new homes and short ownership) it might be even more with additional taxes. So even if the old house increased its value, the new one would also. And with each swap you loose a lot of money.
Thanks for all the great content. Moving to Germany in 2 weeks and this channel has been such a massive help.
so glad we could be a good resource for you! Good luck on your move!
Such informative videos! I'm German and I'm currently renting and I don't plan on ever buying a house. I wouldn't do it unless I was 100% sure that I would want to stay in that area. But I like to keep my options open. I surely don't want to go into dept either.
Haha when you said you were building a house my first thought was "oh they are settling here, guess they are staying". I have had quite a few conversations with friends (around 30 years old) who built or bought a house about how they will be able to live there in their old age. One friend widened the doorframes in case they ever need a wheelchair. When I got my apartment the seller said that the toilet and bathroom could be connected to become one room down the line to make it wheelchair accessible. So I would say people really buy a house for the rest of their life.
Wow! I can't say we have ever had a conversation with a friend or relative in the United States who was looking this far down the road. Really interesting.
Yes, very true. I've build my stairs to be ready to add a lift someday, in case my future me needs this.
I live in Austria. In my area housing prices increased in the last decade significant. The prices doubled for the same house. Even with law changes and interest rises on the horizon, I think the homeownership isn't affordable for the majority of people.
Und schon wieder: klasse Video und sehr fundierte Daten. Ihr macht Euch so viel Mühe, das ist echt bewundernswert. Jedes Video ist lehrreich und toll gemacht. Danke dafür. 😘
Vielen Dank fürs Zuschauen. Dieser Kommentar bedeutet uns sehr viel.
Not sure if I left a comment before on this particular video but it’s EXCELLENT!!!!!!!!!!!! I am a real estate professional in South Florida and have family living in Germany and some other European countries and have noticed all of the differences you guys mentioned in this video (very accurate!). Interesting to note that as of 2021, the average homeownership duration here in the US has risen to roughly 10.5 years. Post-pandemic, people seen to want to live longer in the same place :)
Thank you so much for watching! Quite interesting about the new 2021 statistic. Maybe some influence with being able to work from home. :)
I love this series! And yes, most people buy with the intention of owning that house (or flat/apartment) for life.
Thanks so much for watching!
Excellent video! I remember while living in Marco Island, FL our water bill (in the winter season, considered the dry months) was upwards of $200/month, however, when we lived in North Carolina we had no water bill because our house had a well installed. Well water was also by far the best water we have ever had.
The costs can vary so much depending on where you are. It's a difficult comparison.
You can tell from this video that you had to deal extensively with the topic out of your own interest as recently homeowners and Ashton is practically straight from the field. The quiz was also entertaining.
This video was a LOT of fun to film. We are so glad you enjoyed it.
About renting a home and living in another rented home yourself: one example is when you inherit a house, the one your parents lived in and in which you grew up, maybe, but then decide not to move in yourself, because you live elsewhere in another town, got your family and/or jobs there... but you also don't want to sell the parents' house, because you prefer a security to fall back to just in case, only renting a home yourself. Or you prefer a monthly income over a once only payment when selling that parents' house. Maybe because of low housing prices like some years ago. Or you just plan to move in later after your retirement or when your own children leave your home or whatsoever. So: just one example with many varieties.
What I'm more interested in and think would be a fairer assessment is comparing the cost of construction materials of the standard German house to the standard American house of similar size and what the implications would be if America was to adopt the German housing standards.
How would porotherm style brick constriction and ceramic roof tiles fare in the earthquake prone regions of the west or the tornado/hurricane zones of the east? Would they be sturdy enough to withstand that or is it better just to have a cheaply built house that could be easily replaced and do less damage to its surroundings in the event of?
Excellent concept
Wow! First of all, great job editing the video. Did you do it yourselves? Second, it’s fun watching both of you guys and great job making a dry topic very entertaining to watch. I am curious about the efficiency of the HVAC system in Germany. In the short time I’ve lived there and Scandinavia, I’ve seen different systems with radiant floors, heated towel racks, solar, gas, solar water heaters, and combi-boilers like Vitodens. It was interesting to see some homes had a separate hot water storage from the boiler. It would be interesting to get an engineer’s and architect’s perspective on the difference in both countries’ HVAC systems and the associated IoT smart controls in them, they had some. I assume Jonathan is on a permanent contract with his employer so it looks like you guys are there long term which is probably why you chose to buy a home. Your content has been really helpful as I’m on track to moving either in Germany, Switzerland, Netherlands, or Norway to work and start my masters and PhD in engineering, and raise my kids - I find that most of these countries are safer and ranks higher than the US in various social, education, economic, and quality of life indexes. Big thing for me is school safety and quality of education especially in German primary schools. Keep up the great work! Love your content and how you keep your videos lighthearted and entertaining.
Thank you so much! Stay tuned to next week's video where we will be covering HVAC systems. :)
@@TypeAshton Don't forget to include "Fernwärme" and - yes! - "Fernkälte", the latter of which can be based on the former. Never heard of that? Well, they are more common in urban parts of Germany, and VERY rare in the US... E.g. in Berlin there's 2 regional / local Fernwärmeversorger, just in 2021 this market was liberalized so that there might be more competition in the future. But the new rules also impose a regulation on the providers in regard to how the "Wärme" / heat (essentially very hot water) is produced: by "green" energy...
To your Question about renting on minute 10. It´s often about need and cost. If you can rent out a flat for more money than you pay in rent for your own flat and don´t need a change, it is just a financial strategy to make a bit profit on the side. And some Banks provide shared ownership of real estate as a financial strategy.
We have also seen that the tax situation is much better when renting out a flat.
yes, we bought our appartment for keeping it for life basically. If this will turn out as a fact we'll see.
As for renting and living for rent by your own: There are some incentives in this. When you rent, you can account for repairs etc pp on your taxes. This is not possible when it's where you live in for whatever reason. So if you do a cross renting with someone both win and can subsidize each other.
Dear Ashton and Jonathan,
there has been another regulatory factor in incentivizing the population to only buy one house for life in Germany - "AfA" for owner-occupied homes. AfA (Absetzung für Abnutzung - deduction for wear) is the income tax deduction over a period of years for businesses and other sources of income, e.g. buy a car for business and deduct 20% of the purchase price for five years. For rented houses in Germany, this is typically 50 years (for houses built pre WW2 40 years). And for homeowners, there is no such AfA, but there is "Sonderabschreibung" (special deduction) for homeowners (which makes it almost equal to rented homes), but it is granted only once per person (twice for a married couple).
CU twinmama
Thanks for sharing this tax information. We are a little bit nervous to talk much about taxes because it's so complicated and we do not want to give incorrect advice. So, anyone who can help explain it to us is very helpful!
As a german ur channel is really interseting, love the videos
Thank you so much!
Well I live in germany and in my family, as well wirh my friends, if we buy a house we plan to have it for your whole life. It usually comes together with having a partner or marriage as well founding a famaly. My wife and I for example own already the land where we want to build our house and we think its important to keep it in the family so that even if we die, our kids (that we plan to have) can use it or rent it to others. Were both 27 btw as well as most of our friends.
The husband of my best friend also owns an appartment for example, but its to small for them now especially after getting 2 cats. So they rent a new appartment and rent their own to others. This ist because of 2 reasons.
1. they dont want to move far from their original neighbourhood, where not many ppl are selling their appartments and because if you rent an appartment you get sth called "Vorkaufsrecht" if the current owner deciedes to sell his own which their new appartment owner promised to do in a few years.
2. the rent they get as income from the old appartment not only finances nearly the whole rent of their new appartment also it makes it easier to get money from a bank. A friend of mine for examples owns 2 appartments thx to his dad and with those he completly financed the appartment he lives in now. And he will definetly keep and not sell them and give them to his kids.
So yeah I think keeping and renting is a much better investment for a family that works together on the long run then selling and buying new ones that you only use yourself.
But I guess its only possible because its not that easy to be the owner of your first home in germany. But if you have at least one and can finance a second you can finance future property with those you already own and rent to others. It wont be a fast expanding business but it secures financial wellbeing for your family even though my wife, m friends and I want to build our own houses with our own loan.
Picture at 16:42 min: the picture shows Kloster Andechs (Andechs monastery), also called "the holy mountain of Bavaria" and home of the famous "Andechser" beer brand. In the background, you see the Ammersee. The scenic village of Starnberg is approx. 15 km to the east, located at the north side of the Starnberger See.
Map 3 at 19:04 min: "Prices for building land...": what are the units? chicken? €/m²? And "Frequencies" - of what? Maybe, you add something, in particular I absolutely don't understand "Frequencies". Sorry, really don't want to be nitpicking, but it would help...
I think the one key factor overlooked on the affordability of houses in Hawaii, is what percentage of houses are Primary residences. I bet the higher-priced houses are bought by individuals (and corporations) as vacation houses for rent or clients. That would create a lopsided real estate market, with expensive houses on the high end that are not meant for the full-time residents of the state.
I just learned in a recent CNBC video that laws in the US could forbid sidewalks and required a minium size of the plot to generate those huge suburbs we know today. And, that there is some thinking now that suburbs are not helping to keep city centers alive.
I think one important point was missed, the investment of private equate firms and hedge funds investing in housing and being a big part of driving up prices. In short speculation is a bid piece of the puzzle that needs to be looked at.
That's a loaded topic, but you are absolutely right. We will try and find a way to tackle this one in the future.
@@TypeAshton I don’t know is it is loaded, but clearly the actors don’t want this to be exposed. Any look at the subject will be incomplete without looking ai such a fundamental influences. Better be prepared to bail out the bankers again when this blows up in their faces agin. Remember2008? We are on that path again, with only small changes.
Your videos are awesome ❗ I'm bi national (American /German) I live here in Germany.
Your research on the topics of your videos is phenomenal ❗They're so informativ and also entertaining at the same time ❗Please keep up the outstanding work❗
Thank you so much for watching!
To the "Buy to stay" thing.
You need to stay at last a couple of years in your house atm because you have to pay speculation taxes if you benefit of selling the house again.
So with all the costs to buy the house and make it nice and so on you dont want to pay even more taxes if you leave.
In some cases you loose a lot of money this way. And that is the last thing you want if you want to move up the ladder :)
But the most people that are buying houses these days are quite rich in the first place anyway because of the huge costs of building a home these days.
A "average" family with an average german income can not afford this anymore.
Very interesting and informative video. Thumbs up! 👍 You surely put a lot of work and effort in you videos. Here my two cents I have to add:
If you only take into account the last 10-15 years, yes it looks like prices permanently go up (recency bias). However over the 30 years before that prices dropped by 30% on average (including inflation). So this „boom“ was more like a recovery, at least for a while. It is quite questionable that the current trend will continue for the next 10 years. Especially if you look at how far prices for renting and buying have diverged. Imho a correction is due. Even the Bundesbank (German Federal Reserve) talks about homes being up 30% overpriced at the moment.
Oh, forgot: And of course I wish you all the best in your new home! 🏡😊 Congrats!
I hardly know any people who actually sold their houses just to buy or build a new one. People that sell their house usually move far away. Even if your house get's too small you wouldn't sell it - just add some rooms and be done with that problem this way - but selling? no way! 😀
yes, I'm german
and by the way when I bought a house with my girlfriend, now wife, four years ago we totally had the mindset of buying for live (we were in our early 30s back then).
Either that or they move into a small apartment which is suitable for older people.
For the average German, buying to rent while living in a rented home rarely makes sense. My guess is that in most cases, people doing so didn't plan like this but got caught by a job change forcing them to relocate.
There are some tax incentives to home ownership but they are now reserved and limited to people with relatively low incomes who can barely afford a home.
Some people have already pointed out that due to the population density, more people live in flats and fewer in individual houses.
That's true - and only since the 1950s, separate ownership of condos is possible in Germany - before, buildings and land could be only owned as a whole unit. So fewer flats are condos in Germany than they might be otherwise.
I've actually heard of this on multiple occasions - people buying to rent a house out and renting themselves, all due to the tax structure. On one occasion I even heard of two very good friends building houses 'for each other' (where they designed their own house, but had the other party build it and then rented it), so they could both profit from this. But mostly Germans do prefer living in their own houses - I just get the feeling it's less a financial decision, but rather a decision of the heart, people preferring to live in their own home, with all the rights and freedoms that entails.
Certain types of new houses are built to maximize efficiency in heating and cooling. In our country called " energy neutral homes." which are costly to build yet pay back their own due to low energy consumption.
Hard to say who has the lowest energy cost but the way your house is constructed (from what I could see in the videos) it seems very energy efficient, so you might end up on the lower side and at an average cost lower than the medium.
Our house for example is a KfW55. So, it should be quite efficient for us.
I had to smile a bit about your picks for the costs of detached houses. You picked some of the most expensive cities which is not very representable (representable?! or representative?), I think. For example my cousin bought an old farm (two buildings + land) for half a million € near the border to Poland. For comparison: a detached house built in the 80' near Karlsruhe costs also around half a million. A semi-detached house in the town I was born (in the Ruhrgebiet) costs around 260k Euros 🙂
Yes it is difficult to compare everything. Going for the major known cities can be a bit more relevant to our non-German watchers. Comparing San Francisco can also paint a much different picture on home costs in America.
I‘m enjoying this so much. I‘ve just stopped in the middle to comment- sorry if I have missed this - why don’t you offer a consultation service for Americans purchasing homes in Germany? Maybe this is already happening, and I missed it, getting caught up in your PhD content…?
Great suggestion! This could be a really intriguing direction for us to go in the future.
@@TypeAshton you know, with your real in depth knowledge. You could explain why the heating systems are different, what’s better, so much information that would ease the stress and help people make the right decisions for them. Because you mentioned about a job in the future, this occurred to me. And it ties in with your channel.
I find this comparison and the way you do it quite interesting, although I'm neither American nor German (I'm Austrian)
But I wonder, why you didn't mention the starting point of the insane house prices of the last few years - the "crisis" in 2008. In my feeling, up to that point an average person - at least in Austria - could relatively easily afford own property.
But at that point many investors started to buy and pushed the prices.
Ah that would be an interesting approach to take to this! The housing bubble in 2008 is really interesting for me (Ashton) because it was also the year I started University. I distinctly remember the economy crashing and people telling me "Well, be thankful you are studying and not trying to get a job right now. Everything is going downhill". We tried to include a few bits of data on how much it has increased since 2015, but it would be good to look back a bit further and in more detail.
@@TypeAshton Ever heard of the housing / real estate bubble in Japan back in 1990? Mankind tends to repeat mistakes... As you are into movies, watch "Margin Call" (again)...
Very interesting research! Thx for that!
And: I love the outtakes!
Hahaha glad you enjoy them!
You should have a ton more of subscriptions, the videos have a very good quality and are very informative.
Ah wow thank you so much. We're still new and in our first year but we really appreciate the kind words of support.
Another deeply researched, highly informative video. How you keep up with your daily schedule while delivering full-in-depth National Geographic level (or better) researched documentaries is beyond me. Wow.
My parents were outliers in that they built (yes, built, not only bought) a total of three houses to live in during their life time. For them, it was actually possible to upscale each further home based on some skilled business acumen of my father plus some pretty high support from the German state for home owners at that time. Obviously my parents sold their previous houses when moving into the newer one. My parents were born just before WW2 and suffered through the near total destruction of their homes. They had both the misfortune to suffer through that period but also the good fortune to recieve such a chance to help rebuild the German housing market with massive financial incentives by the Federal government.
Me and my two older siblings conform much more to the average German that we lived for quite some time in rent-based housing, until we each got our finances settled and bought, not built, houses in which we continue to live. Yes, for us the old adage of being a home-owner instead of renting still means a stepping stone towards a secured future relatively free of many financial cares.
Very interesting! Thanks for sharing your own families experiences with us and thank you for watching. Hearing the differences between your parents and you (and your siblings experience) is really quite interesting!
We bought our house (Berlin / Potsdam area) for life, but we are over 50! We wish we would have bought a house much earlier when they were more affordable.Thanks for the video. Lots of fun to watch.
so glad you enjoyed it!
regarding the heating.. id take a wild guess,.. and say with germany being far more north than the usa,.. id say heating rooms 1 by 1 over a long period of time is more important than cooling them over the relatively short summers. adding of top of that the differences in isolating the homes would make up another good argument.
Thanks for sharing, very informative and entertaining.
Home ownership is more complex spectrum of arrangements than just owning a home or renting it.
One could even say that if you have mortgage and the T&C of the loan gives some special position to the ban, the bank is the actual owner. Especially if the "owner" can just leave the property to the bank and by doing that get free of the loan.
It’s a pretty good asset to own a home with a decent property and it’s fairly rare to sell that asset instead of getting a monthly income from it, since larger homes are usually easier to rent out by now and they give you a steady income if you downsize or move for work. So both profit from it. Our family actually rented out homes when they moved for some reason or didn’t need the full space.
We used to rent out our old home to a friend that was family and long time renters since my grandparents used the size of the family property to build a new house on it. And our other family home has had family members rent it since it would be really difficult to sell without tearing the house down based on size alone aside from the attachment, although it’s currently a longtime source of drama and tearing it down to split the property would be the easier option by now asset wise. It could be split into two to three properties comfortably.
And usually family houses inherited down were built when it was cheaper to build large and thereby difficult to sell but easier to rent out when you live somewhere else.
Although sometimes there is a rent to buy option, so either they rent till they can afford to buy it or they pay rent until they paid off the property price. Whenever you find stable renters it can be easier to work with them rather than finding new renters every few years just to get a few more bucks on a rural property.
I recently bought a house in germany too. Before I lived for rent, because I waited to have some money saved up to get the bigger bank loan. And also for my income to inrease.
So at the age of 33 I bought a house, and of course (like its typical here) bought it to keep it until I die.
For the bank loan I set up a plan so the house will be totally paid of by the time I'll be in pension. So that by the time I leave my job I don't need to pay any more monthly fees to the bank, and I have more money for me (regarding you first get less money because you don't work anymore).
So a house is kind of an investment for the future.
And if I ever plan on leaving for somewhere else, I can then sell the house and have all the money to spend for whatever I want to do with it then :D Or my future kids will get it once I die and can sell it to fund or pay off their own house.
And I guess this is the way lots of german house buyers plan their future.
But to be fair this works for me because I work in a department and have a very safe job.
We took a very similar approach. We got a loan what will expire before we retire. Plus we were approved on just one income so we could manage if we ever had any financial instability in the future.
Same for us, here in Austria. I agree 100%. I think the housing market is quite similiar to Germany and it‘s quite frightening what it leads up to since Covid kicked in.
To us, buying a house (did it 4 years ago) came naturally. It simply is what you are supposed to do when you have a certain income, stable job + relationship and almost everyone I know does it. Plus, why pay rent when you could pay for something that is going to be yours once the loan is paid off? It feels like paying in your own pocket somehow - although taxes and bank fees are incredible.
Also, it shall be my kid‘s house when I am dead. Especially concerning housing costs in the future (if it goes on like that), this owning hopefully provides financial security for my child one day.
I found it interesting that you said taxes weren't deductible in Germany if you live in your own house. In Switzerland we have something called Eigenmietwert which sounds similar. It is basically a virtual income tax you have to pay on the rent income of a property, even if you live in it yourself. Swiss parliament is now trying to remove it for your main house.
Another thing I recently read about housing prices in Switzerland is that many older people would like to downsize but often can't afford it because their house would sell for less (this is due to significant Grundstücksgewinnsteuern you have to pay after living in a house for decades and prices having risen so much in that time) than what a much smaller house or apartment would cost. Which is really crazy if you think about it.. Due to that there have been movements like older people sharing their garden they can't tend anymore with people who don't have one and help with the upkeep in return.
Super interesting, we didn't know that about Switzerland. Thanks for sharing.
I know a couple here in Berlin who are in their 30s, one of them English, the other German. They live in a rental apartment but also own an apartment that they rent out, as an investment. I bought an apartment here 20 years ago and live in it, and plan to stay here for the rest of my life. As a freelancer, I figured back in 2002 that I was unlikely to be able to be able to afford a decent apartment here if I ever retire, and I didn't know how correct that would prove to be. By the way, in 2002 the property purchase tax was only 3.5% in Berlin but as your graph showed, it is now 6%. Buyers had to pay the full real estate agent fee of 6.9%, however, in those days in Berlin and now buyer and seller share it. I am immensely glad I bought when I did because the prices both to rent and buy have skyrocketed as you note. One of the biggest differences I see between the US and Germany is property taxes. At the moment, the property taxes I pay are absolutely negligible (about €150 per year) in comparison to the hundreds or even thousands a month people pay in the US.
I have certainly heard of people holding onto a house and renting it when they relocate and renting at the new location. The reason to live in what you buy in the US is because mortgage rates for owner-occupied houses are better than for investments.
I bought a house in 2020 and at the moment houses are very expensive. Even though me and my wife are both engineers. So we bought a 20 year-old one which is OK as long as we live there with our children. But the house itself is not made for old people so the plan really is to sell it again when the kids moved out - and rent a flat in the city-centre where we don't need a car to get around.
Greetings Bad Homburg! I can only emphasise this,prices here are nuts...but the city is close to Frankfurt and all its financial institutions a certain clientele will not stay in the city...rather move north to the Taunus mountain range.Gald we paid off our apartment a while ago
@5:41 They have the fastest internet speeds, too. ;)
@10:52 It is probably cheaper to use it as an asset than to live in a house. :)
You also have to mention salaries. For Example an engineer in Germany has an average salary after 10 years of 66.000€ (~75.000 $), but only 55% so 36.000€ (41.000$) net pay will arrive on your bank account. The average salary in the US (google) is ~63.000$ which will be a net pay of ~52.000$ per year, so almost 27% more income in the USA with at the same time lower house price tags. Thats also why there are fewer house owners in Germany. Personal story: I know a couple, he is an engineer, she is a lawyer, no kids, no depts, lowcost lifestyle, but they can't find an affordable house since years. Its just crazy.
It's true, I have lived in Germany for a few years and the disposable income is ridiculously low compare to how high cost of everything is.
We are a family of 5 and we own a flat in a touristic town that we rent out. We live in a rented one-family house in Germany where the market prices for houses are completely crazy due to the proximity of the Swiss border. So the income of our flat covers half the costs of our house rent. If we would have bought the house where we now live in instead of the flat, even with a personal contribution of 35% we would pay to the bank almost double the amount of rent we pay each month in order to have full ownership in no less than 20 years...
But you would have a house at the end of it.