I’m sorry, but a 10% drop isn’t a “plummet.” That’s a dip. Sure, it’s a big dip; but when prices have gone up 300% in 15 years and roughly 10% every year in general the last 2 decades, this is just a down year.
I hope this is contagious.
As someone who owns my own home, let me just say…me too. I don’t care if my house value goes to zero. I still have a house. I don’t know how anyone in the middle class can get into house ownership without crippling debt.
The only ones who should cry are the home-hoarding investors and landlords. Fuck em.
As someone who owns my own home, let me just say…me too. I don’t care if my house value goes to zero. I still have a house.
Ditto. I just hate that everyone will have to pay for yet another bullshit speculative bubble bursting to bail all the banks and investor out.
Double ditto. My mortgage is less than rent anyway, and my costs will go down if valuation does (lower taxes). I don’t even like where I live right now (I bought what I could afford and got in with a low interest rate, but it’s a poorer neighborhood) but I’d be so happy to see my friends who’ve been struggling manage to have something for themselves.
you do not like where you live right now and still own a house in that neighborhood?
This is actually something I’ve discussed with my wife and we came to the conclusion that we only buy/build a house if we find the right one or the right spot. For me it just wouldn’t work to own a house just for the sake of it because a house has to last and since we live in an awesome flat in the center of Bonn there is no need to rush for us, except a baby but then we just would find a bigger flat for us.
Except now you need even worse debt to buy a house. Two years ago interest rates were around 1%, now it’s over 4%. So the house is 10% cheaper, the interest more than tripled.
Same. I was apparently got lucky and picked up my place in 2017 before everything went crazy. Even though my home value has doubled, it doesn’t really help if every other house out there has doubled in price too and finding a home is harder than ever.
Bless you. That is truly the righteous sentiment. You’re a good person.
Please let it leap west. I’m really hoping housing becomes affordable again here in the Netherlands
I have lived in Germany for 7 years. I hold a STEM master‘s degree and was working an industry job that paid market rate salaries. With 50k€ in savings I was still denied mortgages because 50k was just barely covering the additional purchase costs (such as realtor and notary fees).
For a modest condo with a small garden in a small-ish city in central Germany I would’ve had to work and pay the mortgage until I retired, because the average house was 600k EUR. And most of the properties sold at that price still needed significant renovations.
If that is not f^cking crazy, then I don’t know what is.
Yeah the salaries in Europe do not jive at all with the housing prices in major metros. At least in the US a STEM job is probably gonna pay north of 6 figures if you’re in a decent metro area. I live in the EU now and if I switched from freelancing for American clients to working a full time job here I would be taking a major pay cut to do it. The pay is god awful but rent is fairly comparable to where I used to live on the US west coast.
That’s not always the case. Plenty of engineers that I know make less than 6 figures in the urban Midwest.
Edit: By Urban Midwest I mean cities like Chicago, Detroit, Cleveland, etc and their immediate surroundings.
I dunno what you’re doing wrong but I bought an apartment in Germany a couple years ago and that wasn’t my experience at all. I saw plenty of nice places big enough for a family of three for 250-300k. We had a little bit more than 50k in savings and were able to buy something much bigger than we need with a large garden (we spent 440k), but could easily have gotten something big enough with 50k savings. We’re in a medium/large city but just not right in the middle, more towards the outskirts. Still only 15 mins bike ride to the centre though!
You poor bastard
While the prices are surely very high, they are not that high everywhere. My sister just bought a small house with small garden in a smallish city (50k people living here) for 260k. And we are 30min train ride from the next major city
The point of my comment was not really that there are no cheaper options. The point is that I should be, by most measures, firmly middle class and should be able to afford to buy a house around the place where I work. It’s not Munich or Hamburg, and I was not looking for something close to the city center. I was just looking for a decent house for my family.
Good. Hopefully this helps the working class to finally own their own homes en masse for the first time in a generation.
I’m not holding my breath though. Capitalists will find a way to crush the workers under their boot as always.
Good. Hopefully this helps the working class to finally own their own homes en masse for the first time in a generation.
Nothing was solved regarding home supply. In fact, the opposite happened. No new construction is ongoing.
Once their economy recovers, prices will again rise.
oh, construction is happening here and there. But it’s basically all super expensive luxury apartments
They only construct the super luxurious condominiums. The reality is that for decades less new houses have been built than needed. And the gap was only widening with the years.
Prices now are decreasing because of the higher interest rates and the high inflation, so the majority of the people have even less disposable income at the end of the month. So they didn’t get any cheaper for regular people.
In Munich, the average rent for a single studio apartment is north of 1.000€, I would even say more like 1.200€, while the average salary is like 2.700-3.000€. A three room flat in the city would probably cost around 800K, and then you need to pay 6-7% administrative fees on top of it. You can make the calculation yourself how affordable flats in Germany are and who can actually buy them, especially in big cities.
I dare say that this 10% dip is more or less negated by the higher interest rate so the total cost of ownership for the regular folks who don’t have all the cash upfront would be equal if not higher from before.
Yep that’s generally how housing prices work in Germany, since rent is heavily controlled and fixed interest rate loans are readily available, the value of a property adjusts depending on the current “cost” of a loan
What terrifies me is how things will progress in the future, when you are in an active working age you can afford that rent but when you get to pension, the income of many people will plummet substantially and I can only imagine that a lot won’t be able to afford paying their rents especially in big cities. And I am extremely disappointed that government after government does very little if anything to alleviate this situation. Especially in Germany when the majority don’t own their own places, this will be devastating.
Not to mention that increasing rent and purchase prices benefit very few and definitely not the economy, when people have progressively less disposable income at the end of the month. It is also bad for the young people who would be hard pressed to live with their parents for longer because of the high rent prices.
Good, fuck everyone.
I hope this comment can start being applied to more news stories
That’s not very cash money of you, champ.
so insightful!
Hahahaaaahahaha oh man… glad you’re here
I’m not sure if you really can say “burst” already if its only down 10% after it went up 100% since 2010.
More like the beginnings of a correction.
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I don’t think housing will ever be cheap again. It’s been too over-consolidated and the game of corporate monopoly has already started. Unless we get strong regulations about how much housing property a person or company can own, we are stuck high housing prices.
This is pure fantasy. The German housing market is barely consolidated at all. The biggest housing company owns about 3%.
Which is why the German bubble is popping.
nice 👍 - maybe now I can afford an house here in germany
Nope, you can’t. Unless you inherit some substantial sum, choose the very cheapest place or you aren’t in the top 5-10% of earners with a wife/spouse also earning equally good and with no children
Im pretty confident about that.
Me and my wife earn quiet a lot, we have 150K+ in savings but it still was not the right one there on the market and right now we are not yet ready to make any compromises.
Can you get a mortgage? I heard it’s quite difficult in Germany?
Do you have a million under the mattress? Because if you need a mortgage, it’s even worse now than in the past, despite the slightly lower prices.
that’s bullshit buddy
Sure, ECB.
Is it just a result of rising interest rates? Or was there another catalyst, not covered by the article? Did the supply of housing increase? What are the current rates of immigration?
My opinion is that it’s investors.
Plenty of people out there buy houses for cash, spruce them up, and sell them for profit to extract some of the equity inherent in real property. Over time, they collectively push up the perceived value by force, and occasionally, the people who are the ultimate source of that equity, the ones looking to buy a permanent home, will stop buying.
There’s been a chunk of time recently, a decade or maybe more, where those permanent home seekers, the true source of the equity, haven’t been buying property. COVID exasperated the issue, because the flippers went fucking crazy for a couple years and inflated the amount of non-homes. Now they want their equity back out, but nobody who wants an actual home is looking to buy one because there isn’t enough value for them.
So prices have to come down before the actual source of equity starts buying again. The bubble has to deflate some.
Again, the entirety of this statement is simply my personal opinion, so grain of salt, but this is what pure logic and critical thinking suggests is the true mechanism :)
The problem is that (at least in America) tons of banks and corporations are buying up HUGE swaths of housing - single family homes, condos, apartments, etc - and they’re building, or have already built, businesses models centered on permanently renting those residences. Here is an article, and here is an excerpt:
Real estate investors bought a record 18.4 percent of the homes that were sold in the United States in the fourth quarter of 2021, up from 12.6 percent a year earlier, according to the realty company Redfin.
And in some markets, especially in the relatively affordable Sun Belt metro areas, their share is far higher.
In Charlotte and Atlanta, investors purchased more than 30 percent of the homes sold in the fourth quarter of 2021, according to Redfin. In Jacksonville, Fla., Las Vegas, and Phoenix, they bought just under 30 percent.
For those in the back: two years ago, corporations bought around 30% of available homes, and particularly focused on markets where home prices were reasonable, thus further exacerbating the housing crisis and wealth disparity in the long term.
New law proposal: the only type of corporation allowed to own a house is a bank, and then only under the strictures of a mortgage held by a private individual (or, logically and necessarily, through default and foreclosure). Additionally, houses repossessed through default may not be rented, as long as the bank is the sole holder of the property.
I think investors figured out that the REAL money in real estate is in endless renting and not so much in flipping.
I know more than 1 person that owns several rental properties and they’re getting filthy rich from monthly rent while also building equity. But I get the impression from them that they’ll never sell. Buy low, then rent forever.
If interest rates went up, crippling demand for new housing, this is a temporary “burst” at best. Their economy is in the trash can right now, and that means demand is artificially low.
The second their economy rebounds they’ll be back in the same situation.
Oh no. Anyway…
