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Germany Does Housing Better

phattonez

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As you've probably read I've posted a lot of threads on housing lately, and I wanted to look at another example and compare with another country that has gone a different route. I want to look at Britain, which like the US deregulated its financial markets and saw rising homeownership. I want to look at the effects of that and compare it to another country which went in a very different direction.

https://evonomics.com/wealth-power-productivity-laurie-macfarlane/

Laurie Macfarlane said:
Over the past five decades ... [t]axes on land and property have been removed, and subsidies for homeownership introduced. The deregulation of the mortgage credit market in the 1980s meant that banks quickly became hooked on mortgage lending ... Rent controls were abolished, and the private rental market was deregulated.


Sounds much like the US in the 1980s and 1990s before the housing bubble, right? So what happened there?

The result has been an unprecedented house price boom. Since 1995, skyrocketing house prices have increased value of Britain’s housing stock by over £5 trillion – accounting for three quarters of all household wealth accumulated over the same period. While this has been great news for property owners, it has been disastrous for tenants...
The trillions of pounds of wealth amassed through the British housing market has mostly been gained at the expense of current and future generations who don’t own property, who will see more of their incomes eaten up by higher rents and larger mortgage payments.


It looks like they've had mostly the same effects that we did. Home price appreciation was great for those who owned property, but for those who either did not buy or were too young to have done so, they now face higher rents that take up large chunks of income, 33% is the standard (which is the brink of unaffordable according to government agencies), while 50% has become common. So what would have happened had we gone in another direction? What if we didn't deregulate finance? What if we had strong rent control? Would it have been disastrous, as so many pundits have predicted?

Germany has among the strongest tenant protection laws in Europe, and many German cities also impose rent controls. This, along with a banking sector that favours real economy lending over property lending, means that Germany has not experienced the rampant house price inflation that the UK has. Remarkably, the house price-to-income ratio is lower in Germany today than it was in 1995, while in the UK it has nearly tripled over the same time period. The fact that houses are not lucrative financial assets, and renting is more secure and affordable, means that the majority of people choose to rent rather than own a home in Germany – and therefore do not own any property wealth.

...
So while German property owners have not benefited from skyrocketing house prices in the way that they have in Britain, the flipside is that German renters only spend 25% of their incomes on rent on average, while British renters spend 40%


Hmm, it sure doesn't look like ruin and starvation to me. Germany actually looks like it's doing quite well. Germany also had among the best recovery from the financial crisis:

BlogImage_RealGDPGrowth_022717.jpg

So why can't we have a system like this? It would benefit far more Americans than our current system while still allowing for a robust economy. Given the housing crisis that we have in the US, it's time for a change.
 

Hawkeye10

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As you've probably read I've posted a lot of threads on housing lately, and I wanted to look at another example and compare with another country that has gone a different route. I want to look at Britain, which like the US deregulated its financial markets and saw rising homeownership. I want to look at the effects of that and compare it to another country which went in a very different direction.

https://evonomics.com/wealth-power-productivity-laurie-macfarlane/



Sounds much like the US in the 1980s and 1990s before the housing bubble, right? So what happened there?



It looks like they've had mostly the same effects that we did. Home price appreciation was great for those who owned property, but for those who either did not buy or were too young to have done so, they now face higher rents that take up large chunks of income, 33% is the standard (which is the brink of unaffordable according to government agencies), while 50% has become common. So what would have happened had we gone in another direction? What if we didn't deregulate finance? What if we had strong rent control? Would it have been disastrous, as so many pundits have predicted?



Hmm, it sure doesn't look like ruin and starvation to me. Germany actually looks like it's doing quite well. Germany also had among the best recovery from the financial crisis:

View attachment 67249976

So why can't we have a system like this? It would benefit far more Americans than our current system while still allowing for a robust economy. Given the housing crisis that we have in the US, it's time for a change.

Are you aware that young Germans have long bitched constantly about the housing situation, which they claim is getting worse? Now part of this is because the young dont want to live rural, and they are bitching because they have such a hard time moving to the urban area that they want to go to, even the few who have money have to work at it because of the lack of availability of housing.
 

phattonez

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Are you aware that young Germans have long bitched constantly about the housing situation, which they claim is getting worse? Now part of this is because the young dont want to live rural, and they are bitching because they have such a hard time moving to the urban area that they want to go to, even the few who have money have to work at it because of the lack of availability of housing.

Average rent in Berlin is $1384. In Manhattan it's more than $4000.
 

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Sounds good to me. Also, since the U.S. job market is so fluid, a lot of that homeowner profit is eaten up by relocation costs. The only clear winners in the middle class are those who sell in a high-price state like California and move to a low-cost state like Oklahoma.
 

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Average rent in Berlin is $1384. In Manhattan it's more than $4000.

Then too when I lived in Darmstadt I was talking to a guy who was renovating his house....every 80 or 100 years they need a good redoing and if folks have the money they do some upgrades as well...maybe adding rooms or totally reconfiguring the place to modern lifestyles....He was talking about all of the red tape and all of the time both time out of his life and time for the process to work to first get the approvals, then get the work done, and then have it inspected and approved.

He also was running his tally in cost up to around $200,000 in 1997 dollars.....

I was all WTF
 

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As you've probably read I've posted a lot of threads on housing lately, and I wanted to look at another example and compare with another country that has gone a different route. I want to look at Britain, which like the US deregulated its financial markets and saw rising homeownership. I want to look at the effects of that and compare it to another country which went in a very different direction.

https://evonomics.com/wealth-power-productivity-laurie-macfarlane/



Sounds much like the US in the 1980s and 1990s before the housing bubble, right? So what happened there?



It looks like they've had mostly the same effects that we did. Home price appreciation was great for those who owned property, but for those who either did not buy or were too young to have done so, they now face higher rents that take up large chunks of income, 33% is the standard (which is the brink of unaffordable according to government agencies), while 50% has become common. So what would have happened had we gone in another direction? What if we didn't deregulate finance? What if we had strong rent control? Would it have been disastrous, as so many pundits have predicted?



Hmm, it sure doesn't look like ruin and starvation to me. Germany actually looks like it's doing quite well. Germany also had among the best recovery from the financial crisis:

View attachment 67249976

So why can't we have a system like this? It would benefit far more Americans than our current system while still allowing for a robust economy. Given the housing crisis that we have in the US, it's time for a change.

Maybe you should ask some actual GERMANS about it. They live in MATCHBOXES, unless they are very wealthy.
 

phattonez

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Germany has its housing downsides as well - lack of affordable housing in urban areas. Of course, housing is much more affordable in rural areas of the US as well.

https://www.deutschland.de/en/topic/life/lifestyle-cuisine/housing-in-germany
It's certainly different than US housing, but I'm not seeing why I'd prefer the US housing situation. They still pay far less than we do. It's not perfect, but I don't see where we do obviously better.

Sent from my phone. Instaurare omnia in Christo.
 

phattonez

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Maybe you should ask some actual GERMANS about it. They live in MATCHBOXES, unless they are very wealthy.
I've spoken with people who have lived in Germany. Perhaps you should speak to more American youth.

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ttwtt78640

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It's certainly different than US housing, but I'm not seeing why I'd prefer the US housing situation. They still pay far less than we do. It's not perfect, but I don't see where we do obviously better.

Sent from my phone. Instaurare omnia in Christo.

I never claimed that we do better - I only pointed out that lower supply than demand causes housing costs to rise, and home size to fall, in urban areas in Germany as well.
 

phattonez

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I never claimed that we do better - I only pointed out that lower supply than demand causes housing costs to rise, and home size to fall, in urban areas in Germany as well.
Sure, but overall I'm not seeing the misery that people claim we'll get if we limit speculation in housing or introduce rent control. Sure, it may be smaller, but they're spending a lot less than we do.

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ttwtt78640

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Sure, but overall I'm not seeing the misery that people claim we'll get if we limit speculation in housing or introduce rent control. Sure, it may be smaller, but they're spending a lot less than we do.

Sent from my phone. Instaurare omnia in Christo.

Property taxation is a huge source of state/local revenue - it may be quite hard to convince those in government to take any action to reduce their major funding sources.
 

phattonez

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Property taxation is a huge source of state/local revenue - it may be quite hard to convince those in government to take any action to reduce their major funding sources.
They're going to have to unless they want even more angry, voting Millennials.

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Are you aware that young Germans have long bitched constantly about the housing situation, which they claim is getting worse? Now part of this is because the young dont want to live rural, and they are bitching because they have such a hard time moving to the urban area that they want to go to, even the few who have money have to work at it because of the lack of availability of housing.
I was wondering about that aspect. Seems like with the system outlined the incentive to build new homes wouldn't be very strong.
 

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I was wondering about that aspect. Seems like with the system outlined the incentive to build new homes wouldn't be very strong.

Just like how the German government said during the 80's "Yes we know how you all want to get to where you are going in cars but we have decided that this will not work....we will however vastly improve the rail system and the local transit systems " they have also said "We know that you all want to live in the "cool" places, but that is not going to work".

Imagine American leaders pulling that!
 

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The German "system" aint good nor is the British/American system.

Our whole society is based on wealth of the home. So there is an incentive in society as a whole, to make sure that property values go up. That basically caused the sub-mortgage crisis and will cause the next one. It also causes massive problems in most countries when it comes to first time buyers and so on.

The problem is supply. There is simply not enough housing being built and it is deliberate. The more affordable the housing, and the more housing.. the lower the value of the existing housing stock. Hence governments and corporations tend to put in as many road blocks to prevent a housing boom.

UK had public housing for generations, which were then sold off by the Tories starting under Thatcher I believe. This caused a massive amount of problems that are being felt even today. The reason for the sell off was so that the renters could become homeowners.. but that failed badly. Instead some people bought up cheap former public housing, fixed it up a bit and then resold them at a massive profit driving up prices in the area and forcing out those people who did not buy their own homes.. So what do you have now? Lack of affordable homes that cause tons of problems. When the Tories put in place a new tax on people having too many bedrooms in their public housing... sounds stupid, but yes they did this. The idea was for the people to either rent out the rooms, or move.. problem was they were often willing to move as many were 40+ who had children leave the nest, but there was no affordable housing to downgrade too because.....drumrolls, the very same Tories had sold off the stock.

In Denmark, there was put in place building bans on certain sizes of homes.. no homes with less than 2 bedrooms could be built. That basically put a stop to building affordable homes in Copenhagen for decades. Now days it is not much better, even though the ban has been lifted.. as most new builds are 2+ bedroom very very expensive water front apartments. Social housing.. naw we dont need no stinking cheap homes!!

In Spain it was a bit different due to the external influence, aka the Northern European summer homes program. Here prices went up and up meaning that the locals were priced out in the popular (most populated) areas of the country. For example, in my area, a 2 bedroom apartment could be gotten for 400 euros 3 years ago during the crisis. Before it was 600+ and now it is back to 600+. This is all because of massive demand, and lack of stock. They are building like crazy here again but it wont help the locals. It is normal for Spanish youth to live at home until the mid 30s. When the US crisis hit Europe, it hit Spain especially hard because of housing. Suddenly housing prices collapsed and tons of investors were underwater on their buildings. The only "good" thing about the Spanish problem, is that home ownership is one of the highest in the world, but it is not because of buying.. but because of inheritance.

Point is, politicians wont change the system because yes it brings in a lot of taxes, but it also defines your nations wealth. You try to tell your voters.. oh btw, the thing we have been telling you for generations about it is best to own your home.. naw just joking! Aint gonna happen. Just as it aint gonna happen that governments suddenly start building affordable housing because that would mean singles living in the area, which means low tax revenue... no we need families with 2 parents working... so lets only build those kind of homes!

The housing problem will only get worse and worse and to those who say "yea but you can just move to cheaper areas".. hog wash. People are moving more and more to cities, and dont want to live in little hicksburg with 2000 people where half are your family. If you want that, then here in Spain you can buy a whole village for next to nothing if you want. Granted there is no internet and the roads might suck, but you got your own village!
 

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As you've probably read I've posted a lot of threads on housing lately, and I wanted to look at another example and compare with another country that has gone a different route. I want to look at Britain, which like the US deregulated its financial markets and saw rising homeownership. I want to look at the effects of that and compare it to another country which went in a very different direction.

https://evonomics.com/wealth-power-productivity-laurie-macfarlane/



Sounds much like the US in the 1980s and 1990s before the housing bubble, right? So what happened there?



It looks like they've had mostly the same effects that we did. Home price appreciation was great for those who owned property, but for those who either did not buy or were too young to have done so, they now face higher rents that take up large chunks of income, 33% is the standard (which is the brink of unaffordable according to government agencies), while 50% has become common. So what would have happened had we gone in another direction? What if we didn't deregulate finance? What if we had strong rent control? Would it have been disastrous, as so many pundits have predicted?



Hmm, it sure doesn't look like ruin and starvation to me. Germany actually looks like it's doing quite well. Germany also had among the best recovery from the financial crisis:

View attachment 67249976

So why can't we have a system like this? It would benefit far more Americans than our current system while still allowing for a robust economy. Given the housing crisis that we have in the US, it's time for a change.

German cities tend to have housing shortages. No surprise.

Berlin was the exception, but that’s changing.

Tell me, would you invest in housing if you couldn’t evict tenants? Germans can’t. People can squat in their residences”, failing to pay the rent for months, a year, 18-months.

People go bankrupt when they are saddled with free-loading scum.

As the property owner, you don’t have rights.

If you want housing to be affordable, build more of it... which means putting an end to the senseless bureaucratic BS... which Germany is also rife with. Believe me, as someone who spends gobs of time in Germany, I know their stifling bureaucracy. In fact, I profit handsomely from it.
 

phattonez

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German cities tend to have housing shortages. No surprise.

Berlin was the exception, but that’s changing.

Tell me, would you invest in housing if you couldn’t evict tenants? Germans can’t. People can squat in their residences”, failing to pay the rent for months, a year, 18-months.

People go bankrupt when they are saddled with free-loading scum.

As the property owner, you don’t have rights.

If you want housing to be affordable, build more of it... which means putting an end to the senseless bureaucratic BS... which Germany is also rife with. Believe me, as someone who spends gobs of time in Germany, I know their stifling bureaucracy. In fact, I profit handsomely from it.
I notice you're looking exclusively at the position of the property owner here. Tell me who faces more financial insecurity, the landlord or the tenant? Where is the tenant better off? Here or Germany? And where is the doom and gloom in Germany?

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Maybe you should ask some actual GERMANS about it. They live in MATCHBOXES, unless they are very wealthy.

I was just there. I saw houses, townhouses, city apartments ... all very similar in size to what we have in our own urban and suburban areas. The tour I was on included a very pleasant home visit with a German family. Housing and home costs are not their biggest gripes. Google 'german church taxes'.
 

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I notice you're looking exclusively at the position of the property owner here. Tell me who faces more financial insecurity, the landlord or the tenant? Where is the tenant better off? Here or Germany? And where is the doom and gloom in Germany?

Sent from my phone. Instaurare omnia in Christo.

Those who rent properties have gone bankrupt due to renters not paying, and the renters being unable to evict these free loaders. It’s a serious problem, and why I would never invest in rental properties in Germany.

So, obviously the renter faces more financial insecurity because they run the risk of having to pay for their property despite the renter not paying his rent. the banks don’t give a **** if you have a delinquent tenant. They want their money.

Tell me, what type of effect would that have on housing investment?

I had a conversation with a former managing director of a major construction company... just last week about this very topic.

It’s Russian Roulette with your money.
 
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phattonez

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Those who rent properties have gone bankrupt due to renters not paying, and the renters being unable to evict these free loaders.

So, obviously the renter faces more financial insecurity because they must pay for their property despite the renter not paying his rent.

Tell me, what type of effect would that have on housing investment?

There's less of it. Now tell me why that's a bad thing for the quality of life of Germans. How has massively more rental housing investment here helped the quality of life of Americans?
 

phattonez

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The housing problem will only get worse and worse and to those who say "yea but you can just move to cheaper areas".. hog wash. People are moving more and more to cities, and dont want to live in little hicksburg with 2000 people where half are your family. If you want that, then here in Spain you can buy a whole village for next to nothing if you want. Granted there is no internet and the roads might suck, but you got your own village!

Of course it's hogwash. There are no jobs there and the infrastructure has been neglected for decades. There's a reason that everyone is moving to the cities, and the most basic reason is that cities have all of the jobs.
 

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I was just there. I saw houses, townhouses, city apartments ... all very similar in size to what we have in our own urban and suburban areas. The tour I was on included a very pleasant home visit with a German family. Housing and home costs are not their biggest gripes. Google 'german church taxes'.

You can opt out of German church taxes. Maybe they want to be buried in a Church plot, or are dependent on a job that demands they be a member of the church... yes you read that right.

Otherwise, they can say **** you to the church taxes.
 

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There's less of it. Now tell me why that's a bad thing for the quality of life of Germans. How has massively more rental housing investment here helped the quality of life of Americans?

When there is not enough rentals, prices surge.

There is less of what?

Mietspiegel-Index: Mieten wird in ganz Deutschland teurer - SPIEGEL ONLINE

Wenn Sie deutsch lesen kann...

When you can read German... if not, there’s google translate.

You have zero idea what you’re talking about, but that’s OK... I do know having spent massive amounts of time in Germany.

As noted earlier, Berlin is cheaper. I thought of buying there. Why is it cheaper? Because after the fall of the wall and Berlin became the Capital, they overbuilt.

Writing to you from the beautiful foothills of the Alps.

PS> Also lived in Orange, TO, Simi, Diamond Bar, and Alta Loma.
 
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phattonez

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When there is not enough rentals, prices surge.

There is less of what?

There's less investment in rental housing. It does little to change the actual supply because people still want to buy and people always need a place to live. It just keeps asset prices from inflating.

Remember, it's not the cost of the structure that causes home prices to rise. It's the price of the land.
 
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