European refugee crisis thread

[Thunderfire]

I have not seen used houses below 135k and new houses below 250-300k. Except for the ones literally in the middle of nowhere, not just a village.

60k-80k usually means a small village with no shopping facilities and/or no high speed internet access.
40k = in the middle of nowhere 60km-100km away from a large city.

[salm]

Most likely scenario is more exclusion and ghettoes, though, because integration takes time (and there is not much time) and because just as banks don't give credit to refugees, neither are capitalists eager to hire them, except as the lowest-paid menial labour. Many are not willing to offer even that.

I hope the ghettoisation will stay managable.
There is some hope as it seems that there is a lot more social will to integrate refugees into society than in the past. Of course you´ve got the Freitals and Salzhemmendorfs where hate and terror is thrown at asylum seakers but on the other hand there seems to be a lot of solidarity as well. It´s difficult to find number but I know several volunteers who joined groups to help with integration things such as language training, taking care of beurocratic stuff and things like that and these people tell me that they actually have so many volunteers that they don´t require more, at least in their particular areas. My mother for example tried to volunteer as a language instructor but she was denied because they had enough people.
We´ll see if that works out in the long run or if the enthusiasm will dry up.
There are also a lot of open jobs at the moment and a lot of the Syrians are supposed to be well trained people with middle class education, so perhaps at least a certain number can be integrated into the German job market decently.

[Thanas]

Germany should stop building houses for the rich and build more affordable housing. This would alleviate the problem for the populace as well, who are what, 53% renting and not having own apartment/house?

Affordable housing is available in germany. Buying a house for 40k-80k EUR is possible if you are willing to commute.

80k? Really? For a decent house? In what area?

[salm]

Germany should stop building houses for the rich and build more affordable housing. This would alleviate the problem for the populace as well, who are what, 53% renting and not having own apartment/house?

Affordable housing is available in germany. Buying a house for 40k-80k EUR is possible if you are willing to commute.

80k? Really? For a decent house? In what area?

You get dirt cheap houses in Brandenburg starting at 5000 bucks for a house. I doubt that they´re decent at that price but if you come into the 80k range I think they are.
People who live in Berlin and earn halfways decent money sometimes buy a weekend house somewhere in Brandenburg because they are so cheap.

Link

[amigocabal]

Yes.

Despite the worship of home ownership they reaches near hysteria at times, there is and will continue to be a need for affordable rental housing. Not everyone will remain in an area long term. Not everyone has the resources to own a home. Not everyone wants to own a home.

Refugees need shelter, they don't need to be saddled with decades-long debt.

Maybe shelters could be built for them on farms. This also means that they will have jobs.

S.M.. Stirling's Emberverse series mentions refugees who live and work on farms. Maybe this could be practiced in real-life Germany for real-life refugees.

[Broomstick]

Modern farming doesn't require nearly as much manpower as in prior centuries. I doubt there are sufficient farm jobs for 800k refugees.

[Thanas]

You get dirt cheap houses in Brandenburg starting at 5000 bucks for a house. I doubt that they´re decent at that price but if you come into the 80k range I think they are.People who live in Berlin and earn halfways decent money sometimes buy a weekend house somewhere in Brandenburg because they are so cheap.

Link

Holy shit. Over here it is starting at 120k for a house built in the fifties and needing 30k of renovations.

Still that wouldn't do much for refugees as you drop them in the middle of nowhere. Probably better than camps, but still. Where do they go from there?

[salm]

You get dirt cheap houses in Brandenburg starting at 5000 bucks for a house. I doubt that they´re decent at that price but if you come into the 80k range I think they are.People who live in Berlin and earn halfways decent money sometimes buy a weekend house somewhere in Brandenburg because they are so cheap.

Link

Holy shit. Over here it is starting at 120k for a house built in the fifties and needing 30k of renovations.

Still that wouldn't do much for refugees as you drop them in the middle of nowhere. Probably better than camps, but still. Where do they go from there?

Yeah, it depends on the area extremely. I´ve been keeping an eye on housing prices a little bit for a while because my parents are getting older. They´ll probably still be living in the house they own for a while but in that age you never know if they´ll need expensive assisted living or something like that soon. The house was built in the 90s in a tiny village in southern Germany. It´s a great house, well kept, no repairs needed, it´s got a modern layout and large windows with a lot of light and a nice plot with trees, cabins, brick bbq and all kinds of cozy stuff. Basically all the stuff you´d want if you moved to the counry side. But it´s in a tiny village where nobody wants to go to and I kind of doubt that if the need to sell it arises it will sell for more than 120k to 140k. It´s a shame, really, but I guess it´s worth it for the greater good. More people living in cities is more environmentally friendly after all, or so it is often said.
Younger people move away when going to university, the old die and the few young people who stay don´t want to live their parents houses for some reason. They buy enormous, ugly prefab houses and build them in the "Neubaugebiet" at the village limits. The houses in the center of the villages are empty because nobody buys them and the former owners die. These villages are turning into doughnuts.

[Thanas]

Yeah, had that experience in my parents home town. Which is crazy, there are great houses that stood solidly on good ground (ever wonder why we get so many flooded cellar now? Because some people decide that building in areas where people before decided not to build on before and sometimes these areas are exposed to high water floors etc.). But I wouldn't want to move there either because it would necessitate me travelling 2 hours a day. No thanks.

[salm]

I wonder if it is going to get more interesting in the future when more people work from home offices. I´ve been working from my home office for almost 3 years now and from a financial standpont it would make sense to move to a cheap rural place.
I need a very fast internet connection for work and rural areas have been catching up with internet speed. At the moment I´ve got a 50Mbit down and 10Mbit up line which I surprisingly could get in a lot of rural areas now as well. However, these speeds have been around in rural areas only for a year or so and I´m a bit afraid that soon I´ll need even higher speeds because 4k resolutions and VR are on the rise. Both require extreme bandwidths and of course the necessary bandwidth which is available here in Berlin (200Mbit down 40Mbit up) now, will take a while to trickle down.

[Thanas]

One of the few times I have been really impressed by Merkel.

[Welf]

A house for 40k? Probably in the middle of nowhere, like 30-50 km off Leipzig, heh, where you have to spend a huge part of your life driving a car on the Autobahn every day, expending your life in traffic jams and on the road. I know, this sounds crazy, but I've even met people who commute 100-200 km to work. That's how bad the housing thing is. And... That is not normal. It's sickening that people have to utterly waste the time of their lives like that and makes the 8-hour day fight of the European labour movement into a total joke. 80k Eur is already a lot for most working-class families with one earner. It takes over 8 years to save that much under the savings norm of 40-60% of total income - which, as I've learned, normal people (=Europeans) here do not do anyway, only weird people like us Russians or the Asians are somehow inclined to save like crazy. Of course, it is easy to make 80k if you are a banker, indeed, these make 200k per year easily, so the entry price for new construction in cities is between 200k and 400k depending on city (that for apartments) and older properties will not cost less than 80k (used to be 60-70k in worst parts of town after the 2009-2011 housing price collapse, but now it is nowhere near the numbers).

I have not seen used houses below 135k and new houses below 250-300k. Except for the ones literally in the middle of nowhere, not just a village.

A savings rate of 40-60% isn't really a good thing, if done by households directly. Germans and Europeans have to save less, because they usually pay for healthcare, education and retirement with taxes or social security deductions. And since that means shared risk, each one can save less because he doesn't have to cover liquidity risk.
Btw, where did you get that percentage from? I do read about saving rates in economies as data, but I haven't heard of a normative theory for this. Seems like a gap I'd like to close.

Also, how do you know so much about the German housing market?

One of the few times I have been really impressed by Merkel.

Relevant comic, however in German

[salm]

At the moment saving is also next to useless. With interest rates being next to zero you actually lose money when saving.

[K. A. Pital]

Saving is not "useless" - you do not lose money only if you invest in assets which appreciate lke 3% per year, outpacing inflation, but spending everything on consumer goods doesn't make much sense either. Just about the only asset (other than stocks, etc.) which offers a stable over 3% return is... property.

Btw, where did you get that percentage from?

Europe and developed economies

Asia

Also, how do you know so much about the German housing market?

I wouldn't say it is much, just some bits of information others may find useful.

I do read about saving rates in economies as data, but I haven't heard of a normative theory for this. Seems like a gap I'd like to close.

There are gross savings (which also include corporate and govt savings) and then there's the household savings rate. I say "norm" because a savings rate of 50% is the norm for myself. Doesn't mean it's normal for Europe or developed economies, although I don't think total spending and nigh-zero savings are normal either...

[salm]

Saving is not "useless" - you do not lose money only if you invest in assets which appreciate lke 3% per year, outpacing inflation, but spending everything on consumer goods doesn't make much sense either. Just about the only asset (other than stocks, etc.) which offers a stable over 3% return is... property.

Yeah, I mean saving as in fixed deposits and similar things. You lose money because of inflation and low interest.
Wasting money on crap you don´t need is obviously even dumber.
Property has a rather high entrance barrier so stocks, as unlikable as they are, are one of the very few options.

Personally I probably save and invest more than 60% of my income, for one because then I can take a year off here and there and furthermore I simply wouldn´t know what to spend it on anyways. Most of the things I want are cheap or free.

[Sea Skimmer]

Property also has continuing costs. Property taxes, depreciation , maintenance costs ect... while it remains possible to make a long term profit on property in many markets, it is no certainty on the small scale, large investors spread property over wide areas and types to hedge themselves, that will pretty much always be profitabe. All the more on the small scale so if the property in question is not also your residence, in which case its bound to undergo non trivial depreciation. That may be counteracted by large increases in property values, it may not be, but at least in the US its now very hard to find markets in which simple home ownership is a profitable thing. It may well break even, which really does beat paying for apartments, but it's not going to make you actual major money compared to what even conservative stock investments. It also means you need to have the resources to handle sudden liquid problems, like the building needing a new roof.

[Elheru Aran]

My general understanding of finances related to property-- which is very minimal but I'll give it a try-- is that property only turns a profit either a.) in the long term (think decades) or b.) for those with the money and resources to purchase large quantities of property and then flip it, especially in high-value areas.

Purchasing a house, for example, only really turns a profit in the long run for a private homeowner if you stay with it, keep it maintained, no ruinous repairs come up such as replacing the roof multiple times or the foundation goes to shit, and property values in the area don't depreciate badly. Finish out the mortgage, and in the long run, you're probably doing better than if you had rented an apartment for that timespan (mind you, it's not many people who rent an apartment for ~15 years). On the other hand, if you only need a place to live for a few years... an apartment could well end up being cheaper, but this depends very strongly upon local costs. Some areas, rental costs are a good deal steeper than a monthly payment on a mortgage.

[K. A. Pital]

Property also has continuing costs. Property taxes, depreciation , maintenance costs ect... while it remains possible to make a long term profit on property in many markets, it is no certainty on the small scale, large investors spread property over wide areas and types to hedge themselves, that will pretty much always be profitabe. All the more on the small scale so if the property in question is not also your residence, in which case its bound to undergo non trivial depreciation. That may be counteracted by large increases in property values, it may not be, but at least in the US its now very hard to find markets in which simple home ownership is a profitable thing. It may well break even, which really does beat paying for apartments, but it's not going to make you actual major money compared to what even conservative stock investments. It also means you need to have the resources to handle sudden liquid problems, like the building needing a new roof.

This does not apply to apartments (you do not have to be expected to pay upfront for roof construction, and typical emergency expenditure will not exceed the sum of one monthly wage). Property has costs, which need to be substracted from rental costs in the same area over time. Which, at least here, would mean a person saves anywhere from 3500 to 10000 Eur per year depending on what type of apartment he or she would otherwise rent. Purely because the alternative costs are so high. This money can be invested in anything, but while you rent, disposable income goes down. Of course, this does not apply in case of mortgage debt, where you have to consider that a breakeven will happen only after you fully pay out the debt. Still, at the end of it all, in say 10-15 years, you are either left with an apartment that costs 80-90k Eur... Or you are left with nothing, and your rentier landlord is left with around 50-60k pure income. Only people who fail math can still wonder what is the better option here.

No idea about the houses, though, costs may be prohibitively high and credit terms (interest, other payments) worse due to the bigger sums involved.

Depreciation applies mostly to new construction (expected drop in value ranges somewhere between 30-50% depending on how long you use the property and how good was your initial offer). If you take used property after depreciation period ends, which it does for most such properties and it is not terribly hard to determine that point depending on the type of construction. I've worked a bit in urban planning, which helps to do that, but it is well within the ordinary intellectual capabilities. Purchasing assets older than that will remove the depreciation problem.

Finally, long-term rents here only take into account the prevailing market rental prices in the area, so this income is fixed and stable over very long periods of time. You can literally live off being a rentier if you have several mid-priced properties. This is not related to US, though, all based on our local conditions.

Taxes are a joke, as far as apartments are concerned.

Finally, yes, it is expected that you either live in the apartment (thus your annual savings are the otherwise-inescapable rental costs minus property maintenance costs and taxes, basically 600x12 = 7200 minus 200 maintenance minus 220-300 taxes, total yearly savings are ~6700) or you rent it out, in which case annual income is 5-7% of total property cost. You do not leave apartments staying empty just for fun, and most rentiers here are very conscious of the costs that pile up if you do not rent but just keep it empty. Calculations here are for larger towns in Hessen and Baden-Württemberg.

[Thunderfire]

80k? Really? For a decent house? In what area?

Harz , Rhön and other areas close to the former inner german border.

[salm]

Finally, yes, it is expected that you either live in the apartment (thus your annual savings are the otherwise-inescapable rental costs minus property maintenance costs and taxes, basically 600x12 = 7200 minus 200 maintenance minus 220-300 taxes, total yearly savings are ~6700) or you rent it out, in which case annual income is 5-7% of total property cost. You do not leave apartments staying empty just for fun, and most rentiers here are very conscious of the costs that pile up if you do not rent but just keep it empty. Calculations here are for larger towns in Hessen and Baden-Württemberg.

Did you include house management (Hausverwaltung) and the money you have to pay for the shared areas like the stair case somewhere? I hear that is a rather large sum.

[K. A. Pital]

Home service is what you pay regardless of whether you rent or own. To expand a bit, typically these costs are between 200 and 300 Eur per month, this includes hot water, cleaning etc. The only difference between owning and renting is that the owner also pays to amortization funds (30-40 Eur per month out of the above sum). Usually, however, the "cold rent" (Kaltmiete) is offered by the rentiers at such a level that it also compensates the amortization costs. This is why these costs are born anyway. Annual amortization costs are between 380 and 500 Eur - even after substracting them, you are left with 6300 or so in pure income or savings.

[salm]

With amortisation funds, do you mean interest on loans you took in order to buy the appartement and things like that?

[K. A. Pital]

No, I mean the part of the Hausverwaltung costs borne only by the owner and not by those who rent. These 30-40 Eur per month are basically going to a common house repair and maintenance fund.

The interest is another thing alltogether. Considering a 1,5-2% interest rate and 10 years to pay off the loan, the annual costs borne will be around 1000-2000 per year, which is still not bad even if it diminishes annual savings to around 4000, 5000 per year... considering rentals for two-room flats start at ~600 Euro per month "cold".

[LaCroix]

You get dirt cheap houses in Brandenburg starting at 5000 bucks for a house. I doubt that they´re decent at that price but if you come into the 80k range I think they are.
People who live in Berlin and earn halfways decent money sometimes buy a weekend house somewhere in Brandenburg because they are so cheap.

Link

Holy Crap!

I'm living in Bumfuck Nowhere, Hungary, and even here a house starts at 10k!

[Thunderfire]

Holy Crap!

I'm living in Bumfuck Nowhere, Hungary, and even here a house starts at 10k!

Depolulation is a problem in germany. There are many empty houses in dying counties like Osterode.