Bavaria and the real estate bubble

381 posts in this topic

12 minutes ago, mtbiking said:

 

A significant part of the rise was the market correcting itself.

 

 

Interesting. When did you get back in and how much did that in the end cost or earned you?

12 minutes ago, mtbiking said:

 

Interesting. When did you get back in and how much did that in the end cost or earned you?


Ofcourse I didnt sell all. My depot at Scalable Capital cost me dearly. But I had a lot of cash even in Janury, as I was sceptical even then. Most of my ETFs or Fonds are automatic buys with Sparplans. I  raised monthly sparplans after the big crash. 

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Ok, and all together what did that bring you? I’m mostly curious. I didn’t sell a single thing but used the largest part of my cash reserves to buy in March/April parallel to my sparplan. I’m basically up on what I invested last year, and the rest is give or take at January last year’s level plus dividends.

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2 hours ago, mtbiking said:

and Munich will likely and in the long term remain a very livable city with a high quality of life, and one where the people in power are not so wiling to sacrifice parks and forests for high rises

 

I guess you've never seen the Ackermanbogen development. That used to be a complete green space behind my house with a small forest. Now, all packed together ugly apartment buildings. Several acres of them. Ruined our view.

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4 minutes ago, fraufruit said:

 

I guess you've never seen the Ackermanbogen development. That used to be a complete green space behind my house with a small forest. Now, all packed together ugly apartment buildings. Several acres of them. Ruined our view.


I’m sorry. But overall there’s a big resistance here to that sort of thing and compromises need to be made. I’m from Portugal, as long as money exchange hands mostly no-one stands in the way of a development there and it shows 😕

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5 minutes ago, yesterday said:

Its a shame, when you consider there is so much free ( OK farming ) land ) around Munich, Why cannot they not build there if they have to ?


In many cases that farm land doesn’t belong to Munich and the cities in charge of it resist to becoming an extension of Munich.

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1 minute ago, mtbiking said:


In many cases that farm land doesn’t belong to Munich and the cities in charge of it resist to becoming an extension of Munich. 

OK, but Munich has to 

 

Extend or

Build on every green place in the central area, until its concrete everywhere  or

Continue with no expansion

 

 

Which one would you pick ??, there are down sides with all options

 

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35 minutes ago, mtbiking said:

Ok, and all together what did that bring you? I’m mostly curious. I didn’t sell a single thing but used the largest part of my cash reserves to buy in March/April parallel to my sparplan. I’m basically up on what I invested last year, and the rest is give or take at January last year’s level plus dividends.

 

I could sleep very well in March, April, when some of my friends were calling me everyday to talk about their situation. And frankly speaking I never saw the Violent V-shape market come-back. But still I raised sparplans of ETFs like Nasdaq-100 where I thought too much bad can't happen.

" A significant part of the rise was the market correcting itself. "
 

Yes, I agree. But the correction is overshooting, I think.
I find it difficult to believe in Efficient-market theory. There are too many lobyists, Anal-ysts, marketings people trying to manipulate, too much greed on work etc.  "Market Can Remain Irrational Longer Than You Can Remain Solvent" :)

" Many other asset classes have more than  doubled in value in the last ten years. "

Yes, abosutely correct. But stocks and housing has a basic difference - housing is a basic need. Many won't care if Tesla stock is $500 or $2000, but most of them will if his/her rent is $600 or $1100. Its a job of the society to take care that is doesn't go out of control.

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13 hours ago, Goodbye_BlueSky said:

I don't agree with people saying its purely because of supply-demand.

 

The question is how much housing should cost, without people getting pissed-off. We also have to eat, which is may be more important. But cost of food remains very much under control, the state pays a lot of subventions and regulations to keep it under control.

I think this was the crux of your musings. You kind of answered your own question with the bold(ed) statement. At the end of the day the State and the Big Fish are pulling strings to distort the mechanics of the simple supply and demand equation. Which is how Little Fish get eaten up by Big Fish.

 

There is no profit until you actually sell. And then what do you do with your cash and how much will it get you? Which brings you back to inflation...

 

Trouble will arise when locals are priced out of the market by absentee "investors" who don't re-invest in maintenance. Look around at the UK. Nothing actually belongs to them anymore. Their infrastructure has been sold off to invisible non-tax-paying non-reinvesting "external" forces. The result is hungry kids and food banks. In a nutshell.

 

1 hour ago, Goodbye_BlueSky said:

I personally dont understand Monetary policy and Macro Economics. So I dont know whats gonna happen in 5-10 years. But number of economists sounding alarms about Monetary policies and consequences is high.

 

Don't kid yourself anybody else does either, even if they pretend to. The ringing of alarm bells is merely common sense shining through the fog, not the result of skilled crystal ball gazing and advanced studies in ivory towers. We all know the banking system has a big hole at the end of the tunnel well disguised by a bunch of spaghetti-like financial products nobody understands and gobble-de-gook (people trying to explain them). The buck stops somewhere.

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11 minutes ago, yesterday said:

OK, but Munich has to 

 

Extend or

Build on every green place in the central area, until its concrete everywhere  or

Continue with no expansion

 

 

Which one would you pick ??, there are down sides with all options

 


That mostly explains the scarcity in real estate in Munich. I don’t get to decide anything, but I think that “central” Munich is essentially full. They’ll use the available space more effectively when replacing old buildings or factories (see the old Kultfabrik area in Ostbahnof) but that’s mostly it. The area to the west/northwest of the city offers some place to expand and maybe build some high rises but that’s it.
 

The smaller cities in the suburbs, specially in the south, will continue to grow but with a lot of red tape and discussions as there are many small centers of decision involved and independent from Munich.

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33 minutes ago, Goodbye_BlueSky said:

 

I could sleep very well in March, April, when some of my friends were calling me everyday to talk about their situation. And frankly speaking I never saw the Violent V-shape market come-back. But still I raised sparplans of ETFs like Nasdaq-100 where I thought too much bad can't happen.

" A significant part of the rise was the market correcting itself. "
 

Yes, I agree. But the correction is overshooting, I think.
I find it difficult to believe in Efficient-market theory. There are too many lobyists, Anal-ysts, marketings people trying to manipulate, too much greed on work etc.  "Market Can Remain Irrational Longer Than You Can Remain Solvent" :)

" Many other asset classes have more than  doubled in value in the last ten years. "

Yes, abosutely correct. But stocks and housing has a basic difference - housing is a basic need. Many won't care if Tesla stock is $500 or $2000, but most of them will if his/her rent is $600 or $1100. Its a job of the society to take care that is doesn't go out of control.

 

 

Analyists and lobbyists tend to cancel themselves. And yes, housing is considered a basic need in Germany: if you are a resident and truly can't afford your rent anymore the city of Munich will  subsidize it or try to find you a suitable accommodation, and the long waiting times are a big problem. But there's no constitutional right to a cheap, stylish  apartment within 10 min cycling distance from Marienplatz. Having left Lisbon 15 years ago I still think that many, many people are spoilt here and have no idea of how good they have it.

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@mtbiking
" if you are a resident and truly can't afford your rent anymore the city of Munich will  subsidize it or try to find you a suitable accommodation,"

As an extreme cautious person/investor I will hope that this won't happen to me. On the other hand, numbers of Sozial wohnungen  in Germany went down from 2,58 Million in 2000 to 1,07 Million in 2019 - a reduction of 58% . So I think the politcal signal on this subject has been very clear last 20 years. May be it will change in the future.

I am not talking about constitional rights , but basic needs has to be there for everyone, within a good radius - doesnt have to be in Marienplatz. And constitution is written/modified by politicians elected from the people of the society. If no kinder garten teacher or fire service person can rent a house anymore, do you expect him/her to drive 3-4 hours hin und zurück everyday to come to work? I remember a friend of mine went to Munich in 2004 with a job after his MSc in Computer Science from Uni Stuttgart, salary 50K. We thought wao !  Now 50K should be like bare minimum for Munich, I have long stopped looking for a job in Munich area, doesnt make sense financially! How does Munich attract normal people for normal jobs these days ?   

 

I agree fully with your point that the Germans has it very good here. I know people in East Germany, who were mad to leave DDR back then, and now they can make 3 vacations in Canary Islands every year and are still very unhappy with the Govt

"Analyists and lobbyists tend to cancel themselves."

-  Can you pls explain a little ? I am not sure I understood your point here. 

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2 hours ago, Goodbye_BlueSky said:

@mtbiking
" if you are a resident and truly can't afford your rent anymore the city of Munich will  subsidize it or try to find you a suitable accommodation,"

As an extreme cautious person/investor I will hope that this won't happen to me. On the other hand, numbers of Sozial wohnungen  in Germany went down from 2,58 Million in 2000 to 1,07 Million in 2019 - a reduction of 58% . So I think the politcal signal on this subject has been very clear last 20 years. May be it will change in the future.

I am not talking about constitional rights , but basic needs has to be there for everyone, within a good radius - doesnt have to be in Marienplatz. And constitution is written/modified by politicians elected from the people of the society. If no kinder garten teacher or fire service person can rent a house anymore, do you expect him/her to drive 3-4 hours hin und zurück everyday to come to work?

 

There's a structure in place to  compensate for higher costs of living for those state employees deemed necessary (München Zuschlag, rental property only for state employees) and many locals have families and connections that facilitate finding accommodation. Newcomers are left to fend for themselves in the free market.  The situation is far from being unique to Munich (it affects most major cities in Europe) and the prices will fall whenever the demand/offer dynamics change. Take my home city of Lisbon, property prices there are proportionally to income higher than in Munich and no normal family dreams about owning a detached home, even high earners consider themselves happy with an apartment in a high rise with view to the highway.

 

Quote

 I remember a friend of mine went to Munich in 2004 with a job after his MSc in Computer Science from Uni Stuttgart, salary 50K. We thought wao !  Now 50K should be like bare minimum for Munich, I have long stopped looking for a job in Munich area, doesnt make sense financially! How does Munich attract normal people for normal jobs these days ?

 

A couple years ago a young German guy with a PhD in Computer Science applied to rent from me. First job after the PhD in a well known IT company in Munich: €125,000/year + €25,000 sign in bonus. He sent me a copy of the contract.

 

Quote

-  Can you pls explain a little ? I am not sure I understood your point here. 

 

For every analyst shouting buy there's one advising to  sell, for every lobbyist one one side you can be sure there's a counterpart lobbying for the other.

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Another update here. We visited my in-laws the week before Easter, way up in the north, in Meck Pomm. My wife always said, "no one wants to live up there" and "the house owners are happy if they can sell their houses at all!" Well, low and behold, due to 10 years of low interest, even up here things have gone way up in price. Comparable houses in small cities cost around 75% of what they do in Oberbayern, and in the local paper there are 5-6 callouts of families looking for a house to buy or a lot to build on. Looks like buildable land and housing up there has gotten scarce, too.

 

Meanwhile in Oberbayern, we tried a new tactic this year. We used BayernAtlas to find not yet built, albeit separated Lots in our town. We went and asked about 10 people if they would sell. They all said no, they are saving for their kids or grandkids. 

 

Our Gemeinde also put up a Grundstück for sale as a Höchstbietverfahren. Have you ever seen this? Minimum price €750, two rounds of bidding. The first round ended at €1.100, and after that you have two weeks to increase your bid. What some buttholes. We could only bid up to €900, leaving us with another €400k for a Fertighaus. I am about 99.9% sure that our chances are long gone, however there are pockets in Germany where you can find cheap houses (like Landau an der Isar). Maybe we will just move someday.

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On 3.4.2021, 06:02:12, dmbartender said:

What some buttholes. 

 

What? Some buttholes?

What! Some buttholes!

 

But some what-holes?

 

Somewhat buttholes.

 

 

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On 5.3.2015, 07:10:18, dmbartender said:

I've been watching the real estate market here around Rosenheim the last three years, entertaining the idea of buying a home. With ultra low interest rates and fear of inflation and currency reform, many people want to transfer their savings into Betongold. As a result, an ordinary single family home in our village of 6000 people costs half a million euros, whether old our built new. The housing prices have been rising at 5-10% per year.

 

I wonder how long the real estate market can keep this high? I feel that if interest rates can no longer be artificially suppressed that enough people will have to default, vacating possibly enough homes to bring the local market back somewhat to realistic rates.

 

Would anyone with more experience in this arena like to weigh in? Should I force buying a house now, or cross my fingers for a more favorable buyers market in the distant future?

9 years and still climbing... Dont you just wish you had bitten the bullet when you first got here?      

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On 03/04/2021, 06:02:12, dmbartender said:

Minimum price €750, two rounds of bidding. The first round ended at €1.100...

Of course you mean per square metre?

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8 hours ago, SpiderPig said:

9 years and still climbing... Dont you just wish you had bitten the bullet when you first got here?     

In another 9 years he might be glad he didn´t buy now. By then the babyboomer´s kids will have left the market and there will be no replacement for them. Plus interest rate will be higher - making current prices unaffordable. That´s my guess at least.

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29 minutes ago, jeba said:

In another 9 years he might be glad he didn´t buy now.

 

Spidey wasn't talking about now. He was talking about 9 years ago which was definitely a lot cheaper.

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Jeba never actually reads what people write...

 

If BMBT had actually bought 9 years ago...   in another 9 years the property could possibly be debt free.. so who would be worried about interest rates and who would be worried about any "Baby boomers".. what ever that means..  

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