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> 20%/y is that interest?! One thing that always struck me about some countries that seem to have a really low housing (rent) costs: the home prices seem to b

> 20%/y is that interest?! One thing that always struck me about some countries that seem to have a really low housing (rent) costs: the home prices seem to be equal that in the US! It doesn't make any sense. I'll see homes for 100K USD, but rent only $200-300/mo? How does that work?

charlesdm 11y ago
That's because the Hryvnia, Ukraine's currency, is a volatile currency which is hardly worth the paper it's printed on. It has declined about 20% YTD against the Euro, and about 45% YTD against the dollar. Inflation is also extremely high.
andrewl-hn 11y ago
Yep, that's interest rate - I checked with several bank sites before posting. This is due to volatile economy (war, corruption, all that) and higher risks for banks. You end up paying several times the price of the property. Like I said, almost everyone I know just puts aside 30-50% of their salary instead and buys at once when they save enough. 50% of 4k - and you effectively have only $2k to spend each month. Doesn't look that rosy compared to France, does it? Rent is cheap - I pay about $500/mo for a 1 bedroom apt in the city center. 10 minutes of walk to the office. The price of that place? - about $200k. That's one of the reasons we don't have a proper rental business: it just doesn't make sense.
csomar 11y ago
I live in such a country. My parents have a $250k home, that would cost only $500-$600 to rent. But here is the catch, they only pay $200-$300 in municipal taxes. I guess in the U.S it'll be a few thousands dollars. This cost will eventually drill down to the person renting the property. Also that's the price tax-free because nobody is paying taxes on rental (which is 30%). So if you add these two up, you get your price!
- strictnein 11y ago
  The general property tax rate in my area of the US is about 1.25-1.5% the value of the home. My home is ~$500k and my property tax is about $7250 a year. Previous home was ~$300k and my property tax was about $4200 a year. Schools are funded primarily through this mechanism.
- odonnellryan 11y ago
  Property taxes are a lot in many places in the US. Not all states are bad. Some states you only have a few hundred dollars a year. In NJ (my home state), especially near NY, it is normal to pay ~2-3% of the home's value a year in taxes.
ajuc 11y ago
> It doesn't make any sense. I'll see homes for 100K USD, but rent only $200-300/mo? How does that work? It's +- how it works in Poland in dozen or so biggest cities. There's no ad valorem tax on buildings, just a very small muncipial tax basing on land area and some multipliers depending on category. Also there's still shortage of buildings in these cities. 50m^2 flat in Lublin is worth around $80 000, I could rent it at $250/month maybe. The price of renting is on the high side for the city size, it helps that that particular city has 5 universities and 100 000 students with 350 000 regular population. Interest rates are at around 2-5% mostly.
geodel 11y ago
It is very common in India. Rent costs are typically half or less compare to US properties. Most people who buy are using black money or hoping for high appreciation in price of property. With rental income no one can service mortgage.

charlesdm 11y ago

That's because the Hryvnia, Ukraine's currency, is a volatile currency which is hardly worth the paper it's printed on. It has declined about 20% YTD against the Euro, and about 45% YTD against the dollar. Inflation is also extremely high.

andrewl-hn 11y ago

Yep, that's interest rate - I checked with several bank sites before posting. This is due to volatile economy (war, corruption, all that) and higher risks for banks. You end up paying several times the price of the property. Like I said, almost everyone I know just puts aside 30-50% of their salary instead and buys at once when they save enough. 50% of 4k - and you effectively have only $2k to spend each month. Doesn't look that rosy compared to France, does it? Rent is cheap - I pay about $500/mo for a 1 bedroom apt in the city center. 10 minutes of walk to the office. The price of that place? - about $200k. That's one of the reasons we don't have a proper rental business: it just doesn't make sense.

csomar 11y ago

I live in such a country. My parents have a $250k home, that would cost only $500-$600 to rent. But here is the catch, they only pay $200-$300 in municipal taxes. I guess in the U.S it'll be a few thousands dollars. This cost will eventually drill down to the person renting the property. Also that's the price tax-free because nobody is paying taxes on rental (which is 30%). So if you add these two up, you get your price!

strictnein 11y ago
The general property tax rate in my area of the US is about 1.25-1.5% the value of the home. My home is ~$500k and my property tax is about $7250 a year. Previous home was ~$300k and my property tax was about $4200 a year. Schools are funded primarily through this mechanism.
odonnellryan 11y ago
Property taxes are a lot in many places in the US. Not all states are bad. Some states you only have a few hundred dollars a year. In NJ (my home state), especially near NY, it is normal to pay ~2-3% of the home's value a year in taxes.

ajuc 11y ago

> It doesn't make any sense. I'll see homes for 100K USD, but rent only $200-300/mo? How does that work? It's +- how it works in Poland in dozen or so biggest cities. There's no ad valorem tax on buildings, just a very small muncipial tax basing on land area and some multipliers depending on category. Also there's still shortage of buildings in these cities. 50m^2 flat in Lublin is worth around $80 000, I could rent it at $250/month maybe. The price of renting is on the high side for the city size, it helps that that particular city has 5 universities and 100 000 students with 350 000 regular population. Interest rates are at around 2-5% mostly.

geodel 11y ago

It is very common in India. Rent costs are typically half or less compare to US properties. Most people who buy are using black money or hoping for high appreciation in price of property. With rental income no one can service mortgage.