4 ms·

i hope so. millennials might finally be able to own

baggsie 7y ago
The reality is older people buying up cheaper property to rent out as they are the only ones able to get mortgages.
samsonradu 7y ago
Unfortunately, I’d argue the contrary. Housing prices will further decouple from the economical reality and become a safe-heaven like asset that protects wealth from inflation.
cm2187 7y ago
If they still have a job
ketzu 7y ago
While homeownership of millennials is lower than that of their parents' generation at the same age in the US, it is far from being zero. Most results I've seen point it at 32-37% compared to the parents' generation at the same age in the US at 42-47%. It's not a small gap (with various factors leading to it), but it's not like millennials don't own anything or previous generations even owned mostly at that age. (But the data is not the most recent, so actually previous generations might have had more than 50% ownership at that age in the US)
- mschuster91 7y ago
  The key issue is the rural-urban gap, and it's not just only in the US (although it's the most extreme there). In Germany, if you live in the more... remote parts that don't have much in terms of jobs or public transportation, you can live for cheap or continue living in your parents' house. No biggie. But getting started with ownership in urban areas? Next to impossible without financial assistance from parents. 500k minimum for a 3 room/60 m2 is the ultimate lowest of the low you'll get in Munich. 10% downpayment is 50k plus closing costs of 35k (17k taxes, 17k realtor) which means prospective owners have to save at least 85k (and better 100k to account for moving costs, furniture, repairs)... which means that if you want to own an apartment at 35 you have to save 10k a year beginning with 25 - and no one I know here in my age group can put aside 900€ a month, not with regular rents gobbling up 50% or more of your paycheck! And... even with 1% interest rate you'll end up with 1.100€ mortgage payment at least plus hundreds of euros a month in HOA fees (if applicable, usually only in condos/bigger private developments), insurances (fire, weather, ...), some emergency fund for issues such as heating or renovations), that is next to unaffordable.
  - ketzu 7y ago
    While I agree in general, I don't think it's as easy as urban-rural. Germany has some cities with extreme housing prices, notably Munich, but the discrepancy is big within the group of larger cities as well. I can't say much about my friend group, as we don't talk about buying houses often. The few I talked to have an even split between the ones that want to buy (or just did) and the ones that don't even want to, even though we're in an income segment where it would be affordable. I was surprised to find that home-owner rates in Germany have been quite low compared to other countries, but I couldn't find data before 2005 (it was 51-55% overall). It's really interesting to look into these kinds of things!
Tycho 7y ago
I’m hearing that in the current economic situation banks are asking for 40% deposits to get a mortgage. I remember my landlord in 2008 saying it had been hiked to 20%. In good times people can get a mortgage with 5-10% down.
- ag56 7y ago
  In 2005, in Holland, my deposit was -20%. I went into the bank hoping I might get 100% and the mortgage guy immediately offered me 120% "to help with the furniture".

The reality is older people buying up cheaper property to rent out as they are the only ones able to get mortgages.

Unfortunately, I’d argue the contrary. Housing prices will further decouple from the economical reality and become a safe-heaven like asset that protects wealth from inflation.

cm2187 7y ago

If they still have a job

ketzu 7y ago

While homeownership of millennials is lower than that of their parents' generation at the same age in the US, it is far from being zero. Most results I've seen point it at 32-37% compared to the parents' generation at the same age in the US at 42-47%. It's not a small gap (with various factors leading to it), but it's not like millennials don't own anything or previous generations even owned mostly at that age. (But the data is not the most recent, so actually previous generations might have had more than 50% ownership at that age in the US)

mschuster91 7y ago
The key issue is the rural-urban gap, and it's not just only in the US (although it's the most extreme there). In Germany, if you live in the more... remote parts that don't have much in terms of jobs or public transportation, you can live for cheap or continue living in your parents' house. No biggie. But getting started with ownership in urban areas? Next to impossible without financial assistance from parents. 500k minimum for a 3 room/60 m2 is the ultimate lowest of the low you'll get in Munich. 10% downpayment is 50k plus closing costs of 35k (17k taxes, 17k realtor) which means prospective owners have to save at least 85k (and better 100k to account for moving costs, furniture, repairs)... which means that if you want to own an apartment at 35 you have to save 10k a year beginning with 25 - and no one I know here in my age group can put aside 900€ a month, not with regular rents gobbling up 50% or more of your paycheck! And... even with 1% interest rate you'll end up with 1.100€ mortgage payment at least plus hundreds of euros a month in HOA fees (if applicable, usually only in condos/bigger private developments), insurances (fire, weather, ...), some emergency fund for issues such as heating or renovations), that is next to unaffordable.
- ketzu 7y ago
  While I agree in general, I don't think it's as easy as urban-rural. Germany has some cities with extreme housing prices, notably Munich, but the discrepancy is big within the group of larger cities as well. I can't say much about my friend group, as we don't talk about buying houses often. The few I talked to have an even split between the ones that want to buy (or just did) and the ones that don't even want to, even though we're in an income segment where it would be affordable. I was surprised to find that home-owner rates in Germany have been quite low compared to other countries, but I couldn't find data before 2005 (it was 51-55% overall). It's really interesting to look into these kinds of things!

Tycho 7y ago

I’m hearing that in the current economic situation banks are asking for 40% deposits to get a mortgage. I remember my landlord in 2008 saying it had been hiked to 20%. In good times people can get a mortgage with 5-10% down.

ag56 7y ago
In 2005, in Holland, my deposit was -20%. I went into the bank hoping I might get 100% and the mortgage guy immediately offered me 120% "to help with the furniture".