12 ms·
> To sum up: if you are single and opt for "live cool and don't care about expenses" style, then an average developer salary will be enough (it might be harder
by sdevonoes 5y ago
> To sum up: if you are single and opt for "live cool and don't care about expenses" style, then an average developer salary will be enough (it might be harder if you have a family to feed).
> On the other hand, if you choose to go the student-like route (living in Wohngemeinschaft and not eating out too much), you can easily manage with just 1.200-1.500 EUR per month, and save the majority of your salary.
I know it may be an unpopular opinion, but saving 18K Euro/year leads you nowhere (first world problems, I know) if you would like to buy a decent house (not flat) in the suburbs of a medium-size German (or western European) city. Decent houses cost around 450K Euro (or more).
Edit: Let's start a revolution :) https://news.ycombinator.com/item?id=26903194 https://news.ycombinator.com/item?id=26903194
- rkachowski 5y agoTypically you'd be saving for a deposit on a house, rather than the full amount.
- dkyc 5y agoWhy's that? Saving 18k for 5 years would yield you 90k€, which would be an appropriate 20% down payment on the 450k€ house.
- ChuckNorris89 5y agoIn 5 years, that house might cost a bit more than 450k.
- adrianN 5y agoOr it might cost a bit less.
- wink 5y agoPrices have beeen going up steadily for the last 10-15 years. Maybe there was a single dip in 2008-2010.
- adrianN 5y agoPast performance of an asset is no guarantee for future performance.
- ChuckNorris89 5y agoI don't care about past performance, I'm only looking at the future and unless there will be a future building boom in the cities to increase supply(spoiler alert, it won't because a million reasons) and unless there will be a sharp drop in internal and external immigration to the cities with jobs, prices will keep rising.
- snidane 5y agoHave you exhausted all options for why prices will only increase? I can see a scenario in which inflation rises and increased mortgage rates deflate the current overvalued housing market.
- imtringued 5y agoIt's already rising in the US, if the central bank figures out how to meet the 2% goal year over year it will raise the interest rates in a few years. Probably not before 2024 though.
- marcosdumay 5y agoEspecially when the populational trends imply that demand for housing will go down on the distant future. Future performance is almost guaranteed to decouple from past performance at some point.
- wink 5y agoYour points are technically correct, the best kind of correct. I'm not looking at any undetermined future point in time, if I'm ranting about housing prices it might be not unrealistic that I'd like to buy one in the next few years - and I've seen absolutely zero indication that the prices would suddenly drop by 20-40% to the point where I'd call them reasonable, like 15 years ago.
- imtringued 5y agoWell, assuming everything goes according to plan we are reaching the peak and housing will have to go down again. I don't know when this will happen, it could happen within 5 years, it could happen no earlier than 10 years.
- sdevonoes 5y agoLet's do some simple (and probably wrong, but hey) maths: - House price: 450K euro - In Europe you usually need around 30% of the house in cash (20% for down payment and 10% for paperwork and the like). This means you need 135K euro saved. Saving 18K euro/year => you need to save money for 7 years - Now you get a mortage for the 70% of the 450K euro (315K euro). Now depending on how much you want to pay every month, we get different outcomes. Let's say you are willing to pay 1500 euro/month of mortage: this means (roughly) you will be paying your house for around 17 years - This all implies you will be earning 60K euro (or more) per year over the next 24 years of your life. Let's say you are at this moment 25 years old, so you'll get your house paid when you are 50. This is the panorama for people who are supposed to be the top 10% tier in the society (in terms of gross income) in a country like Germany (but applies to any other western European country as well). Not bad, but not good either.
- erinnh 5y agoThats wrong. At least right now. 10% down payment is quite common currently in Germany for a house.
- deleted 5y ago[deleted]
- maaaaattttt 5y agoWell the money still needs to be paid at some point. If you go the 10% deposit route, you will get slightly worse interest rates and overall higher monthly payments. Payments that you need to maintain for ~20 years…
- erinnh 5y agoThe 10% is what is currently often done because it barely moves the interest rates. The interest rates are just so low that waiting to get a loan and buy a house is mostly money lost by not getting that stupidly low interest loan.
- jsdwarf 5y ago
- tdumitrescu 5y agoWhen I bought a 250K€ apartment in the Netherlands, my total cash outlay (down payment plus costs) was around 40K€. Anecdotal point supporting those pointing out that owning a 450K€ home in Europe is indeed still within reach for someone saving a modest amount each year.
- lbrito 5y agoI assume engineering positions are on the top bracket of salary distribution. If not even this is enough to pursue home ownership, what kind of people are able to afford a house? Honest question.
- almoehi 5y agoThe general assumption you make is wrong - it’s not like in North americas. There are eng jobs in the top bracket, but the big majority isn’t.
- Traubenfuchs 5y agoLawyers, consultants, doctors, couples and don‘t forget about those who inherit some money and those who are happy with a 300k single apartment.
- nicoburns 5y ago> If not even this is enough to pursue home ownership, what kind of people are able to afford a house? Honest question. Yeah, nobody can. At least not without a huge mortgage. That's why house prices are one of the biggest political issues in Europe.
- ChuckNorris89 5y ago>what kind of people are able to afford a house The kind where both partners have top jobs (less common) or receive inheritance (most common).
- rm445 5y agoA couple who are both in a good income bracket?
- estaseuropano 5y agoPrice/sq meter varies between 100-2000€, so it really depends on your region, lifestyle and choices. If you have a normal salary (or both working) you can afford a small house. Mortgages also tend to be reasonable in Germany.
- 5y ago
- madarcho 5y agoFew people buy a house outright. Mortgages make the ordeal a little more in reach. Now as to whether banks grant it or not is a different problem...
- frockington1 5y agoDo you know if Europe's negative rates have made mortgages more or less challenging to receive. I can see it going either way as any interest is better than negative bond yields but how much effort are you going to put in if a mortgage rate is suppressed as well?
- dagw 5y agoAt least in Sweden they have made the rules around getting a mortgage stricter and stricter over the past 4-5 years. The income requirements have gotten stricter, they're requiring that you put down more money up front and that you make larger monthly principal payments.
- KptMarchewa 5y agoNo longer >100 year loans?
- imtringued 5y agoIf the minimum down payment grows it gets harder.
- ChuckNorris89 5y agoSorry, but even 450k Euros for a house is very cheap for the current crazy market in Germany. At that price don't expect to be in a nice area or be close to any major city or good facilities.
- estaseuropano 5y agoTotally depends on the region..and public transport such as local trains tend to be good and most cities small enough for cycling to work or commuting in. Even hlHamburg or Munich is not like London or New York.
- deleted 5y ago[deleted]
- corty 5y agoRecently, near my grandmother's, public transport got a new train stop in the outskirts of Frankfurt. House prices in the adjacent villages have more than doubled. And they weren't cheap to begin with, considering it is commute distance to Frankfurt.
- alkonaut 5y agoSavings is for a down payment. Then you pay mortgages on the house and any savings are much better to keep (retirement, buffer, ..). If I were to save to buy my house (€800K) I'd certainly not be living in it before the kids move out, at which point I no longer need a house. The price of a house on the market has a pretty simple formula: it's what two incomes can pay per month times the interest rate they expect over some horizon, and the expected monthly pyament of the principal (if any). Where I live, I can stop paying back the loan when the loan is under 70% the valuation of the house, so it's then interest-only after that. And of course there are better uses of money than paying a mortgage: in recent history the stock market has been booming while my mortgage is under 1.5%. Whenever I have €1K lying around, I'd certainly not want to pay back 0.1% of my mortgage when I can save it instead.
- jcbrand 5y agoIf you're not paying off the principal, you're just renting from the bank without the benefit of having a landlord to fix things. Why bother?
- alkonaut 5y ago> If you're not paying off the principal, you're just renting from the bank without the benefit of having a landlord to fix things. Renting a house is more or less unheard of. If I want a house I need to buy one (or: “rent from the bank” as it were) And the market price is basically “what two high income earners can afford if they pay interest only”. So: if I want to live in a house at all, I need to buy it using borrowed money, and in the window I expect to live in a house (say 10-25 years) I couldn’t make a large dent in the principal regardless, because of the extremely low interest rates (around 1% now for mortgages) and the high prices that come from that. I don’t like it, but I don’t have a choice. Also regulations strongly favor buying with borrowed money over renting. Interest can be deducted while those who rent from a landlord obviously pay interest too - indirectly through their rent - but in their case it isn’t deductible. So anyone who is forced to rent (e.g because they can’t afford the huge 15-20% down payment or aren’t paid enough to get the mortgage) is pretty much subsidizing the tax deductions of those who take mortgages.
- ecnerwala 5y agoIts not an unpopular opinion in my book. The first sentence, especially the "it might be harder if you have a family to feed", is distressing. If an average developer salary is not enough to do that, then, what are the jobs that DO allow you that ?
- mgraupner 5y agoDoctor, Lawyer or a couple where both work full time and earn good salaries.
- luckylion 5y ago> If an average developer salary is not enough to do that, then, what are the jobs that DO allow you that ? Don't believe the hype. The average developer salary is enough to feed a family of four, you just won't be able to buy a house in a sought-after suburb on a single salary.
- koevet 5y agoAnd let's not forget that in Germany, one has to add around 15% on top of the house price: taxes, notary and - almost always - the real estate agent cut.
- nickkell 5y agoThat real estate agent fee is sickening. It's shocking that they can charge a percentage of the value of the property. With ever-rising house prices they're earning more and more without doing any additional work. This money also has to be paid upfront, and so is yet another hindrance for young, first-time buyers.
- 908B64B197 5y agoIf Europeans devs want better compensation what they need to do is simply vote with their feet and relocate to SV. That's the only way.
- f1refly 5y agoThen you'd have to live in america though and I don't know a single peer who considers that an acceptable tradeoff.