Friday, November 14, 2014

Explaining Apartment Issues in Germany

After a fair debate yesterday.....I've sat down this morning and done research to find condo-apartments and their cost levels here in Germany.

So, for Frankfurt......if you were looking for a one-bedroom deal, within 10 km, in the range of 50,000 Euro or less, you'd have twelve options to pick from.  I would admit....some aren't in the inner-city....some aren't new.....some are probably in the range of 28-to-35 square meters.....and some won't include parking.

For Mainz, with the same requirements.....there are ten condo-apartments up for sale.

For Wiesbaden, with the same requirement.....there are seven condo-apartments up for sale.

For Worms, with the same requirement....there are seventeen condo-apartments up for sale.

For Kaiserslautern, with the same requirement.....there are thirty-five condo-apartments up for sale.

Is there a market for smaller condo-apartments with nothing fancy to be built?  No.  That's the simple part of this story.  If you were going to invest some serious money into a building construction project, and the idea was sixty one-bedroom standard'd make a lousy return on your money.  So no one likes to finance these.

Houses?  A different story.  Course, I could go out into the rural areas of Germany (like Kaiserslautern for example), and find forty houses in the 50,000 to 120,000 Euro range.  Some are fixer-uppers.....some are standard-built houses from the 1970s.....and some are barely 90 square meters.

When people get into the mindset of a condo-apartment and renting....they don't really like to come up in five years and talk about finally buying a place.  It's a path that the typical German establishes and just refuses to consider the "next step".  So, you end up with a thirty-year old guy, who has partnered up with some thirty-year old gal, and happily renting a place.  They may never go beyond that point and just enjoy the simple and humble dwelling they've rented.  At age sixty-five, they both kinda wake up and realize that the rent of 1,100 Euro is a bit high for a retired couple to afford, but what options do you have left now?

You also run into the other problem of Germans becoming anchored down to a neighborhood or area of town.  There's the bus route that became part of their daily routine.  There's the subway station just around the block.  There's the bakery on the walk into work.  There's the stability factor of knowing the twenty-two places of business that they might use on a weekly basis.  So anchoring down to an apartment is fundamental.

I'd also inject here that people get used to the fact that whatever building they choose for their apartment dwelling.....they've come to accept the fact that the bathroom window is drafty, or that the heat isn't perfect, or that the lighting as you leave the building is lousy.  So one day....a new owner comes onto the scene....fixes everything to be perfect, and then pushes the rent up by sixty-percent.  The place is now unaffordable for the old renter.  So, as this guy goes to search for a new place.....he discovers that rent for the nice and 'fixed-up' beyond his expenses.  So he rents a marginal place with drafty bathroom window, limited heat, and poor lighting.  He's hoping to just scrap by and wait until another new owner arrives to fix this place.

There's a problem here, but it's not that simple.

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