You want to retire early

Real Estate
24

You underestimate how wealthy Switzerland is. If those houses can’t be afforded there is most of the time a fat pension fund of the parents of the buyers, to reduce the mortgage until it’s affordable.

Also the mortgage conditions which are public, and are very rigorous, are more often than not not strictly enforced by banks, since for a lot of banks the interest difference business (loan out money at a higher rate than they have to pay for) is the main income sector so they are open for selling their product (loaning out money).

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25

I think the reason many of us instinctively reject current real estate valuations is that we compare the price to other goods which price is based solely on its utility. And there’s no way that this house’s utility is 3M, which is same as a fleet of 50 brand new upper class cars.

The theory is, real estate has taken an additional role as a vehicle for saving, i.e. preserving wealth into the future. Why did this happen? Individuals have gradually been pushed from gold to cash to savings accounts to bonds and finally to real estate (or the stock market) as a means of saving for the future. Which is a tragedy, because it turned the house from a consumer good into an investment good.

In case you care, this theory was laid out by Saifedean Ammous in his books The Bitcoin Standard & The Fiat Standard.

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26

I am on of these persons that you describe and to be honest with you I still can’t believe how I arrived where I am yet I am just another average Joe.

In 2012 we purchased a 600k CHF apartment with my wife after 4 years of very frugal living and putting all the money on the side for the famous 20% deposit. We arrived in CH in 2008 and we had almost nothing on the pension pillars to pledge against the deposit.

We bought an absolute ruin in a very pricey area with incredible lake view made in the 1940s that was never renovated and was not livable at the time. We spent year and a half renovating it ourselves (well, mostly me) and buying quality materials in Germany and Italy. At the time the saving was incredible, the difference was massive, today prices in CH have somewhat normalized. We invested around 100k CHF but we completed changed the outlook of the apartment, torn walls, open space living, new floors, kitchen, adding bathroom, adding shower etc.

In 2019 we really wanted a house with yard, and we were lucky to find our next project, again pricey area, house with good bones that needed completely everything. We sold our apartment for 1.65M and purchased the house for 2M. After investing 350K in complete renovation, new roof, kitchen, new underfloor heating system, 2 new bathrooms, windows, outside landscaping and we live in out dream home.

We could get today between 3.3 and 3.5M for our place. The issue is not selling, I could do that in a day, but what could I buy that is comparable in the area? Absolutely nothing.

We are not rich, we have normal jobs, we live frugally, we’ve never bought a new car, we have no loans apart from the mortgage. If we never had that uplift by making a bang on the apartment, we could have never saved for a house.

But buying property for us was never about an investment, it was to have a nice home which we could do as we wish, and our kids could have some sort of stability of growing up.

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27

Am I the only one who deliberately don’t want to buy? We moved the last 25 years at avarage every 3.2 years.

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28

A house with yard might still be considered a luxury for many :slight_smile:

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29

Nope, not the only one. I wouldn’t ever spend money on walls.

“House with a garden” used to be a way to say that someone is well off in Athens.

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30

You are, one way or another. You do need a place to live. And when you rent, it’s the most straightforward way of spending money on walls :slight_smile: . In a different World, where renter rights were not protected so much, and real estate price were a few times lower, I think you would also consider buying, just to have a peace of mind.

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31

Not really, as I will inherit properties, and don’t intend to stay in CH forever. Even if I was I wouldn’t buy.

Edit: I’ve long thought that real estate should be taxed the shit out of, in a stepwise way, so 1st property for living to be helped a lot (home ownership is good for a society, in my opinion, keeps decency), second being taxed reasonably and then additional properties should be progressively taxed in a way that swimming with sharks, covered in fire ants becomes a better proposition. And in return gains from transferable securities being being taxed very low/zero, including lending (ie bonds) and dividends. Real estate is a zero sum game, as Americans say “buy land ‘cause god ain’t making any more of it”, and it’s also intellectually lazy and breeds entitlement. We aren’t taking anything from anyone investing in transferable securities.

Also big proponent of HEFTY inheritance taxation, people need to work and use their brains, not keeping adding silver spoons up their backsides.

Saying all that BECAUSE (not DESPITE) I am a committed capitalist.

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32

A house with yard might still be considered a luxury for many :slight_smile:

depends on sun exposure :joy:

33

I moved about once every 1.5 years, but I still bought. The old homes became rentals.

Anyway, the dream comes closer, now going for 2.7M! :stuck_out_tongue:

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34

It’s still on the market 6 months later ? Sounds like a red flag. The price must be way above market.

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