i'm a german who has been living in the
us for a little over five years now and
last year i even bought a house here
something that i definitely wouldn't
have done if i had stayed in germany why
you ask here's the answer
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hello servos and welcome back to my
youtube channel my name is feli i'm
originally from munich germany but i've
been living here in cincinnati ohio on
and off since 2016. and as i just
mentioned in the intro i even bought a
house here last fall which makes me the
first one out of all of my german
friends to do that and probably even the
first one who has even thought about it
here in the us however i have plenty of
friends my age who own their own home i
feel like it's quite normal here to buy
a house even at a younger age and pay
off the mortgage instead of paying rent
and in a lot of cases people just sell
their houses again after a few years and
move somewhere else or simply upgrade to
something nicer germany on the other
hand is known as a nation of renters i
know that this comes as quite a surprise
to most people but more than half of all
germans actually live in a rented place
and only about 45 percent of germans
live in a place that they or someone
else in the household own now the reason
why this is so surprising is that
germany is the country with the biggest
economy in europe and one of the biggest
ones in the world so naturally you would
think that a wealthy country like this
has plenty of people that own their own
real estate but the truth is germany
actually ranks among the last places in
the developed world when it comes to
home ownership rates out of all european
countries only switzerland has a lower
rate than us these numbers are a little
bit older most of these countries don't
release new numbers regularly but it
really hasn't changed all that much
germany is still in that same rank today
so it's a helpful graphic to visualize
the differences but how does this make
sense how does a wealthy country like
germany have a lower homeownership rate
than poorer countries such as spain
greece or mexico
let's talk about it
so of course it's not like no german in
the entire country owns a house the
title of this video is obviously
somewhat of an exaggeration i personally
grew up in a residential neighborhood in
munich where most people did own their
homes granted the majority of those
houses were row houses or duplexes with
a rather small yard where only a thin
fence is dividing you from your
neighbor's patio and yard but even that
is already a pretty big luxury in a
large german city like munich because we
generally don't have as much space as
people do here in the us where it's
standard to have a standalone house with
a front yard backyard and your own
garage or driveway if you want to hear
more about how german and american
houses are different you can check out
this video by the way it's linked up
here but we're going to stick with home
ownership versus renting today and in
munich which is one of the most densely
populated and expensive cities in
germany you'd have to pay a fortune to
get something like what i just described
as standard in the us even buying a two
bedroom apartment in munich costs more
than a five bedroom house here in
cincinnati but that's just a side note
because that's not actually the reason
for the low home ownership rate in
germany and of course munich and
cincinnati are two cities that you can't
really compare price wise it's just a
little glimpse into my personal reality
when looking at where i'm from and where
i live now and what i can afford here
but first let's look at the facts as i
just said the majority of all germans
live in a rental property and that
applies especially to younger and older
people according to this survey by the
deutsche bundesbank from 2017 it's about
85
of the 25 to 34 year olds who rent their
home 71 of the 35 to 44 year olds and 52
of those over 75. so the highest
homeowner rates are among the people
between 45 and 74. in that age group the
homeowner rate is at 54 to 60
so more than half of all people in that
age group do own their own home and only
40 to 46 are renters over the last 10
years the home ownership rate in germany
has only slightly increased by the way
the home ownership rate also varies
within germany and is different from
state to state with the highest rate of
about 65 percent in the zaland and the
lowest rate of 17 in berlin what's
interesting is that overall there are
fewer homeowners in the so-called new
states of germany neue bundeslander so
in former east germany then in west
german states which seems to be a
remnant from the gdr about 90 of all
rental units in germany are located in
multi-family homes that's a very common
type of building that you'll see all
over the country in historical districts
in newly built neighborhoods in the city
centers and in the suburbs eastern
germany is even known for a specific
type of multi-family building called
plattenbau those buildings consist of
pre-fabricated concrete sheets platinum
and were mainly used to build quick and
cheap housing after world war ii but
you'll find these buildings in other
parts of germany as well
now let's get to the reasons as to why
the home ownership rate in germany is so
low i did mention that real estate
prices in munich are extremely high so
you might think well duh houses are just
a lot more expensive in germany than in
other countries so fewer people can
afford buying a house but actually even
though in some cities such as munich but
also hamburg or frankfurt real estate
prices are indeed very high the average
house in germany only costs around 320
000 euros or at least that's the only
number that i could find for a
nationwide average because the prices
are usually listed per city and not for
the entire country and according to this
article by the german news outlet focus
when you compare the average price for
one square meter of real estate to the
average household income in germany the
rate is actually very similar to other
countries so an average household in
germany could purchase about four square
meters of real estate with their yearly
net income that's actually the fifth
best rate in the european union in many
other countries the average household
can afford way less than that yet they
do own more real estate than germans and
one reason for that is that you don't
necessarily have to purchase a home to
own it you can also inherit it and
that's something that just doesn't take
place quite as much in germany about
half of all german homeowners are
currently paying off a mortgage which
indicates that they bought the house
themselves while in romania the country
with the highest homeownership rate in
the world only about one percent of
owners pay of a mortgage why is that
well there simply isn't quite as much to
inherit in germany which of course has
historical reasons about 20 of all
german housing stock was destroyed
during world war ii about 2.3 million
homes an additional 2 million were
damaged and including the refugees from
the eastern occupation zone about
21 million people needed a home so in
the first few years after the war west
germany needed to come up with a plan to
provide a lot of housing about five and
a half million homes to be exact as
quickly as possible and they had to do
it in the midst of a broken economy with
the currency being virtually worthless
and a population who didn't have a lot
of financial means the best way to solve
the situation was to build government
subsidized social housing in the form of
apartment units that people could rent
for a reasonable price the first housing
program started right after the end of
the war when there wasn't even an
official state and government in place
yet but shortly after the federal
republic of germany was officially
founded in 1949 the government did also
pass the first housing law vuonung
spaukazetz with the goal of having as
many people as possible benefit from
this the government ended up funding
about 3.3 million homes 2.7 million were
built by private investors that were
given access to subsidies low interest
rates and tax breaks and so germany
managed to cut the housing shortage in
half by 1956 and due to the fact that
there wasn't really a high demand for
private real estate at the time because
of the financial situation banks were
hardly giving out loans and multi-family
homes could house more people most of
those newly built homes were rentals the
foundation for germany's preference to
rent was laid other countries that were
affected by the war such as the united
kingdom for example actually had similar
strategies after the war still today the
homeownership rate in the uk is
significantly higher with about 65
percent in 2004 it was up even more so
the big question is why did the germans
stick with renting even after the
economy recovered and the country
experienced the so-called witch of
zwonda in the 1950s one of the answers
seems to lie in how much money was put
into rentals since the uk mainly
targeted their housing programs at
public and non-profit institutions
excluding the private sector and kept up
renting and construction cost caps for
public housing developers most rental
property was of significantly lower
quality than privately owned homes
because landlords had to cut back in
maintenance as a result rentals in the
uk especially those that were largely
publicly funded acquired somewhat of a
stigma in germany on the other hand
rental regulations were reduced much
sooner in the early 1960s and the
policies were more balanced between the
private and the public sector so that
rental housing has stayed of relatively
high quality in germany and is
oftentimes nicer than privately owned
places in countries like croatia
slovakia or romania which goes to show
that owning your own home doesn't always
necessarily equal a better housing
quality and german renters seem to be
very happy according to a 2007 survey by
the oecd where the 93 of germans said
that they were satisfied with their
current housing situation one factor
that probably contributes to that
satisfaction is that there are a lot of
regulations in place to protect tenants
in germany this includes rent caps that
limit rent increases to no more than 20
over a three year period in some cities
it's even 15 in cities with a
particularly tight housing market we
also have a so-called rent price break
since 2015 a rent control meat price
primes that keeps landlords from raising
rents unreasonably above the local rent
index meat speaker and turns out that
rents in germany are actually cheaper
than in many other countries a one
bedroom apartment in germany costs about
700 euros a month on average it's
obviously gonna be more expensive in a
city like munich while the nationwide
average here in the us for a one-bedroom
apartment is at 1100 us dollars in
addition to that leases are usually
unlimited in germany unlike in the us
where a standard lease ends after one
year and terminating a lease in germany
comes with quite a few rules especially
on the landlord's end both parties
usually have to give a three-month
notice unless the lease agreement says
otherwise and if tenants have lived in
the place for over five years the
landlord even has to notify them six or
even nine months before also landlords
can't terminate elise without having a
good reason that can include the tenant
being late with their payments of course
but also when the landlord needs the
place to live in it themselves or for
family that's called eigenbedaf they do
have to show evidence of this need
though and they can't terminate the
lease when they want to sell the place
so landlords are often pretty restricted
when wanting to end the lease and often
have to overcome a lot of obstacles
which means that tenants don't have to
worry about just being kicked out at any
given time and that provides a lot of
extra security now besides all of the
upsides of renting in germany the durban
government also just doesn't provide as
many incentives to buy your own home as
other countries do even though there is
a homeowner program the kfv von eigen
tom's program that gives people who want
to buy or build their own home access to
low interest loans it doesn't seem to be
enough for people to buy more real
estate and even out the lag in tax
breaks because unlike other countries
germany doesn't allow you to deduct your
mortgage interest payments from your
taxes unless you rent the place out
instead of living in it yourself which
then again encourages the renters market
more also german banks are generally a
little more conservative when giving out
mortgages and often require a 20 down
payment
while in the uk you usually only need
five or ten percent and in the us you
can get a mortgage with a down payment
as low as three percent or in some cases
even zero at the end of the day this
just keeps the threshold of entering the
real estate market a little higher than
in other countries and especially
excludes people with a lower income
what's also pretty high by international
standards are the transaction costs for
home purchases in germany which makes
buying a home and especially frequent
moves less attractive last but not least
as this article points out the low
homeownership rate in germany probably
also goes back to mentality differences
in most countries owning your own
property is a life goal for many people
with a pretty high priority george w
bush promised his voters to make the us
a homeowner society for example and when
brits say things like my home is my
castle you can tell that they idealized
the idea of owning their own home as
well meanwhile according to the article
and my personal experience most germans
are a little more hesitant when it comes
to buying real estate and taking out
loans and with the good renter
conditions in the country renting just
seems like a very responsible and
reasonable thing to do
and that actually lines up perfectly
with my personal experience i kind of
mentioned this at the beginning of the
video but i feel like buying a house in
germany is just considered a much bigger
step than it is here in the us it's more
like this intimidating adult thing that
younger people honestly don't really
talk about a lot even in your 20s
because it's not really a realistic
option for most of us it's something
that's way down the road or might never
be reality for us now of course i grew
up in a big expensive city this is
definitely a little bit different in
rural areas but i think it's safe to say
that buying a house is just a big
decision and a big step for germans and
i experienced the different reactions
when i bought my house last year while
most of my american friends were simply
excited for me many of my german friends
looked at it as this huge milestone and
couldn't even believe that i was able to
do this and how easy the process was
here americans really make this whole
house purchasing process seem like the
most casual everyday activity my realtor
even told me that she never had a client
that asked as many questions as i did
even though from a german perspective i
really just did what everyone who's
about to make a big decision like this
should do but she said that most of her
clients usually just want her to handle
everything and don't really care to
understand all of the details themselves
and the signing of the final purchasing
contract took me like 15 minutes in
germany i know from my parents that that
usually takes over an hour because
they'll read the entire contract to you
here they just summarize the contract
for me and have me sign the different
pages i also feel like even for germans
who could technically afford it buying a
house isn't even on the table usually
until they're sure that they want to
stay at that place for a long time and
until then they rent you wouldn't really
buy a house in germany when you already
know that you're going to move again in
a few years buying a house is something
much more permanent to us in general
germans only move four to five times in
their lives while americans move more
than 11 times on average with the yearly
leases here in the us especially younger
people often choose to move every year
instead of extending their lease and
even for families it's normal to move
every now and then and as i said earlier
just sell your house and buy a new one
so to answer the question of the video
the reasons as to why germany has a
lower home ownership rate than most
other developed countries in the world
are a combination of the country's
history and rebuilding process after
world war ii the high quality of rental
housing relatively low rents the high
renter's protection low incentives for
homeowners and probably a little bit of
our mentality if you want to read more
about this topic i linked all of my
sources and articles that i used for my
research in the info box below now i
would like to hear your experiences with
a topic what is this like in your
country do people prefer to rent or own
is there a stigma about renting have you
bought a house before and if so how have
your experiences been and if you're
german or american do you have anything
to add to my perception of how this
topic is approached in the two countries
let me know in the comments below and if
you want to hear a little bit more about
mortgages and taking out loans in
general i can recommend this podcast
episode of understanding train station
where josh and i talked about how
germans and americans handle their
finances and we also talked about buying
a house and financing it at all of those
things that's actually how i got the
idea for this video i also wanted to say
thank you to you guys for voting on
which video topic you wanted me to do
next because i did a little poll in my
instagram story the other day and this
topic actually beats why germans poop on
shelf toilets so as you can tell my
instagram content is very sophisticated
if you don't follow me on there you
should definitely go ahead and do so at
feely from germany so that maybe next
time you can vote too thank you guys so
much for watching i really hope that you
found this video interesting i certainly
found the research very interesting
there were a lot of things that i didn't
know before if you did enjoy it please
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see you next time cheers
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you