How difficult is it where you live to get a loan for a house?

Discussion in 'Off-Topic Discussions' started by TeacherBelgium, Jul 21, 2021.

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  1. TeacherBelgium

    TeacherBelgium Active Member

    Where I live (Belgium) it used to be easy.

    Now it's very difficult. 1 out of 3 young people will never own the home they live in, according to recent statistics from the minister of spatial orientation, ecology and living.

    A decent house here can be had starting at 300k euro.

    I would love to take out a loan for a house.

    However, they require you to retain at least 1500 euro (approximately 1850 dollars USD ) after all your loans are paid (including the one from the house) to qualify for a house loan.

    I would love to buy alone. It provides more security imho.

    With my salary most banks estimate that I can take out 170k euro, which buys you a house but a small one and often with a lot of work to be done regarding renovations.

    It feels kind of bitter. Working hard, doing your best, studying as much as you can and still not being in a position where you can live comfortably.

    I received an offer for a freelance extra job of 15 hours weekly. Since I'm already doing a 40 hour week, you would think that 15 hours extra would be too much. However, reality is that as a young person in Belgium this is my only way to get myself a house in a reasonable amount of time. Otherwise , if I stick with one job, I would be 35 (!) when I would find myself in a financially comfortable position to buy a house.

    New generations have it more difficult when it comes to buying real-estate, sadly.
    It feels like we're going back to medieval times where land was the most precious thing one could own.
     
  2. Rich Douglas

    Rich Douglas Well-Known Member

    Harder than it was prior to the housing bubble c. 2006.

    This is a good thing.
     
  3. TeacherBelgium

    TeacherBelgium Active Member

    I don't see how that is a good thing. Building a home for yourself is the most basic human need there is.
    I'm 25 and I will have to work 2 jobs to buy a mediocre house.
    Older generations had it much easier buying houses.
    Young people nowadays are unnecessarily harshly challenged these days in providing for their basic human needs.
     
  4. Vonnegut

    Vonnegut Well-Known Member

    There’s a distinction between being able to obtain and being able to afford a home. After the 08 housing crash, lending standards were significantly increased. High lending standards aren’t necessarily a bad thing, although it impacts some groups far more than others.

    As for the price of homes now... that’s a whole other can of worms! Sadly, there’s not many solutions and it’s a problem shared by many countries.
     
    Vicki likes this.
  5. TeacherBelgium

    TeacherBelgium Active Member

    True!
    The banking crisis mostly developed in the US and metastasized to Europe.
    Lending standards have always been higher here than in other continents.
    House prices go up here because the country is too small to accomodate so many people seeking to buy a house. That number is growing yearly.

    I personally am going to take a second job on to be able to buy a house on my own. Too much fuzz buying a house with a partner, with so many divorces nowadays.
    Buying alone means owning alone.

    Many people my age are still living with their parents until 30 and often start families in the house of the parents while renting from their parents. I don't want to be in that position. Better working as hard as I can then that I can build up something of my own. I wouldn't want to rent anyway. I want it to be my own place.
     
  6. Rich Douglas

    Rich Douglas Well-Known Member

    Because the availability of credit to those who should not have gotten it blew up the housing bubble at that time. All that money that should not have been in the market chasing houses drove up prices rapidly. Then, when so many of those people could not afford the mortgages they never should have received, lots of people lost their homes and foreclosed. This, in turn, drove prices into a deep, deep hole for everyone, contributing to what became knowns as the Great Recession. It was not just devastating to the families who lost their homes, it was crushing to everyone else as well.

    So, yeah, it's a good thing.
     
  7. Rich Douglas

    Rich Douglas Well-Known Member

    Higher prices now are not a function of cheap money like in the mid-2000s, true. Higher prices now are a function of huge demand vs. depressed supply. Huge demand seems to be coming from the "K"-shaped recovery, where lots of people did quite well in the recovery (while others most certainly did not), plus restlessness driven by Covid. (Some people decided they were tired of the homes they owned and spent so much time inside during the pandemic.) Plus, many people have seen their financial prospects improve significantly lately.

    Supply remains problematic for two major reasons. First, the pandemic reduced the building industry's ability to produce housing because of shortages in materiel and workers who could do the work on site. Second, the housing industry is a slow one to change--houses don't get built overnight, and ramping up for increased building takes a long time. Thus, the supply chain isn't responsive to rapid changes like we've seen during this pandemic.

    We're seeing similar dynamics in the auto industry. The average price for a used car rose by a third (from about $15K to over $20K) in the past year. Simply put, the demand is there, but the supply is really limited.
     
    Vonnegut likes this.
  8. sanantone

    sanantone Well-Known Member

    The problem in the U.S. isn't qualifying for loans; it's the fact that people are selling houses in more expensive states and paying cash for houses in cheaper states. They're paying well above asking price, and it puts borrowers at a disadvantage. Corporations are also buying up houses.
     
  9. TeacherBelgium

    TeacherBelgium Active Member

    Even without that artificial increase of prices, how many young people nowadays can still buy a house with the salaries offered to young professionals nowadays? I feel like salaries for juniors are not adapted to society's demands. Most young professionals would need 2 or 3 jobs to buy a house nowadays. On 1 salary it could work maybe if they lived off ramen and never went out in the weekends.
    Society's inflation index should more account for housing prices than it currently does. Salaries don't rise proportyionally with house price inflation.
    I worry for all generations to come.
     
  10. Vonnegut

    Vonnegut Well-Known Member

    I believe I’ve mentioned the problems with REITs and other issues related to hedge funds and family offices pouring into single-family homes here. Timely article on it in the news today... Before my city heavily restricted short term rentals, every home sale during the first two months of the year was a non-owner occupied. New or young home seekers can’t compete in many areas with all cash offers that are significantly over asking and are waiving inspections. Add in the developer/builder holdback, and it’s a different world out there.

    https://www.yahoo.com/news/whos-outbidding-tens-thousands-dollars-185731616.html?guccounter=1
     
  11. sanantone

    sanantone Well-Known Member

    Not in the U.S. It's really not expected that a 25-year-old will be able to buy a house, and people are getting married later anyway. For older Millennials, we would be able to afford starter homes if it weren't for the crazy housing market.
     
  12. Vonnegut

    Vonnegut Well-Known Member

    What you see in Belgium may differ, but I’ve never seen starting salaries as high as I’m seeing recent graduates achieve. Or at least in STEM fields. Personally consider that current job market to be experiencing almost concerning levels of rapid wage growth.

    For a legion of reasons, houses will likely never be as easily obtainable/affordable as they were a generation or two back for high-quality(?) locations. Society has changed, often an hour or two away from those locations and the costs drop down to being affordable again.
     
  13. Vicki

    Vicki Member

    Older generations didn’t have it easier. We have already struggled through our 20’s… eating those ramen noodles and renting or living with parents. Spent our 30’s building credit, trying to earn more, buying a starter home and then later… finally buying what is hopefully our forever home in our mid to late 40’s. I think you have no clue what the “older generations” experienced before they became the older generations…
    I think that assumption sounds pretty entitled
     
  14. Vonnegut

    Vonnegut Well-Known Member

    Shrugs, that’s my thoughts, or my convoluted thoughts. Just happen to see more opportunity out there than has likely ever existed, but that it’s also akin to the K shaped recovery that Rich mentioned. That while it’s an unimaginable time of opportunity for many, it’s also a significantly more difficult time (from my perspective) for the majority. I’m not young, ouch - that’s hard to acknowledge, and that’s just my perspective.
     
  15. TeacherBelgium

    TeacherBelgium Active Member

    Exactly. I'm 25 and I'm embarassed to still live at home. I want my own place. However on 1 salary it's difficult to buy a nice house. Only the small houses with 1 bedroom, no attic and no basement would be available at those prices (150k euro).
    On 2 salaries ( a couple ) it's possible, but it hurts to have to share the ownership of the house then seeing how casually people divorce nowadays.
    I want to own the house alone and that's tough on 1 salary.
    Bank rents are not that high: 1.85% here in Belgium. But we pay very high notary fees ( 5k euro ) and registration contribution (6% of the house's value on top of the basic price of the house and on top of the notary fees).
    After food costs, clothing costs, electricity, loans etc. you need to retain 1500 euro per month to receive a house loan here.
    You also need to have 35k euro from your own at least, to prove that you are financially stable.

    It's sad how even people in higher functions struggle to buy houses nowadays.

    An average salary in Belgium is 2.5k euro per month. Not a lot.
    We are taxed to up to 50% of our salary here.

    Young people are converting school busses and creating mini homes / tiny houses to escape the high living costs of a regular brick and mortar building.
    Society is deteriorating because of the mistakes that have been made in the recent pasts and that have changed everything for the worst.
     
  16. sanantone

    sanantone Well-Known Member

    What's wrong with paying rent? Is rent that expensive there?
     
    Vicki likes this.
  17. Vicki

    Vicki Member

    I am 47 and wouldn’t be able to afford a home by myself. At 25 I moved back in with my mom. Life isn’t easy. We all have various struggles.
     
  18. TeacherBelgium

    TeacherBelgium Active Member

    Salaries for starters here are around 3000 euro gross and after taxes you get to keep 2000 euro per month. Peanuts in other words.
    A house loan here is at least 1200 euro per month over a period of 25 years.
    Living costs are high, amounting to 250 for food per person monthly and transport costs and electricity and water bills and nothing is left.
    No money for a car after all that.
     
  19. TeacherBelgium

    TeacherBelgium Active Member

    Rent = paying for a roof that's not your own.
    I don't want to rent. I want to own my own home.
    A place that's rented = someone elses roof, someone elses rules. Not into that.
    Rent is around 700 euro a month here. A own home is 1200 euro per month. So would prefer to own. What you pay in rent doesn't contribute to ownership, what you pay to the bank does.
     
  20. Vicki

    Vicki Member

    You are describing adulthood. I think you need to adjust your expectations.
     
    Vonnegut and sanantone like this.

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