In times of rising interest rates on loans, potential builders come under pressure: Buy now or build quickly to still get reasonably favorable conditions? It’s better to take it easy.
Interest rates on construction loans have risen sharply in recent weeks. From around one percent to around three percent. At the same time, the supply of apartments, homes and building sites remains scarce and prices high. How should buyers behave in such a market environment?
This situation makes professional market players think – some tend to forego an investment because otherwise the return would suffer. Private builders don’t have a problem with returns. But many are faced with the question of whether they should still fulfill their dream of owning their own home before interest rates and prices continue to run away. Deciding that means time, financial and emotional pressure.
According to experts, prospective owners should resist this. Nobody should act hastily out of concern about going empty-handed, says Roland Stecher from the consumer center in Bremen. He advises: “Now really look around in peace”.
When it comes to real estate, the amounts of money involved are far too high to make a decision to buy over the knee. Added to this is the long-term nature of the investment. Some people tie themselves to their property for life. Hasty purchase decisions increase the risk of making a mistake and thus the risk of becoming unhappy with and in your own four walls.
In addition to interest rates and prices, the sales skills of providers such as brokers and property developers are an additional pressure factor. The supposedly last apartment in the property is advertised and references to competitors who are very interested are not only intended to increase interest, but also to tempt people to grab them quickly.
Corinna Merzyn, general manager of the Association of Private Builders (VPB) knows how to counteract these “psychological tricks”. This includes sounding out the market at an early stage. For example, it is possible to find out how quickly comparable properties in the region would actually be sold.
In addition, interested parties should consult an independent consultant or expert to get an objective picture of the property. This can take the pressure off and at the same time prevent you from buying when you are feeling overwhelmed. On the one hand, the consultants pay attention to possible weak points when viewing existing properties – experience has shown that there is a different need for renovation and investment depending on the age of the building, for which additional capital must be raised.
The money should be financed from the company’s own reserves in order to keep the need for credit within limits – also in view of the development of interest rates. One of the most complex works is roof renovation. According to the VPB, the costs could ruin homebuyers. “You shouldn’t buy a pig in a poke, otherwise it will become a tiger that will eat you up,” warns Merzyn.
On the other hand, experts assess the overall project with a rather cool head. Because for them, in contrast to potential homeowners, the purchase of real estate is not an emotionally charged affair of the heart. That is why they are hardly impressed by information such as that the apartment they are currently viewing is really the last one in the great property and you absolutely have to make a decision immediately.
Such supposedly good tips tend to make people suspicious, says consumer advocate Stecher. He recommends having the developer contract checked neutrally for new buildings.
However, the feeling of having to grab something is not only caused by external influences. A homemade component is often added. “People lack clarity about what they actually want,” says Detlef Schmidt about the cause. The management consultant from near Cuxhaven coaches both sellers and buyers of real estate.
His observation: Families only discuss their wishes after viewings, not in advance. The result is a long search for the right property, including stressful viewing marathons. This creates pressure to finally have to find something. This intensifies when all buying interests rush out at the same time.
To counter the internal pressure, the coach recommends a family council at a round table. Everyone names their ideas, then priorities are set. The whole thing ends in a timetable or a checklist that contains both facts and emotions. In the case of objects, the specified criteria are then ticked off: yes, no, able to compromise. “That brings clarity. Clarity helps with quick decisions. And when I know what I want, I don’t feel any pressure,” summarizes Schmidt.
An assessment that Corinna Merzyn shares. She says: “The better prepared, the more cold-blooded you can decide.” A discussion with the house bank is also an essential part of clarifying the framework conditions. If you have a bank commitment behind you, you can strike faster. This can also bring more serenity and calm to the search and purchase process.
