buy a house on mortgage/thoughts about preparation in general

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tomas.kadlas@gmail.com's picture
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Joined: Mar 25 2014
Posts: 2
buy a house on mortgage/thoughts about preparation in general

One advice I keep reading on websites dealing with the future of industrial civilization and how to deal with it personally, is to get out of debt.

Should I buy a house on credit, or continue saving money and continue to rent?

I guess I need to add that:

I live in Norway since 2010, but uncertain for how long. Housing prices have just been rising here for over 20 years, only interrupted by a small dip post-2008. Now they seem to have reached sort of a plateau. They say they don't have a bubble, because the 'fundamentals' are good. It's a country with low unemployment and high immigration from elsewhere in the EU. But let's face it, it's all based on oil and associated industries with windfall profits driving salaries up to 70% over EU level. Obviously, this can't go on forever. Especially when I read about the oil majors throwing in towel. Saving up cash and waiting for the prices to crash may not be a bad option.

Also, I need to add that:

Since I am Czech, 34yo, I will always be a foreigner here. It is not possible to 'become' Norwegian, like one may become American. (?) Neither is it very easy to be really accepted into the local community. I live in a rural place and even Norwegians who have moved in from other places in Norway have a hard time getting friends. I do speak the language fluently (plus several others). So the question is, what kind of event would precipitate crash in housing  prices and whether I can stick to my job here after that.

(I am a dentist and can save a handsome amount of cash each month, even after paying rent and the draconian taxes, because we live relatively frugally. I have no debt, ever. But if you, as a potential patient, can no longer make your mortgage payment, you most probably cancel/postpone indefinitely your dental appointment - if you don't have pain. If you do have pain, you only demand the necessary minimum).

So, if their economy lands hard and crashes the housing prices in the process, I have far smaller network of acquaintances or friends to fall back to if I can no longer make a living the way I do now. Leaving the country would definitely be an option. After Iceland had crashed, most of the Eastern European workers simply left, too. I feel uneasy about attaching myself/ourselves too much to a country that dumps us as soon as they don't need us anymore.

I have a baby daughter and my wife is from Bulgaria. I value the fact that our daughter might learn to speak three different languages so early on. Given the circumstances, preparing for a seminomadic life, moving from one country to another as needed, may be a good idea. The best investment would then be in our health and skills, which no one can ever take from us. Since I am in the health related-field, I am considering learning acupuncture and/or herbal medicine. 

But now, back to the question, the house. Most of the available housing is not affordable without taking out a loan. The exception would be old, poorly insulated, nearly abandoned houses in the middle of nowhere. Which means commuting - driving a car while I have a job, and - if I lose it - being stuck and having to depend on a community we don't necessarily fit in. Also, farming is difficult here because of the climate.

Of course, buying land/small homestead in one of our home countries - Czechia or Bulgaria, may be an option. Especially Bulgaria, since that country has essentially been in decline for over 20 years. The population Bulgaria went from 9 million to 7,5 million over that time, the land is fertile and cheap, the climate favorable. I am sure foreign corporations are about to get their hands on the land there, but more likely, though, they have done so already. My wife knows some people who bought a cheap house there in the countryside, planning to live in a city there in winter and use the house in the summer. After their first winter, they came back to the house, only to find all inventory stolen. Simply buying a house without living there physically and without having anyone trustworthy keep an eye on it, is probably not a good idea either. Unless we go ahead and collapse voluntarily and consciously right now - while we live in what, after all, still is a functioning Scandinavian welfare state:-)

I guess our situation is pretty favorable, with many options still open to us, the important thing is not to screw it all up by one bad investment decision. Maybe you folks from faraway lands and with different backgrounds can offer some precious insights.

Have a nice Sunday!

Tomas

Wendy S. Delmater's picture
Wendy S. Delmater
Status: Diamond Member (Offline)
Joined: Dec 13 2009
Posts: 1988
Dear Tomas

As an American I hardly think I am the best person to comment on someone in your situation, so I held back in case others might want to chime in.The site is somewhat America-centric since it was started here, but has members in Europe. But they have not commented, so welcome to the community; I will try to at least point you to some solutions.

First of all, this site has a section in the drop-down menu under the Prepare tab, called "What Should I do?" It should answer some of your questions. There is a relocation thread in the old forums and a new discussion group. Though they talk about places in America, the principles might be the same for same for what you are facing.

Your response to the situation has to be something that you are comfortable with, you and your family. So ask yourself how you believe things will play out in your part of the world. Do you believe that there is a 100% chance of a crash, or serious reset to the financial system? Do you think it will instead be a "stair step down?"  My personal belief is that we have a 20% chance of a hard crash and an 80% chance of a long, slow collapse and I have structured my response to the world situation accordingly.

In my opinion you're right about dental work being less needed in a crash or depression, but people will still need it. If Finland will not accept you as a citizen, and land is as cheap as you say it is in Bulgaria, moving back there sounds like a good option to me - especially if your wife has family in Bulgaria. I believe that family will become the ultimate resource in a financial collapse: day care, strength in numbers, watchmen, and a network to get through hard times. You mentioned twice that you felt you did not have that in Finland. Listen to yourself and I think you have answered your own question about staying there.

One hard lesson about the American Great Depression in the 1930s - resources go away but debts stay and get harder to pay. I, at least, heartily recommend staying out of debt including mortgage debt. I speak from personal experience so let me tell you a story.

About 10 years ago I inherited about $70K USD. I could have used that money for a down payment on a cheap house that needed work, but I looked at the area I was living in (a New York City suburb) and decided it was too expensive to live there. Also, I thought that the area was too populous to survive a crash with any kind of order. So I used the inheritance to finish paying off my student loan (I'm 58 - I got an engineering degree in my late 40s.)  I paid off my small credit card debt and the balance of my automobile loan,too.  And I saved the rest and looked for a way out of the area.

In my case a job outside of the area never materialized, but I was also looking for a life-partner and found one in a less-populous,  much less expensive part of the USA. South Carolina was as far culturally from New York as Bulgaria is from Norway.  I've had to change my career but we are debt free and I am in a much better position to ride out any unrest. I have family and friends here. We live near farms and yet close enough to a small city that there are places for commerce at a less industrial scale. And I live in a much warmer region so there is a longer growing season. Again, your ideal climate is a personal thing, and you must think of your views of such things as global climate change. For me, moving inland and south made me feel more secure.

I also moved to an area with lower crime. Based on your post, it sounds like crime in Bulgaria might be a factor in your decision. I'm not sure where else you might move except Czechia and you don't say much about there. Both countries are former Soviet satellites and Russia is in ascendency under Putin, so that might also be a factor in your decision.

But you seem to long for homeownership, and the roots that can provide. That is a valid longing. One reason to own a home is that you can do things there that you could not do while renting. I rented in New York. Here, we own a home free and clear. I can have a vegetable garden here. We can have chickens and bees. Ask yourself this: Where would you go if you had to raise a good portion of your own food?

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

osb272646's picture
osb272646
Status: Silver Member (Offline)
Joined: Mar 14 2010
Posts: 120
Norway House

Tomas, you are on the wrong website if you asking people here about buying a house in Norway.  First of all, let me compliment you on your success in establishing a highly respected professional business in a foreign culture such as you and your wife have done.  This is not an easy accomplishment, and it is something that many people do not understand.  Secondly, you have a very positive outlook in that you know that your daughter has a great opportunity to flourish, and certainly that has a lot to do with you and your wife making careful economic decisions and looking forward with optimism, not pessimism.

Norway is an expensive country to live in.  It's energy resources draw in plenty of high quality (expensive) labor and management, and high taxation increase the cost of living.  But, offsetting the high taxes, social forces encourage frugality for the common good.  This is so in all the North Sea countries.  It is a good place to be. It is positive in it's outlook and society.  You have been very successful so far, and you should not be hesitant to deepen your roots in Norway.

By posing your question on this website, as noted by Wendy Delmater's response, you are asking mainly Americans for their advise.  Unfortunately, America is going through a period of self introspection which is resulting in a great deal of negativity and frustration within it's people.  This negativity and frustration glows fiercely on this website, as I'm sure you will agree if you just stop and think about it for a few minutes.  Do you EVER see anything positive here?  Read the daily digests.  Read carefully the postings.  They don't have anything positive to say about the future of society, only about the future of individuals keeping others from stealing their food and kerosene lanterns.  So do not hang your family's future on answers you might find here.  The answers lie in your heart and that of your wife's.

I am hopeful that someday soon America will burst through this impasse we've gotten ourselves into.  There are dark forces accumulating on the horizon for us, but we seem to want to hide from those forces rather than oppose them.  Eventually, we'll discover that hiding is not the answer; hopefully it won't be too late.  In the meantime, you should ask yourself if you would not be better off looking elsewhere for advice about how to lead your life in Norway? 

Best wishes to you and your family.

 

 

 

 

 

 

 

   

 

 

 

SailAway's picture
SailAway
Status: Gold Member (Offline)
Joined: Aug 11 2010
Posts: 404
Re: Norway House
osb272646 wrote:

By posing your question on this website, as noted by Wendy Delmater's response, you are asking mainly Americans for their advise.  Unfortunately, America is going through a period of self introspection which is resulting in a great deal of negativity and frustration within it's people.  This negativity and frustration glows fiercely on this website, as I'm sure you will agree if you just stop and think about it for a few minutes.  Do you EVER see anything positive here?  Read the daily digests.  Read carefully the postings.  They don't have anything positive to say about the future of society, only about the future of individuals keeping others from stealing their food and kerosene lanterns.  So do not hang your family's future on answers you might find here.  The answers lie in your heart and that of your wife's.

Hi osb272646,

We do love positive information, especially when they are backed by supporting data! Please by all means bring us good news!

Fred

 

mado's picture
mado
Status: Member (Offline)
Joined: Aug 18 2013
Posts: 1
buying house with mortgage versus getting out of debt

Hi Tomas,

I've decided to gamble on taking out a hefty mortgage to buy a house instead of doing the opposite and getting out of debt.

Like you, I live in a European country where property is very expensive.

I reckon I can be better prepared as a homeowner than as a tenant. As a homeowner, I can install solar panels and have a vegetable garden, for example. As a tenant, I'm at the mercy of the landlord's decisions. The last place I rented had fuel oil heating and no garden and I couldn't see that working out well in the turbulent times ahead.

As I said, it's a gamble. If (or when) the financial system implodes, I'll be hoping for the best. Meanwhile, I'm racing against time trying to pay off the mortgage as quickly as possible.

All the best,

Mado

 

Mazhar Amin's picture
Mazhar Amin
Status: Member (Offline)
Joined: Apr 22 2014
Posts: 1
what are the policies to buy

what are the policies to buy a house in UK.

DennisC's picture
DennisC
Status: Gold Member (Offline)
Joined: Mar 19 2011
Posts: 310
what are the policies to buy

Not being a resident of the U.K., this is where I would start, if I had this question:

First, access the internet using the government-monitored internet service provider of your choice.

Second, launch the browser of your choice.

Third, type "google.com" into the URL field, and enter "what are the policies to buy a house in the UK" in the search field.  Remember to hit "enter".

Fourth, select the link displayed that seems most relevent to your query.  I would guess that the link below might be a good place to start. https://www.gov.uk/government/policies/helping-people-to-buy-a-home

Best of luck with your efforts.  Perhaps a member familiar with the U.K market could offer you more detailed advice, if they are so inclined.

tomas.kadlas@gmail.com's picture
Status: Member (Offline)
Joined: Mar 25 2014
Posts: 2
the right website

First of all, thanks for all your comments.

I don't think this is a bad place at all to ask what others think about my situation. If I ask around people here, then the advice would most probably be of the sort 'do what everyone is doing'. There is no new useful  information for me in that.

My post was also about a sense of belonging to a place, culture and a community. These will be more important when informal economic arrangements, be it growing your own food or bartering or gift economy take over the niches where I can easily use money as a medium today. As it is, people display more solidarity towards those whom they view as one of their own, be it family, community, tribe, nation or whatever. I feel like I am (we are) much more dispensable comparing to locals in both where we live now (we will always be foreigners here), where I come from (I feel like a tourist when visiting) or where my wife comes from (there I am a tourist, too).

 

 

tictac1's picture
tictac1
Status: Silver Member (Offline)
Joined: Sep 25 2009
Posts: 175
Crunch the numbers

As you read this, bear in mind it is based on U.S. real estate costs and inflation, so you may have to tweak the numbers.

A friend and I sat down recently and crunched the numbers to compare renting to buying. Before I tell you our conclusions, let me just state the obvious- owning gives you more control over property use, while renting gives you more freedom of movement. This should be central in your planning. What we found is that over the past 25 years or so, rents have tracked what I will call "true inflation", or about 9%. I say "true inflation" because once you understand how our inflation is calculated, it becomes obvious it is contrived, with an intentional low bias.

Home prices during that time generally tracked stated inflation, or between 2.5-3%. That means property values are not rising as fast as the cost of the other stuff we buy, and energy. If you are buying a house to pay it off and never move again, this is not a big deal, since the resale value of the home is not a concern. The interest on the mortgage payment is, however. Over the life of a 30 year loan at 5.5%, the interest will cost you more than the house, by a long shot.

Owning becomes even riskier when you consider the possibility of a "one-off" asset tax to prop up failing governments. Consider the possibility of Norway choosing this option. Of course, money in the bank at that point is at an even greater risk.

Our conclusion was that owning a home was a bad "investment" unless you consider it an investment of a non-monetary type. I've intentionally not addressed house flipping, and selling into a bubble market since there are too many variables with flipping, and bubbles are less than predictable. Hope this helps.

Bheithir's picture
Bheithir
Status: Member (Offline)
Joined: Nov 2 2008
Posts: 24
To buy a house or not.

Tomas,

Very mixed emotions for me here. I'm from the U.S., but am familiar with Norway and what you are saying. You feel like an outsider here and may move to Bulgaria or somewhere else in Europe. How safe do you feel where you are? How safe would you feel in Bulgaria, back in the Czech Republic or any other Continental European country? That is a big question.

You are Dentist. That is skill that will still be needed. Sure, you may have trouble giving root canals if things get real bad, but if I need my tooth pulled, I would come to you. In a collapsed world were you local fiat money isn't worth much, then charge in Silver.

As for buying a house, that is a big decision in any country. You would have a responsibility to pay the mortgage, or possibly losing it. If there were enough defaults in your area, like happened over here, people could probably keep living in the house for quite some time, before the bank got around to taking it back. This is for you to answer for yourself, if that is even acceptable. 

I think your plan on improving your skills is a great idea, they are yours to keep. Maybe socking away some silver and gold would be a good way to go too.

Good Luck to you and your family.

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