Construction costs are currently skyrocketing

A question to current planning builders without having read 245 pages now. You hear everywhere about material shortages and rising construction and land prices. We started building in 2019 and paid about 465,000 euros for our 180 sqm in the end (excluding outdoor facilities); in addition, a plot of land would cost 148 euros per sqm and thus 140,000 euros if we hadn’t already owned it. We also had architect costs etc., but I will leave those out now. That means just under 605,000 euros for a new build without outdoor facilities. For that, I need another 15,000-20,000 euros. Now this year, you hear about material price increases of up to 20% and further rising land prices. Are current builders, for example here in BW in the countryside, now paying somewhere between 705,000 and 750,000 for a detached single-family house including land in the countryside? In addition, the interest rates, as far as I know, are rather between 1.5% and 2% compared to our 0.7-1.4% back then. Nevertheless, I see current construction sites in new development areas that can afford a basement. So then the construction costs are rather between 750,000 and 800,000. Is it really like this here in BW within a one-hour radius around Stuttgart or more reasonable?

Is it actually like this here in BW within a 1-hour radius around Stuttgart or is it more reasonable?

It is like that. And depending on the direction, it's even worse. Depending on which direction you go, within an hour around Stuttgart you are still at 300-500€/sqm for the land.

That also leads to strange consequences. My house is in an established residential area. That means there used to be summer huts; about twenty or thirty years ago new families started moving in, certainly not high earners, middle-level employees, craftsmen, simple clerks, etc. Today only double-income academics can afford to build there, and the same ordinary people have become real estate millionaires. They may earn only half to two-thirds of my income, but they have paid only a quarter to half. Even my direct neighbor across the street, who built his house 10 years ago, paid only a quarter for the land alone. However, he still spends a lot on the exterior areas in EL. Just a few months ago he paved his driveway and finished the gate.

ordinary people are real estate millionaires.

Cool, then I am one by now too

As long as profits are not realized, they are only paper gains. So as long as you have not sold the property, you have not earned anything. For most people, it is also irrelevant how much their house is worth. You live in it and usually cannot sell it. Whether it is worth 1 million or 10 million only matters to the one who inherits it and can sell it or in similar situations. I myself am also a property millionaire, but I cannot buy anything with that either. Lots of work and little income. On the contrary, the properties cause costs. The wealth exists only on paper. Of course, you can also sell, but then what do you do with the money? Buying a stock index at an all-time high makes just as little sense as a fixed deposit with negative interest. So I keep the properties. And if today there is an unlimited expansion of the money supply, no one should be surprised about inflationary tendencies. Producer prices in the USA rose by 6.2 percent in October. That is no longer a temporary price increase. It is a solid inflation. And food prices will also see explosive increases shortly. There is still a lot to come. I expect a tripling of prices at the beginning of next year. Many will still rub their eyes in disbelief. There will also be shortages and delivery difficulties here.

Now all that's missing is the sausage for the mustard that can be read here…