Construction costs are currently skyrocketing

Insanity how expensive the vacation is becoming. Doesn't Turkey have immense inflation? I mean, I heard something about that. With all the bad news, you lose track.

We booked in Germany. After Corona spoiled my plans at great expense 2 years ago. Maybe we will go to Finland or Sweden over New Year's. We'll see.

Construction with GCs is not over, they are just losing more and more of their advantages. Exorbitant price surcharges or contracts / fixed prices that are not upheld. Prices are extremely high today. GCs also seem no longer able to guarantee completion deadlines.

When they sign a contract, they order the complete material the next day, including the roof truss at the carpentry center. This way they can exclude subsequent price increases. A working method I find very reasonable.

I think this is exactly how the future of GCs and the construction industry can go: orders are accepted on a rather short-term basis and immediately ordered and executed. Building permits must then already have been issued for the construction execution offer.
But now, commissioning someone and execution in 1-2 years is no longer feasible.

But where is the risk if you are already paying 4% for the long term? After 10 years, the follow-up financing would presumably have to be closer to 6% than 5% for it to be worthwhile. If I also take into account what inflation does to the debts and loan-to-value ratios, if we actually have 6% in 10 years... Such a conclusion is just wasted money. A 1% interest difference at 105% LTV is easily 500€ every month that does not go into repayment but only into interest.

After 10 years, refinancing is still possible. We are coming from 4-6% interest rates and it will also settle at least there again. With 5-7% inflation, interest rates will continue to rise in the medium term. The customer secures interest under 4% for the entire term with a 1% surcharge and can, in the best case, still refinance cheaper in 10 years. I find 10-year fixed interest rates in low-interest phases highly risky.

I have been doing project management in the real estate/construction sector not since yesterday, but despite the team and a lot of experience, I notice that especially the coordination and planning of interfaces between the trades contains a lot of potential for errors.

That’s what the architect is there for. In this phase, he also earns the majority of his fee.

Because interest rates are likely to rise further and because the nominal interest rate is still below inflation. 10-year fixed interest rate is also at 2.84% at 105% BLW.

Steep bet on 30 years after the interest rates were "high" for four months. But to each their own.

105% BLW is of course already special and leads to strange conditions. A third more financing costs are not without consequence. In the past, due to the high interest rates in the long-term range, people only contracted for 5-10 years because the premiums were simply too expensive.

I was approved today for a 100% financing (105% loan-to-value) with a 30-year fixed interest rate of 3.92%. The 10-year fixed interest rates are at 2.35% for an 80% loan-to-value. From now on, home financing with the current interest rates and real estate/construction prices will no longer be feasible for some.

Phew, they pay as much in interest in one year on a 500K volume (which probably won’t even be enough) as we do over the entire term. A crazy idea for me… hopefully, no one will overextend themselves massively if they haven’t even been able to build up equity so far.

That’s what the architect is for. In this phase, he also earns most of his fee.

Yes, and in this phase the client also has to pay close attention to details and make sure that all parties are working with current and correct plans. Otherwise, you end up with issues like changes in buildup heights that were not recorded or overlooked. Learned bitterly: Keep careful notes of every conversation. About every little thing.