Report: Building a house as retirement provision? No way!

and when I’m done paying down in the countryside in my mid/late 40s,

Can one of you country bumpkins here (except Karsten, who can only manage that with a time machine) please confirm this assumption for me? Now opinions are clashing here, which is also okay. I think anyone of us who is currently financed with a loan-to-value ratio of 80% or less will be done in at the earliest 20-25 years due to the high amount. At today’s construction prices, finishing in the late 40s with children is rather utopian. Mid/late 50s is more what I would expect. I agree with you that one can’t pay off a single-family house in MUC before retirement, but that is not going to be the goal there anyway. Now let’s come to the thesis that everything gets better after repayment. After 20-25 years, the first problems and renovations begin. The photovoltaic system needs to be replaced, or in the meantime the second inverter has already broken down. The heating system has acted up 7 times since the warranty expired. The bathrooms also want to be renewed. Renovations have already been done at least once, and the furniture has been replaced. These are all costs that hinder a homeowner from building wealth. Of course, the cold rent is eliminated here compared to a tenant. But anyone who believes that after paying off the house they can pocket the difference 1:1 is beyond help. Retirement is going to be bad anyway because many fall to a level they are not used to. Everyone knows their current pension statement. If I live long enough to receive a pension, then I don’t want to imagine what I can afford with it after inflation. When you are then forced to sell because you can’t afford the maintenance or simply are too old to climb stairs, and here the circle closes, we’re back to the original statement. A house is not a pension provision because after selling you don’t get anything remotely close to what you put in over the years. Of course, and here I agree with you, tenants are no better off. You have the same burden for 25 years and the rents were raised at least 4-5 times during that period.

Well, we deliberately chose a district town because it was cheaper. This way, we can now go on overseas vacations for four people and the cabin will be paid off in 10 years with the regular annuity. Therefore

Karsten does answer Zaba after all. Not because of the time machine. forget about our current house. it was paid off so quickly because we had capital stock. 1) paid-off REH, 2) paid-off land, 3) a matured old life insurance policy. About the REH. We bought it in 1997. We sold it in 2016. It was paid off within 10 years. Interest at the time 4.6%. Why? It was also relatively modest and therefore affordable: in the 250,000 DM range. We also acquired the REH with just over 100,000 DM of equity. That works in the "countryside". By the way, when selling, we didn’t experience any nasty surprises. It went quickly within the family without a realtor. The buyer had the following renovation needs besides some painting: new gas boiler. new fitted kitchen. That was it. Otherwise, everything in the house was fine. Windows still good, doors still good, tiles still good, vinyl coverings still very good. Karsten

Can one of the country bumpkins here (except Karsten, who can only manage that with a time machine) please confirm this assumption for me?

We are done without special repayments at 45 (me) and 42 (her) years old. However, we have already made over 20,000 in special repayments in the first two years and will make another 15,000 in special repayments this year, so we will be done by the end of our 30s/beginning of our 40s.

We live in the countryside and when I ask around in my circle of friends, this is not uncommon. Here, it feels like in 8 out of 10 houses massive own contribution is made. In addition, the plots are often inherited or gifted by the parents.

For me, the house is definitely retirement provision. When I look at my parents, grandma or parents-in-law... all houses are paid off and they now get by with just a few hundred euros. My grandma initially didn’t work or at least not for money (that used to be the case, as almost everyone had agriculture back then) and afterwards she was self-employed (hospitality). She now gets by very well on her measly 600 euros pension, and even saves about half of that. She probably also doesn’t pay any additional costs because the hospitality business is now run by my mother and she lives there for free (and still helps out there in her 70s). My father-in-law will also close his business soon in his mid-50s because the house has been paid off for a few years.

Karsten does answer Zaba. Not because of the time machine. forget about our current house. it was paid off so quickly because we already had capital stock. 1) paid off duplex, 2) paid off land, 3) a matured old life insurance policy.
About the duplex. We bought it in 1997. We sold it in 2016. It was paid off within 10 years. Interest rate at the time 4.6%. Why? It was also relatively modest and therefore cheap: the 250k DM class. We also acquired the duplex with about 100k DM equity. That works "in the countryside". By the way, we had no nasty surprises when selling. It sold quickly within the family without a realtor. The buyer needed the following renovations besides a few painting jobs: New gas boiler. New fitted kitchen. That’s it. Otherwise, everything in the house was fine. Windows still good, doors still good, tiles still good, vinyl flooring still very good. Karsten

What kind of prices were those? So 250k DM - 100k DM equity = 150k DM financing = 75k€ with 4.6% interest. I am not surprised by some statements now. For that money you don’t even get a 2-room condominium today.

Zaba, the prices in 1997 matched the salaries at that time. That was not a special price, those were [RH] of a Lübeck property developer, who still made some profit on it.