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Comment by memling | Hacker News Reader

> Personally, I would rather be worried about the real estate market and office buildings folding in value...

Real estate also has a long-term demographic problem: fewer people means lower demand. We're below replacement rate[1], so as a general class I'd expect real estate to underperform.

My folks sold a house in a upper-middle class neighborhood in one of the best school districts in their state. They owned for 22 years and didn't make inflation on the sale.

[1] https://en.wikipedia.org/wiki/Demographics_of_the_United_Sta...

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Thanks for sharing! Yes - but with a BUT: I think it depends where. On average this certainly is very true. But urban areas (I speak for Germany): they will probably not see a decline in population but rather an increase. Less dense areas may die out. Urban areas with strong economies are “hot” and I am not convinced this may change soon. Home-office may make “urban centers” less attractive and overvalued - but “suburbs” will remain very valuable imho. People still want to have good infrastructure and schools, so even with a shift from city-center office work to “suburb-homeoffice” I don’t think this will change...

And for clarification: in Germany (over-simplified) expensive locations in city centers run at 10kEUR/sqm, suburbs maybe at 4k-7k EUR/sqm in strong regions? So this may sound “super cheap” to folks in the US with a bit of upside until we reach “US prices”.

I am sorry and surprised to hear that they didn’t make inflation even on the sale... Crazy.

The average price per square meter is roughly the same in Berlin and Washington DC. The real estate market in San Francisco and the bay area is an outlier. Houses in second and third tier cities in the US are actually cheaper than comparable cities in Germany, even before you take all the additional transaction costs in Germany into account.

Thanks, this is interesting!

For those who wonder: in some states, there is a 6.5% tax on real estate sales. You sell a house for 1 Mn EUR, the buyer has to pay 65k in taxes... Per transaction. Add the notary and add the real estate agent leaves you at 10% pretty quickly...

And then the government wonders “why aren’t people more flexible in moving across the country to fill all these skilled worker gaps”...

It may also be worthwhile to consider: most houses are brick houses with excellent insulation and high quality windows. The “substance” of the houses is usually built to last 50+ years...

the "fewer people" statement doesn't check out, the article linked shows the US population steadily growing by 1-2 million every year. By replacement rate I'm assuming you are referring specifically to the fertility aspect but that's not enough to jump to the "fewer people overall" and "real estate to underperform" conclusions.

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