Why Don't Germans Want to Own Their Homes?

A few years back I was on TDY at Stanford. With time on my hands, I dined out a lot with a visiting professor from Greece. He marveed at Palo Alto real estate prices (and this was long before the boomandbust). "At least our children can buy their own homes," he kept saying. "They can buy their own homes."

He was right. Greece had and has a high level of home ownership. Indeed, so do many of the poorest and least developed countries in and around the European common market (I believe Hungary may be the highest).

The flip side is that we get some of the lowest rates of home ownership in some of the richest countries--like Sweden, and Germany.

Frame it as a question: why does Germany have such a low rate of home ownership? I tried it on a few of my friends who know more about Germany than I do. I learned some stuff I didn't know before, but most of the answers get you nowhere because it isn't clear which way you are going on the ladder of causation.

• The German government doesn't promote home ownership.

• The banks make it difficult to get a long-term mortgage: lots of cosigners, high down payments.

• There's a horrendous transfer tax (20%+ of value).

• Huge protections for renters; almost impossible to evict.

All this is most interesting and instructive, but in every one of these instances, the phenomenon seems more like effect than cause: i.e., if society wanted home ownership, the government would promote home ownership; would get rid of the transfer tax, would squeeze the banks, would toughen up the eviction laws.

My friend Taxmom has some good anecdotes about the German aversion to home ownership. "My German friends (dual income no kids)," she recalls,

last time I was there explained to me that no-one seriously thought about buying a home unless they wanted to leave something for their heirs, and since they didn't plan to have kids, what was the point? At about the same time I read an article in the Frankfurter Allgemeine about the beleagered misguided Brits, who put themselves into economic servitude for the sake of owning their own home.

Still, I wonder why.

Data: There's a convenient collection of links here. Here's a more tempered discussion of the "why" issue, although it really doesn't seem to add anything.