If you think the housing market in the United States is tough, with mortgage interest rates about 10%, consider Argentina, where the rates range from 20% to 24%.
If you cringe at spending 30% of your household income on your mortgage, look at Australia, where the salary slice is 44%.
And while Southern Californians complain about the high price of putting a roof over their heads, the average home in Tokyo--a four-room condo in less than 1,000 square feet--costs more than $400,000.
"We gripe a lot, but I'd guess that the dream of owning a home is much more a reality here than anywhere else in the world," said Ivan Faggen, worldwide director, Real Estate Services Group, Arthur Andersen & Co., an international accounting and consulting firm.
"Many times, owning a home is out of reach elsewhere," said Faggen, who is based in Los Angeles. "Maybe that's why they call it the American dream."
He chuckled, but it's no joke. Here's why:
"Most other countries don't allow deductions for mortgage interest," said Jim Tobin, director of international tax for Ernst & Young, by telephone from his New York office.
"The U.S. approach of subsidizing home ownership through a tax system is a unique philosophical point of view." The Netherlands is one of the few other countries that do this, he added.
"The U.S. is the only place that hasa 30-year fixed rate for mortgages," Faggen said. "Lenders don't know what it will cost them to make these loans, so they take much more risk than, say, a lender in Canada that matches a five-year, fixed-rate home loan with the current interest rate offered by the bank on deposits."
Even since the introduction of the adjustable-rate mortgage, 40% of the homes in the United States are sold at long-term fixed rates, he noted.
"In most countries overseas, home ownership, while important, doesn't carry the same overwhelming personal desire for it as it does here," Tobin said. "A much lower percentage of the population owns homes, and people tend to buy much later in life, especially in Europe.
"This is all tax driven more than cultural, I think, because it not only takes more time to save up to buy there, but few people trade up, because there is a hefty transfer tax on the sale of a home. So the value of a home must go up 20% (from the time it is purchased until the time it is sold) for the seller to break even."
As a result, he added, "people overseas, especially in Europe, tend to have one home for a lifetime." This is true of renters as well as owners, he said.
Some cities in other countries are populated mostly by renters. Faggen called Tokyo and Toronto "cities of apartments."
"But rents don't necessarily run with the price of a house," Tobin said. "In other words, there isn't necessarily a good yield on the rent of a single-family house."
One reason houses are cheaper in the United States is there is more land available for housing, he figures. In most European cities, more land is allocated for parks. "This is government driven," he explained.
European cities are more densely populated as a result. "But when you're five minutes out of Brussels, for instance, you're in the countryside," he said. In contrast, most big cities in the United States have miles and miles of suburbs.
"It's nice to go 10 minutes out of a city and be in the countryside, but if you did that in New York, each house there would cost $3 million," he remarked.
Even when people overseas own their homes, the homes are often what Faggen described as "substandard compared to ours." That's probably why American architectural styles are frequently copied for new housing in other countries.
"We're probably the country that pays the most attention to (architectural) style," he said.
"In Japan, for example, it's real prestigious to have a Western-style home, and in France, the third largest home builder is Kaufman & Broad, a company from right here in Southern California."
Whether in France, Japan or most any other country abroad, people can will their homes, as they do in the United States, to their children, and title is taken the same way as it is here, he said.
"But in England, there are more land leases, and the leasehold interests are handed down from one generation to another."
Leaseholds are also common in Hawaii, but the durations aren't as long as in Great Britain. "In England, where they evolved from so much land owned by the crown and the church, the leaseholds can run 500 to 1,000 years," he said.
There is a financial disadvantage in that, he noted: "I saw one 500-year lease at $8 a year. They thought that was a lot of money in the 17th Century."
Sometimes, Americans buy British castles on leased land, but mostly, Faggen said, Americans are buying the land and the real estate in resort areas like the French Riviera or the Spanish Costa del Sol.
"Second homes in resorts are a popular way for Americans to own overseas," he noted, "but there are also American colonies in Mexico and Costa Rica, where retirees or semi-retirees find the cost of living to be a fraction of what it is here."
Foreigners cannot buy land within 62 miles of the Mexican border or 31 miles within any Mexican coastal area, but they can establish a trust in which they lease the land for 30 years.
Homeownership Around the World
(Note: Costs are given in U.S. currency at exchange rates valid within the past few weeks, and sizes have been converted from square meters to square feet.)
(All costs are average, and sizes, financing and family sizes are typical for each country. Income is annual for middle-income families, or households, unless specified as being per capita.)
Cost: $30,000 to $100,000, depending on the neighborhood.
Size: 2-3 bedrooms, living and dining rooms, garage, 1,076-2,152 square feet, with age of house from 20-50 years.
Financing: Due to high inflation, the only mortgages available are at interest rates of 24% to 30% with repayment in two to five years. Because of the economy and inflation, home loans are pretty much a thing of the past, and few people are buying homes now.
Family size: Husband, wife, two children and one grandparent. Fifty percent of the wives work.
Special characteristics: There are no restrictions on building, buying or renovating except what has been termed the current "disastrous economic situation."
About 50% of the families own their homes.
Cost: $200,000-$400,000 for a two-bedroom apartment on Sydney's North Shore (close to city center) and $300,000-$450,000 for a 2-3 bedroom, free-standing house.
Size: Besides bedrooms, homes usually include living and dining rooms, garage, sometimes a family room, 1,500 square feet.
Financing: About 60% are purchased with bank loans, 40% with building societies, which are similar to savings and loans. Length of term is typically 25 years at an interest rate of 17% and a down payment of 10% to 15%.
Income: $30,000 per person. About 44% of the household income goes toward mortgage repayment, so many households now have three incomes.
Family size: Husband, wife, two children.
Special characteristics: First-home buyers in Sydney need an annual household income of $64,100 to purchase a median-priced home, according to the Housing Industry of Australia; however, another source in Australia indicates that a household income of $78,000 is necessary to service a $200,000 mortgage on a $250,000 home.
Cost: Varies from $137,000 in Toronto to $200,000 in Vancouver.
Size: 3 bedrooms; living, dining, family rooms plus garage; about 2,000 square feet.
Financing: Mortgage from bank, trust company or credit union with 25-year amortization and an interest rate of 15% renegotiated no longer than every 5 years (usually every 2-3 years). Down payments are usually 10% to 25%. Property taxes average $2,000 annually. Average period of ownership is 10 years.
Income: $41,000. More than half of the households have two salaries.
Family size: In Vancouver, a husband, wife, two children. In Toronto, 3.1 persons per household, with children in 40% of the households.
Special characteristics: Housing prices in Vancouver have escalated rapidly in the past two years to the point where there is an "affordability crisis." There has also been a significant move in the city toward condominium-type living. Most homes there are within a 45-minute commute to work.
Cost: In what is described as "an executive neighborhood" in Paris, $560,000, for 1,076 square feet with 2 bedrooms; living and dining rooms, garage and a kitchen.
In the Paris suburbs, it is about $520,000 for 1,722 square feet with 4 bedrooms; living, dining and family rooms and a garage.
For all of France, the average is $170,000 for about 538 square feet with one bedroom and a living room.
Financing: Mostly with bank loans for 15-20 years at a 10% interest rate with a 10% down payment.
Income: Throughout France, the average annually is $17,000, though the average for executives is $100,000. Most families live on two incomes.
Family size: Husband, wife, two children.
Special characteristics: There is a waiting list for housing at a good price in Paris.
Cost: Varies according to size and location for a 3-bedroom, semi-detached home, including $123,563-$230,650 in Greater London; $32,950-$82,375 in the Midlands (Nottingham); $49,425-$123,563 in the North West (Liverpool), and $52,720-$140,038 in Scotland.
Size: Most are 2-3 bedroom, detached or semi-detached houses. Most are no larger than 1,000 square feet on a quarter of an acre. They have living and dining rooms and a garage.
Financing: Homes are seldom purchased with bank loans but are usually bought through building societies, which are like S&Ls.; Typical home loans are for 20 to 25 years at a current interest rate of 15.5%.
Income: Gross yearly median income of homeowners with mortgages is $18,578. Homeowners with mortgages have the hghest median income of any group in Great Britain. The typical household is still supported by one income, but it is increasingly becoming supported by two.
Family size: 1987 statistics showed an average of 2.55 members, with the number of households with only one person increasing from 17% in 1971 to 25% in 1987. Of the total population in Great Britain, 44% consists of families with dependent children. The average number of children in households with children was 1.8 in 1987.
Special characteristics: There is a waiting list for public rented housing and low-cost first-time buyer property.
Cost: Varies according to city and location of the house, whether is it in a downtown, a residential neighborhood or in a historical center. As an example, a house that is 1,290 square feet can range in price, depending on location, from $60,000 to $300,000 or $420,000 if in a historical center.
Size: 1,346 square feet with 2 bedrooms, 2 baths, living and dining rooms and a garage.
Financing: Bank loans, 14%-15% interest; loans from credit unions, 11% interest. Loans vary from 10-20 years.
4. Special characteristics: Average period of ownership is more than 40 years.
The attitude is to live and work in one's native town. Nearly 65% of the Italians have owned their homes for many years.
The average age of a home is 40 to 50 years. In Italy, types of houses are defined as being Recent (built after 1960), Old (built between 1900-1960) and Ancient (built before 1900).
Cost: The average metropolitan Tokyo condo--with 3 bedrooms, kitchen, dining and living rooms--sold in fall of 1989 for the equivalent of $439,453.
Size: Most recent figures indicate that the average floor space per dwelling in Tokyo is about 968 square feet, with 4.87 rooms per dwelling. Note, however, that in Japan, rooms that are below ground level and common areas that are enclosed by walls in apartment buildings, such as stairwells, are included in size averages.
Financing: The newest thing in Japan is the 100-year mortgage, so that the burden of paying for a home can be passed from generation to generation, making housing more affordable to families. Interest rates are 7 1/2% for 20- or 30-year mortgages.
Income: $42,463, mostly from husband's wages but also from wife's, other household members', side businesses, jobs and bonuses.
Family size: 3.21 persons per household.
Special characteristics: About 61% of the Japanese families own their own home. A survey showed that a number of Japanese prefer independent homes to condos, "unrealistic as that might be." Given the alternatives, 53.7% chose a house requiring long hours of commuting, and 35.1% preferred an apartment or condo close to the city.
Until recently, developers were willing to go as much as about 22 miles from downtown Tokyo to build condos, but with decreasing land available, the radius has spread lately beyond 35 miles.
Cost: Some two-income families can buy homes for about $30,000, with government assistance, and pay for it in five years; then prices jump to $75,000 and more for the upper middle-class, which represents a small portion of the population.
Most Americans who live in Mexico City are only comfortable in the two or three expensive neighborhoods of town, ranging from $200,000 to $1 million. Rents there can be as high as $3,500. An average, one-bedroom condo would cost about $1,250 a month.
Size: Homes at $75,000 and above average 2,583 square feet, including 3 bedrooms; living, dining and family rooms and a garage.
Financing: Mostly bank loans, with 10- and 15-year mortgages; interest rate 15 percentage points above prime rate; 20%-40% down payments.
Income: Per capita income is about $7,000.
Family size: Husband, wife, three children.
Special characteristics: There are three classes: working, poor, and upper middle-class and above.
Unless housing is inherited or government sponsored, most people can't afford to buy a home.
Cost: $99,500, on average; most houses vary from $47,100-$78,500. Monthly rents vary from $130-$728, excluding utilities.
Size: Most houses have five rooms. A separate dining room is found only in older homes. About 10% of the houses or flats have a garage. Detached houses are usually about 2,500 square feet; two-room apartments are 1,000 square feet; four-room apartments, 1,556 square feet.
Financing: Mortgages are usually made by general banks and mortgage banks for a term of 25 years with the interest rate, now at 9%, "renewed" every five years. Most of the management-level families will own their houses. Mortgage loans are usually 2.5 times income.
Income: The median income of the population is $22,000. Middle-income, management-level families earn 2.5 to 3 times this amount. Most families have two incomes.
Family size: A household has an average of 1.8 children.
Special characteristics: There are waiting lists for rental houses in the bigger cities.
The average age of most houses is 35 years.
Cost: Private property ownership is expanding with reforms taking place, but most people continue to rent their homes at subsidized monthly rates ranging from about $10 to $33.
Size: The average home, a co-op apartment either rented or owned, is 409 square feet and includes a living room, which is also the bedroom.
Financing: In February, 1988, a government decree encouraged construction of new housing for Soviets and allowed citizens to take out bank loans for up to about $33,000 to build homes. In rural areas, the loans were to have a 50-year payback; in the cities, the loans had to be repaid within 25 years. Borrowing rates were 1%-3% a year.
Even so, most of the housing is still owned by the state, and the rest belongs mainly to housing co-ops and cooperative enterprises.
To date, all land must be leased from the state, and it is illegal to sell the lease or sublet the property.
Income: About $330 a month.
Family size: An average household has one child and a babushka or grandmother.
Special characteristics: One in five Soviet families lives in what is referred to as collective housing, which can be anything from a bunk in a collective farm barracks to a couple of rooms in an urban apartment shared with another family. There is a waiting list of about 10 years even for rental housing.
Cost: In the $70,000 range.
Size: A typical single-family home built with government assistance has 1,250 square feet. An average flat has 680 square feet. Nearly half of the Swedish households own their own houses, or one-dwelling buildings. About 15% of the households own their own flats in multi-dwelling buildings.
Financing: A typical mortgage runs 30-40 years, either with a fixed interest rate, which is changed every fifth year, or a non-fixed interest rate. Today, the fixed-interest rate is about 15.5%, and the non-fixed rate is about 16.5%.
It is usually possible to borrow up to 85% of the market value of the house on these terms. The last 15% can be financed with a so-called "top loan," with a slightly higher interest rate. The average household makes a down payment of 10% to 30% of the house price.
Income: Ninety percent of the working population works full time or more. These 90% have an average annual income of about $25,400. The typical household living in a one-dwelling house has two incomes. Eighty percent of the Swedish women work.
Family size: Most recent statistics, from 1985, show an average number of members in a household as 2.2, with the average family having 1.9 children.
Special characteristics: In the biggest cities, Stockholm and Gotenborg, there are 5- to 20-year waiting lists for flats to rent. Sites for houses are also hard to get in the major cities.
Almost every house built in Sweden is built with government assistance. The assistance consists of a low-interest rate, which is about half the market rate, in the first years. There are some rules to be followed regarding the size of house and building cost per square meter.
Cost: Prices average $68,000 to $90,000 for a typical home.
Size: 1,076-1,292 square feet, generally with 3 bedrooms, a kitchen and a bath. Most are flats.
Financing: Housing loans, a new phenomenon in Turkey, can be obtained from the Mass Housing and Public Partnership Directorate, which is a public institution, or from certain banks. Loans are given according to limits based on house size. The amount of a loan covers 20%-25% of the market prices. The mortgage interest rate is currently about 7%. The maturity of these loans can be extended up to 20 years.
In many cases, loans are obtained from the construction company. The builder starts collecting installments for the house while it is under construction. After the payment of 60% to 70% of the total, the flat is transferred to the buyer. The balance is collected in various installments for up to three years.
Special characteristics: Families typically can buy a house through the government in the seventh or eighth year of marriage.