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The Shock of Sweden's Housing Market Is Hitting the Country's Currency

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Re: The Shock of Sweden's Housing Market Is Hitting the Country's Currency

#151

Post by jackcosgrove »

WilsonPhillips wrote: post #109

Crytocurrencies and blockchain based solutions like Bitcoin have a built-in deflationary element from the start right? Could that be a way to counteract the deflationary tendencies of this market?

Don't conflate cryptocurrencies with blockchains. Blockchains are merely a decentralized way to prove stake in something.

Cryptocurrencies with a fixed supply like Bitcoin are deflationary, especially since mining costs increase over time.

Cryptocurrencies need not have a fixed supply, and in fact a "currency" with a fixed supply is indeed not a currency but an asset. Currencies must slowly and predictably inflate to be useful, otherwise people don't spend today since the "currency" is worth more tomorrow.

Currencies facilitate commerce and should grow in supply with the economy. They should not be a speculative tool to benefit first movers.

tl;dr: inflation is necessary, deflation is bad, hyperinflation is the worst.

Re: The Shock of Sweden's Housing Market Is Hitting the Country's Currency

#152

Post by paulcole »

lisper wrote: post #107
opportune wrote: post #14

When will we learn that a "strong" housing market is not necessarily a good thing? High housing prices are great for those who already owned houses but terrible for everyone else (e.g. the entire generations born after prices became inflated). Not to mention people are greedy and will over leverage themselves when interest rates are good. No country should let the "landed gentry" hold them hostage over interest rates…

> High housing prices are great for those who already owned houses Not really. Rising prices (not high prices) are great for people holding houses as investments . But for owner-occupied houses, rising prices are as bad for the owners as they are for everyone else. my wife and I own a house in Northern California, which we bought during the sub-prime crash. Since then it has nearly doubled in price. It is also too bi…

I can only imagine the pain of owning a house that has increased over $500k in value in less than a decade. Are there support groups in your area you can turn to?

Re: The Shock of Sweden's Housing Market Is Hitting the Country's Currency

#153

Post by JumpCrisscross »

tom_mellior wrote: post #28
opportune wrote: post #14

When will we learn that a "strong" housing market is not necessarily a good thing? High housing prices are great for those who already owned houses but terrible for everyone else (e.g. the entire generations born after prices became inflated). Not to mention people are greedy and will over leverage themselves when interest rates are good. No country should let the "landed gentry" hold them hostage over interest rates…

I agree. The article isn't very clear on what the problem would be, though it does mention deflation. Deflation is bad by axiom, and we must be pathologically afraid of it. If housing prices sink enough, that may mean that the overall inflation rate turns negative, which is deflation, and thus bad. Even if this "bad" thing, in this case, would just mean that people could consume, save, and invest more.

Deflation means a drop in price levels, a systematic effect. Housing prices falling while consumer prices hold steady isn’t deflation. Deflation is scary because (a) it encourages capital to hold money over productive investments and (b) it is very difficult to fight. Deflation usually occurs once an economy is already at the zero bound of interest rates; no help there. You could monetise a bunch of fiscal spending, but that, too, has a bunch of nasty side effects.

Re: The Shock of Sweden's Housing Market Is Hitting the Country's Currency

#154

Post by Retric »

lisper wrote: post #127
Retric wrote: post #112

Earlier quoted context omitted.

#3 is real, but more a sign of California's disfunction than an inherent problem with high property values. PS: #1 only consumes a percentage of profits, so it can't make a sale unprofitable.

> #1 only consumes a percentage of profits, sit it can't make a sale unprofitable. Yes, that's true, but it makes a move less efficient. If we sell our house and buy another one of equal value, the higher the price, the more we lose in capital gain tax in the transition. If our house had not appreciated, we would pay zero cap gains. The higher prices go, the more expensive it becomes to move locally.

The first 500,000$ of capital gains are excluded when selling a primary residence jointly. So, if your net profit > 500,000$ yes it costs money, but if your actually downsizing then you will very likely come out ahead. Further, your new home is also worth more money in the event you move out of the area.

Re: The Shock of Sweden's Housing Market Is Hitting the Country's Currency

#155

Post by lisper »

mbesto wrote: post #136
lisper wrote: post #107

Earlier quoted context omitted.

> High housing prices are great for those who already owned houses Not really. Rising prices (not high prices) are great for people holding houses as investments . But for owner-occupied houses, rising prices are as bad for the owners as they are for everyone else. my wife and I own a house in Northern California, which we bought during the sub-prime crash. Since then it has nearly doubled in price. It is also too bi…

Fellow Northern California homeowner here. You can sell it and you will net a return. I'm not sure I understand your gripe. It sounds like you're annoyed about the hassle of moving , the associated fees, etc. But the parent's point is valid - the appreciation of value of your house is great for you. > 1. Capital gains tax Note - if it's your primary residence you get capital gains relief on the first $500k. > 2. Real…

> if it's your primary residence you get capital gains relief on the first $500k.

Yes, I know. But our appreciation is substantially more than that. The higher it goes, the more expensive it becomes to make a move.

> which is less impactful since you've already made a profit on it

Only if we move to a less expensive area. If we make a local move, that "profit" just gets rolled in to the next house. There's no way to cash out without leaving the area.

> Clarification - you can't afford to move in the general vicinity, but you could certainly move to Nevada (for example).

Yes, exactly right. What we really want to do, but can't because it's too expensive, is downsize. This would not be the case if prices were stable.

Re: The Shock of Sweden's Housing Market Is Hitting the Country's Currency

#156

Post by bernawil »

lisper wrote: post #107
opportune wrote: post #14

When will we learn that a "strong" housing market is not necessarily a good thing? High housing prices are great for those who already owned houses but terrible for everyone else (e.g. the entire generations born after prices became inflated). Not to mention people are greedy and will over leverage themselves when interest rates are good. No country should let the "landed gentry" hold them hostage over interest rates…

> High housing prices are great for those who already owned houses Not really. Rising prices (not high prices) are great for people holding houses as investments . But for owner-occupied houses, rising prices are as bad for the owners as they are for everyone else. my wife and I own a house in Northern California, which we bought during the sub-prime crash. Since then it has nearly doubled in price. It is also too bi…

> Rising prices (not high prices) are great for people holding houses as investments

This is right. Part of the problem is that we don't refer to this by what it is: Inflation in housing prices.

The thing about housing is that you can't choose not to consume it. You can't anticipate your consumption to beat inflation either.

The only way to win with housing inflation is by exploting some subsidy like cheap leverage and the like.

Re: The Shock of Sweden's Housing Market Is Hitting the Country's Currency

#157

Post by nvarsj »

ppeetteerr wrote: post #115
opportune wrote: post #40

Earlier quoted context omitted.

I think a strong housing market may be the result of lack of productive capital, but I think it has more to do with supply and demand. Most average people pay for a house using a mortgage payment, so when buying a house, they'll be looking for a house that has an affordable mortgage payment. Let's say Joe wants to spend / can afford a $1000/month mortgage payment. If interest rates are 5% and the maximum mortgage per…

I agree with everything except for the "make them and their other rich buddies even richer." Let's not bundle all politicians into this. :)

It's sort of telling how many prominent politicians in the UK make much of their income off of housing. Boris Johnson, George Osbourne, and David Cameron all come to mind - all who were in prime places to improve the situation, but it was against their best interests.

Re: The Shock of Sweden's Housing Market Is Hitting the Country's Currency

#158

Post by lisper »

Retric wrote: post #154
lisper wrote: post #127

Earlier quoted context omitted.

> #1 only consumes a percentage of profits, sit it can't make a sale unprofitable. Yes, that's true, but it makes a move less efficient. If we sell our house and buy another one of equal value, the higher the price, the more we lose in capital gain tax in the transition. If our house had not appreciated, we would pay zero cap gains. The higher prices go, the more expensive it becomes to move locally.

The first 500,000$ of capital gains are excluded when selling a primary residence jointly. So, if your net profit > 500,000$ yes it costs money, but if your actually downsizing then you will very likely come out ahead. Further, your new home is also worth more money in the event you move out of the area.

> if your net profit > 500,000$

It is.

> yes it costs money but assuming you want to down size that should hardly be an issue.

Why? A loss is a loss. What difference does it make if it comes out of your checking account or your home equity?

Re: The Shock of Sweden's Housing Market Is Hitting the Country's Currency

#159

Post by ttul »

lisper wrote: post #155
mbesto wrote: post #136

Earlier quoted context omitted.

Fellow Northern California homeowner here. You can sell it and you will net a return. I'm not sure I understand your gripe. It sounds like you're annoyed about the hassle of moving , the associated fees, etc. But the parent's point is valid - the appreciation of value of your house is great for you. > 1. Capital gains tax Note - if it's your primary residence you get capital gains relief on the first $500k. > 2. Real…

> if it's your primary residence you get capital gains relief on the first $500k. Yes, I know. But our appreciation is substantially more than that. The higher it goes, the more expensive it becomes to make a move. > which is less impactful since you've already made a profit on it Only if we move to a less expensive area. If we make a local move, that "profit" just gets rolled in to the next house. There's no way to…

Awww poor baby. You’ve made more than $500K, much of which will be untaxed, simply by owning a house. Jesus fucking Christ. Cry me a river. Most people would trade their arm in for that kind of leveraged gain.

Re: The Shock of Sweden's Housing Market Is Hitting the Country's Currency

#160

Post by gjjrfcbugxbhf »

notyourday wrote: post #145
opportune wrote: post #40

Earlier quoted context omitted.

I think a strong housing market may be the result of lack of productive capital, but I think it has more to do with supply and demand. Most average people pay for a house using a mortgage payment, so when buying a house, they'll be looking for a house that has an affordable mortgage payment. Let's say Joe wants to spend / can afford a $1000/month mortgage payment. If interest rates are 5% and the maximum mortgage per…

If this is the case and Joe wants to bet that the housing prices will continue to rise, Joe gets an interest only ARM with a 7 year balloon.

Joe is probably risk averse and more concerned with having a place to live in the future than taking on risk.
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