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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

#171

Post by lisper »

mbesto wrote: post #138
lisper wrote: post #124

Earlier quoted context omitted.

There's a 500k exemption, but our house has appreciated more than that. The more it goes up, the more we lose if we move.

But you're not "losing" more...you're only losing more in relation to the gain that has appreciated. Are you inferring to the fact that the rest of the market is appreciating at the same rate, and thus "losing" out when you buy on the downsize?

Yes, exactly. The higher prices go, the more it costs to make a local move. We only "win" if we actually cash out and move to a different, less expensive area, but we don't want to do that. We like it here.

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

#172

Post by el_benhameen »

ttul wrote: post #159
lisper wrote: post #155

Earlier quoted context omitted.

> 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.

You arguably have a point (so does the parent), but this isn’t the way to express it in a respectful discussion.

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

#173

Post by alkonaut »

xbzbanna wrote: post #150
alkonaut wrote: post #84

Earlier quoted context omitted.

Yes gross. $80k gross is around $53k net (depends on where you live but roughly). Now, remember that reason we are in this mess is because interest rates are so low. We still have pretty low living costs. Our $1M house at 80% is pretty cheap, due to low interest rates. Now, everyone knows interest rates can and will be higher in the future, but people have to buy on the current market regardless (And everyone seems t…

You're talking about these interest rates as though they can just move around - are these adjustable-rate mortgages? In the US, the standard mortgage has a fixed rate. So people with those mortgages would benefit from increased interest rates and/or inflation in the wider economy.

Yes, many homeowners have all or a large part of the mortgage at a rate adjusted several times per year. Right now these variable rates are around 2%. So a lot of people will see their interest rate expenses double if (when) rates normalize at say 4%.

I have my mortgage split between 5year fixed, 2 year fixed and the 3month rate, in order to limit my exposure to variations somewhat.

The general consensus is long fixed mortgages are a poor economic choice for those that have the economic margins to be on the variable rates, since the banks margins are so much higher.

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

#174

Post by Shaanie »

notyourday wrote: post #144
lisper wrote: post #128

Earlier quoted context omitted.

The cap gains is also a big factor. Even if prop 13 were not a factor, the higher prices go, the more expensive it becomes to make a lateral move, or even to downsize.

This is pure nonsense. Lateral move or downsize are two different transactions. Capital gains has no effect on the second one. People who are complaining about the capital gains taxes pretending that such taxes prevent them from either moving laterally or downsizing are complaining that other properties also appreciated in price. What they would have preferred is that their property appreciated and the properties the…

If I buy a house for 50k and want to immediately move laterally to another house worth 50k then the cost is 0 + overhead. If I buy a house for 50k and want to move laterally when it's worth 100k then the cost is the taxes of the 50k profit + overhead.

This gets even worse if you want to buy a larger house (if appreciation is percentage based).

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

#175

Post by dmode »

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.

If your house didn't appreciate you would not have any profits either. Very confused on what the issue is.

Let's say your house is 1mn and stays 1mn. You have zero gains and pay zero taxes. Net cash in your bank = ZERO

Now your house becomes 2mn. So you have 1mn profit, first 500K is exempt. And you pay 25% on your next 500k. Net cash = 750K.

Are you suggesting that you would rather have zero dollars in your bank account than 750 K?

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

#176

Post by lisper »

notyourday wrote: post #144
lisper wrote: post #128

Earlier quoted context omitted.

The cap gains is also a big factor. Even if prop 13 were not a factor, the higher prices go, the more expensive it becomes to make a lateral move, or even to downsize.

This is pure nonsense. Lateral move or downsize are two different transactions. Capital gains has no effect on the second one. People who are complaining about the capital gains taxes pretending that such taxes prevent them from either moving laterally or downsizing are complaining that other properties also appreciated in price. What they would have preferred is that their property appreciated and the properties the…

> Capital gains has no effect on the second one.

Of course it does. A loss is a loss. It doesn't matter whether it comes out of your checking account or your home equity.

> What they would have preferred is that their property appreciated and the properties they wanted to move to did not.

That's generally not an option if you want to move locally.

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

#177

Post by astura »

pacala wrote: post #133
astura wrote: post #69

Earlier quoted context omitted.

Jeez, nobody said the desire to own your home was irrational, by definition. You can have a rational desire to own a home or you can have an irrational obsession. Irrational obsession would include things like when you prioritize homeownership over financial security and other basic necessities like healthcare or food. For example I know someone who gave up health insurance to buy house - and she readily admits this.

A broader definition of financial security _includes_ home ownership. The other options are homelessness and renting. The first one is silly, the second is just paying the landlord mortgage while being exposed to financial risk over the long term.

This has been repeated ad nauseum but if it were correct all businesses would always strive to buy their real estate as soon as they could afford it and since many (including my employer, who brings in a billion dollars a year) are content renting long term, that's obviously not the case.

If you buy once you factor in taxes, insurance, upgrades, maintenance, repairs, commission, closing costs, opportunity costs compared to other investments, interest, PMI, etc., assuming you were in a good financial position to buy in the first place so you don't default, you probably will come out ahead compared to renting if you live in your house for more than 5 or so years.

But! That's only if the cards fall just right. So if the neighborhood is still desirable, tax policy/political landscape doesn't change, your neighbors keep up with their maintenance, your HoA doesn't go into bankruptcy, a major employer doesn't leave town, tastes in housing doesn't change, the housing market doesn't crash, too many of your neighbors don't foreclose, nearby amenities don't leave, a major highway isn't built through your neighborhood, interest rates haven't soared, political housing incentives/programs haven't gone away, too many black people don't move in(1), etc., etc. You're taking on a very large risk if your buying vs renting, sure it has the ability to work in your favor (extreme example - buying in San Francisco in the 90s) or not in your favor (extreme example - buying in Detroit in the 50s).

I've seen people lose out terribly financially buying a house, and not just in 2008 recession, my parents house was bought in 1995 and hasn't even kept up with inflation. That doesn't mean it was the wrong choice for them to buy though, houses are really good at providing shelter.

You also have to have the ability and wherewithal to take care of a house - and tons of people don't.

I'm a homeowner, I'm not against home ownership.

(1) I'm not trying to be racist, but white flight does exist.

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

#178

Post by conanbatt »

bernawil wrote: post #156
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…

> 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 a…

> Inflation in housing prices.

Self-defeating definition. Inflation is generalized prices increases. It stops being generalized if you pick an asset type.

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

#179

Post by tostitos1979 »

lisper wrote: post #167
coderholic wrote: post #147

Earlier quoted context omitted.

Won't you only pay a % of the gain in price in tax? In that case you're strictly worse if it goes down in price. You'd pay less tax, yes, but as tax is % of gains you're net worse off. If this really isn't the case can you share some example numbers showing how you can be worse off with a house that's worth more?

Suppose we bought our house for $1M and now it's worth $2M. We have to pay 25% cap gains (federal + state) on $500k so it costs us $125k to move to a house of equal value. If prices were stable, we could move without taking that hit. The higher prices go, the higher the cost of moving.

You are better off unless you bought the large house for cash. Otherwise, you made a big gain in leveraged terms.

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

#180

Post by maxxxxx »

nvarsj wrote: post #157
ppeetteerr wrote: post #115

Earlier quoted context omitted.

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.

Same in US Congress. Most of them are millionaires who benefit from housing prices.
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