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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

#181

Post by btilly »

astura wrote: post #132
Dylan16807 wrote: post #114

Earlier quoted context omitted.

That's more because prop-13 is a garbage fire than any other factor.

Well, if you didn't have prop-13 wouldn't your taxes just go up anyway even if you didn't sell? Around these parts all real property is reassessed every five years. So the tax burden would hit right away rather than when you sell which would be worse. I have a family friend whose neighborhood became really high end since the 30 years she bought the house. Her taxes are really high now and it's becoming a financial bu…

A hidden consequence of prop-13 is that every city wants commercial real-estate and none want residential because they get more taxes from businesses. This restricts the supply of housing, and is one of the root causes of high prices and long commutes.

Without prop-13 we'd have more housing, more convenient housing options, and lower prices. Yes, long-term residents would have higher taxes. However most of us would save both time and money on our housing costs.

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

#182

Post by lisper »

dmode wrote: post #163
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…

I am very confused on your reasons not being able to downsize. Capital gains should have no impact, since first 500K is exempt. So you will have at least 500K in cash. Real estate agent fees are everywhere and can be negotiated to 2%. Property taxes are not really high. I live in Union City, and pay 1.2%. I guess you cannot downsize because a smaller home costs a lot of money these days. Which is fair enough, but you…

That's true, we could do that. But then we'd have to move twice, and at this point in our lives (we're both >50) moving is a non-trivial hassle. It's also not a given that prices will come down, so this strategy carries some risk that we end up stuck in a rental.

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

#183

Post by ghostbrainalpha »

bracobama wrote: post #88

As a foreigner here in Sweden I've heard about this mystical bubble which will burst sometime soon causing morgage rates to skyrocket. If I was going to buy something, say in North Stockholm, how long would you recommend waiting?

That's the wrong way to look at it. If you wait for the bubble to pop, it may never happen. Or it could happen, but only after prices doubles, and the "crash" may only take the price back to where it is now.

Buy now IF you can afford to hold onto the property through a crash. If you expect to need to sell this property in the next 2-5 years, do not buy it.

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

#184

Post by Marazan »

lisper wrote: post #158
Retric wrote: post #154

Earlier quoted context omitted.

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?

You home equity is only realised when you sell.

There is no loss. There is only the money you get net after the sale.

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

#185

Post by rebuilder »

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.

That's purely a paper profit. As the parent said, they can't afford to move to a similar apartment, so they're unwilling to sell. That probably goes for a lot of other homeowners in the area, which seems likely to contribute further to higher prices. Seems pretty dysfunctional to me.

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

#186

Post by conanbatt »

awjr wrote: post #53
mhandley wrote: post #22

Earlier quoted context omitted.

In the UK, around a fifth of mortgages are interest-only, which I guess is effectively an infinite-term mortgage. In comparison, at least you're paying some part of the capital back on a 100 year mortgage. Of course, both are storing up trouble for the future. https://www.ft.com/content/4e0377e6-6ad4-11e7-bfeb-33fe0c5b7...

I would agree that my interest only mortgage is storing up trouble for my future. However given I bought my 1st house in 1996 with no deposit, the reality is that interest only has worked well given that I have leveraged the housing market over 20 years and have now have a mortgage that is around 40% of the value of the house and is probably enough to move somewhere significantly less expensive and retire. However I…

> I have a feeling rent control is the only way we will ever get to the point where we remove this 'investment' opportunity.

And also remove the opportunity to live in the city. Rent-control is one of those policies that the economic community has consensus that its one of the worst things you can do.

"In many cases rent control appears to be the most efficient technique presently known to destroy a city—except for bombing."

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

#187

Post by aeorgnoieang »

bluGill wrote: post #110
samsonradu wrote: post #89

Earlier quoted context omitted.

Isn't it inherently bad to buy "as good as you can afford"? Employment is rarely stable throughout a 30-year period. Shouldn't people be much more careful when maxing out their mortgage relative to 'the good times'?

That depends. Location location location. The right answer changes based on what side of the city you live in. As such nobody can give a definitive answer. In all but the smallest cities you have options for a different job. They might not be as good, but there is an option. If you lose your job you can find a different job close enough to your current house that you don't have to move. Remember this is NOT an ration…

> Remember this is NOT an rational economic problem. There are good reasons to live near by the same neighbors that you know well for years.

Why is a living near the same people you know and love irrational or somehow an inappropriate object of economic reasoning? You could even estimate prices for such things! Just because they're not typically represented as currency amounts doesn't mean they're not 'rationally economic' or that making tradeoffs that involve these things couldn't be better done with good economics.

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

#188

Post by skybrian »

sliverstorm wrote: post #86
tom_mellior wrote: post #28

Earlier quoted context omitted.

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.

People don't consume more in a deflationary world, per the economists, because that dollar you've got today is worth more tomorrow, so you put off as many purchases as possible. Fewer people would take out loans as well, because the loan would become harder and harder to repay over it's life (which means fewer opportunities for investors)

On the other hand, prices of computers and electronics are always dropping due to technology improvements. Stocking up on computer equipment in advance rarely makes sense since next year it will be better.

But this doesn't seem like a bad thing. Would you prefer the alternative, that technology improvements stop and computers become more expensive, so they become good investments? And people do still seem to buy lots of electronics even though they don't hold their value.

Generally speaking, lower prices are better. There are only a few exceptions such fossil fuels and cigarettes where you can say cheaper is worse, due to externalities.

To be sure, if tomorrow a magical new technology gave us free, clean energy, health care, or housing, this would be a tremendous financial shock. Many investments would be worthless. But this is because it's a big, sudden change, not because it's inherently bad. A more gradual decrease in prices is a good thing.

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

#189

Post by pimmen »

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…

And this is the problem with Sweden; we got rid of the property tax, but we kept the capital gains tax meaning people are less incentivized to sell since the prices are rising anyway, meaning fewer houses end up on the market, meaning the prices rise.

This is one of the many contributors to this crisis; high capital gains taxes for people selling their house, no property tax for people keeping it. Add to that our tax deductions on interest rates and local government monopoly on what types of houses gets built (obviously not affordable housing projects, they pay terrible taxes compared to the nice people who would move into luxury condos) and you have a recipe for disaster. There's many, many other reasons too but those things are what the government could and should work on.

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

#190

Post by dalacv »

el_benhameen wrote: post #172
ttul wrote: post #159

Earlier quoted context omitted.

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.

But does ttul really get his point across at how he really feels without the colorful words?
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