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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

#201

Post by grouseway »

pimmen wrote: post #189
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…

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…

Canada has no capital gains tax on housing and it has similar housing inflation to Sweden.

I would say people are frantic to buy a home in Canada because it's tax free and the alternative (stocks/bonds/etc..) isn't.

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

#202

Post by grzm »

Danihan wrote: post #199
el_benhameen wrote: post #172

Earlier quoted context omitted.

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

I dislike the notion that discourse needs to be respectful at all times. Discourse shouldn't be baselessly disrespectful, sure. But the robotic, tsk tsk , shaming attitude that gets thrown around on forums whenever someone expresses any negative emotion gets old too. In any case, complaining about having to pay capital gains tax on gains OVER $500k really is the ultimate first world, privileged problem.

I think you have a point. It depends on context. Within the context of HN, you at least have to be civil. Civility and respect are not exactly equivalent, but they're quite close.

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

#203

Post by dalore »

lisper wrote: post #129
sigi45 wrote: post #119

Earlier quoted context omitted.

'nearly doubled' is more like gambling than investing. Investemnt would be fine if your money is little above inflation. 1-8% with renting it out.

Just to be clear, we didn't buy this house as an investment, we bought it to live in. We're actually hoping for prices to come down so we can downsize without taking a huge financial hit in the process.

But you're not taking a hit really. You just think your are. You have made a profit still if you sell your house, tax the hit in capital gains and buy another place. It's not as much profit as without the capital gains but it's a lot more profit then if you took that original house price money and put it in a mattress. Hell that's even more money then just sticking it in the bank and getting a small interest rate.

You're not taking a financial hit, you just feel as you are. You think the capital gains tax is taking out a huge financial hit on something you already made lots of profit from. So you're still making a profit just not the one you imagined you were making.

That's like someone seeing their pay for the first and releasing the difference between gross pay and net pay. They think they are getting X but really they are getting Y. Both amounts of which are > 0 and so they are still making money. Like you still are.

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

#204

Post by 6502nerdface »

eikenberry wrote: post #95
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 unless you are ready to sell, otherwise it kind of sucks to have your property taxes go up 10-20% every year.

This totally depends on how your municipality levies property taxes. In many parts of the Northeast US, for example, the county first sets its budget for the year, and then levies tax by dividing the budged among property owners in proportion to assessed property value. Therefore, if the county's budget hasn't changed, and if all of your neighbors' houses have increased in value by the same % as yours, then you'll pay the same tax as last year. Conversely, it's possible for your house to increase in value but to owe less tax if your neighbors' houses increased in value by more than yours.

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

#205

Post by styren »

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?

I recently sold my appartment in central Stockholm, I am reinvesting my money in stocks and renting for 1-2 years before hopefully entering a more healthy housing market. Of course it is all a gamble, but most people I talk to recommend waiting +1,5 years, if you can.

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

#206

Post by mbesto »

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…

But you don't realize a net loss from moving to a smaller home in the same area. The only hinderance is paying a higher tax % (because of CA), but you'll likely net more positive cash (because of the transaction) + the absolute value of your new taxes will be less.

I'm still not sure why exactly the issue is. You literally can afford to downsize and you'll make a ton of money doing so.

> If we make a local move, that "profit" just gets rolled in to the next house.

Huh? That's not how it works...

2008 - Buy house for $1M

2017 - Sell house for $2M

2017 - Buy new house for $1M (but smaller size)

Congrats you have an asset worth $1M you've just made $1M in cash. Now net out fees and you have a downsized home and are more liquid than you were before, but with slightly less wealth than you had yesterday (due to netting of fees associated with the transaction).

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

#207

Post by ralusek »

opportune wrote: post #192
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…

Capital gains is only applicable when you sell the house and it's not your primary residence, or if you made a ton of money on it. And it's only a tax on the appreciation of the house, not its market value. Real estate agent fees are only applicable on x% of the value of the house you sell. Higher property taxes do stink but are not applicable after you sell the house. I'm not sure why you can't afford to move. Have…

You're right on 2/3 of those things.

Capital gains is never a "cost" to them, they are by definition only going to be taxed on their gains.

Real estate agent fees, like you said, are based off of the sell value, so unless their commission starts approaching 50% of the value of the house on a 2x gain...they make money. And if their mega-agent charges them 50% of the value of the house, then at least there are no longer any gains to be taxed on :)

The property taxes, however, make sense. Some places lock you in to a certain rate at the purchase price, and they said they bought very low. The argument is that they would be paying more in property taxes for a cheaper house, because they would no longer be locked in to their favorable current rate, which is entire likely given their circumstance.

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

#208

Post by astura »

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.

Except you can really only "cash out" in a meaningful way if you sell and relocate to a cheaper area/somewhere without a housing bubble, which is extremely disruptive to your life.

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

#209

Post by pimmen »

estomagordo wrote: post #2

The combination of removing the wealth tax and the introduction of a 30% rebate on all interest costs for individuals have really combined to clusterfuck the Swedish housing market. Now, the interest rebate seems politically impossible to touch, even long term and through minor transitioning. Home ownership is so important to the economy and affects so many voters, that the property owning class always must be looked…

I absolutely hate speaking to Swedish people who invest all of their retirement savings in their home. It just breaks my heart to know that they are taking on a very high risk by putting all of their eggs into one, figurative basket when other types of investing are not only less risky but also often present more of a reward too.

And, add the fact that investing in your house is one of the least helpful investments for creating new jobs and wealth for future generations. The people who had this idea have my pity but I won't refrain from using their story as a cautionary tale.

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

#210

Post by grzm »

dalacv wrote: post #190
el_benhameen wrote: post #172

Earlier quoted context omitted.

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?

Likely they could. "Colorful words" are often used to elicit an emotional response, and emotion can significantly impair one's ability to self-reflect and remove bias. If the goal is civil, substantive discourse (as is the goal of HN), all parties involved need to keep this in mind when commenting. That does take additional effort, but it's worth it to keep HN one of the better places to engage on the internet.
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