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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

#231

Post by BatFastard »

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.

I am the only one not seeing "reply" links on some of these posts? I see others of the same depth with reply links... Edit: Actually it's just the one from davidw

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

#232

Post by coderholic »

lisper wrote: post #196
tostitos1979 wrote: post #179

Earlier quoted context omitted.

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

What you say is true, but it misses the point, which is that big gains only help you if you actually cash out. If you're making a lateral move, or downsizing in the same area, it doesn't matter whether you're leveraged or not. A loss is still a loss.

The example is useful, thanks. I see that there's $125k of cap gains to pay for a move to a property of the same price. You're calling that a loss though, and I'm not sure I see it that way. Sure, if house prices hadn't gone up you could have moved from a $1M house to another $1M house and paid nothing. But in your example you're still $875k "in profit", so it's not really a loss, it's just a cost associated with a lateral move in the same area. If you downsize you actually realize some of those gains - of course not all of them because tax must be paid, but there's no avoiding taxes :)

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

#233

Post by gamblor956 »

lisper wrote: post #212
opportune wrote: post #192

Earlier quoted context omitted.

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…

Suppose I bought my house for $1M and prices are stable. I can sell my $1M house and buy a different $1M house and the net cost to me is 6% agent fees. But if prices have doubled now the net cost to me is much higher. The agent fees are double what they were, and I have to pay cap gains on $500k. All that is money I have to come up with somehow in order to complete the transaction. I either have to write a check, or…

Not understanding your complaint. You would have to sell your house for more than $1.5M to have any taxable capital gains. You would have to sell your house for more than $2.5m to have an effective tax rate of more than 10% on the sale. (For example, if you sold your house for $2m, your effective tax rate on the sale would be 5%, ignoring AMT and assuming no other significant sources of income.) Boo hoo.

On the second point: the only cash you need to come up with is the down payment for the new house, which you would get out of the proceeds from selling your old house. If you sold your house for 2x the purchase price, you have more than enough cash to pay the down payment. Boo hoo.

Complaints like yours are why people outside of the Bay Area really hate Silicon Valley.

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

#234

Post by ghaff »

mbesto wrote: post #223
yawz wrote: post #195

Earlier quoted context omitted.

> You’ve made more than $500K Nope! This is all speculative until you need to "sell & move". If you want to move to another place in the same area, guess what, you've probably made nothing. With all the taxes and fees that you have to pay on the sale price you can't buy the equivalent of your house. You can only capitalize on that appreciation if you move somewhere considerably cheaper. Not only that, the owner faces…

> With all the taxes and fees that you have to pay on the sale price you can't buy the equivalent of your house. So why on earth would someone want to sell their house and buy an equivalent house in the same area...?

In all fairness, I can see wanting to, say, downsize and move to a more walkable community relatively nearby. (Or, for that matter, move out of an expensive urban condo and move somewhere with more room--although that will harder in the Bay area specifically.) To the degree that market value of the two is similar, the financial hit will be substantial.

But a lot of this is true with moving generally when you're living somewhere that's OK but isn't really optimal for you any longer.

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

#235

Post by nitrogen »

mbesto wrote: post #223
yawz wrote: post #195

Earlier quoted context omitted.

> You’ve made more than $500K Nope! This is all speculative until you need to "sell & move". If you want to move to another place in the same area, guess what, you've probably made nothing. With all the taxes and fees that you have to pay on the sale price you can't buy the equivalent of your house. You can only capitalize on that appreciation if you move somewhere considerably cheaper. Not only that, the owner faces…

> With all the taxes and fees that you have to pay on the sale price you can't buy the equivalent of your house. So why on earth would someone want to sell their house and buy an equivalent house in the same area...?

Switch schools or districts, change neighbors, move closer to work, change floorplans, move closer to family, etc.

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

#236

Post by maxsilver »

samsonradu wrote: post #89
Gustomaximus wrote: post #57

Earlier quoted context omitted.

Homes are important to people and they tend to buy as good as they can afford. When employment is stable and interest rates are low people will spend more because they can and feel safe doing so. Early movers purchase a higher grade of home than they could have previously. Eventually this shifts the market as a whole as income distribution remains stable. Then people buy the same house they would have previously at a…

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'?

In theory, sure. If there were ever any options to be careful, that might be relevant.

But in practice, "as good as you can afford" really means "buy the lead paint, lead water, asbestos ridden, foundation broken 'cheap' house? Or buy the no-lead, no asbestos, no mold 'expensive' house? "As good as you can afford" actually translates to the "least shitty" option, for most people.

Buying an 8 bedroom house just because the bank will technically let you, is a fun TV sitcom joke. Not a real thing most people are ever able to actually do.

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

#237

Post by astura »

BatFastard wrote: post #231
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.

I am the only one not seeing "reply" links on some of these posts? I see others of the same depth with reply links... Edit: Actually it's just the one from davidw

HN has rate limiting on replies. Reply button should appear after a few minutes.

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

#238

Post by opportune »

bogomipz wrote: post #221
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…

>"No country should let the "landed gentry" hold them hostage over interest rates or tax policy so that their assets - many of which they do not even actually own - can appreciate." Can you elaborate on what you mean here? What would be examples of ways in which people who live in places with strong housing markets hold others hostage via interest rates or tax policy? What policies are the policies that accomplish th…

Sure, as a politician you shouldn't be favoring homeowners more than people who don't currently own a home / younger generations. Passing policies that increase home value necessarily makes it harder to own a home than before, and also raises rent prices.

Homeowners essentially hold everyone else hostage because they are able to vote and youth/the unborn/many immigrants cannot. So politicians are highly incentivized to pass policies that increase home values. Of course, not everyone who can vote is a homeowner, but politicians and wealthy/connected people disproportionately are.

The main way to increase home prices is to make the monthly payments lower than before, by either decreasing interest rates or extending the maximum mortgage loan length. In another one of my posts, I explained why this will actually simply raise the values of the homes without affecting mortgage payments very much. This has the added effect of pricing a lot of people out of home ownership compared to the previous market, because this does increase the down payments that you need to make. Thus the increase in rents.

Regarding tax, if you let interest be deductible from your taxes, you are making mortgage payments even lower. Again, this raises home value because mortgage payments will again revert to what they were before.

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

#239

Post by mrmekon »

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?

If bubbles were predictable, they wouldn't be bubbles. Everyone claims they're in a housing bubble when prices rise for years on end. They often aren't. Even when they are, literally nobody knows when they will break, or by how much.

Here's an article predicting the Stockholm "bubble" would pop in 2009: https://arbetet.se/2009/06/26/har-alla-glomt-90-talets-bosta...

And here's one predicting it in 2003: https://www.svd.se/prispress-okar-risk-for-bostadsbubbla

And here's what it did: https://www.globalpropertyguide.com/template/assets/img/swed...

So, if you followed internet advice, you would have pulled out of the market 15 years ago and still be waiting.

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

#240

Post by opportune »

njarboe wrote: post #222
opportune wrote: post #15

Earlier quoted context omitted.

As an American I am absolutely shocked anybody thought that was a good idea. If an average person making $50k/year finds it affordable to pay $1200/month on housing, they're just going to shop for a house that will yield that desired monthly payment. When interest rates are low, how is this not a recipe for runaway housing costs? What's worse is that this is actually a huge subsidy for landlords, unless their mortgag…

"shocked"; a bit of sarcasm perhaps? A 30 year loan is not much different really. Too long. It was rare in the US before various government subsidies and encouragements. First, Fannie Mae (1938), securitizing FHA backed home mortgages. Next, Freddie Mac (1970), securitizing home loans not backed by the US government.

Shocked because it seems obvious to me that this would have undesirable effects down the road. It also funnels even more money into banks because the net effect is that homeowners are essentially renting from banks for most of their lives until they get a significant windfall.

In the US, we saw what happens when you make getting a mortgage "easy". People bought more house than they could afford and got screwed.

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