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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

#281

Post by losteverything »

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.

These comments are helpful because this is how people think.

When a suit or Talbots customer argues over a price at Wal-Mart you should hear the similar type of tone the cashier takes after they leave. Especially if they argue for a buck or two.

This is real world

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

#282

Post by nikanj »

lg wrote: post #68
staticelf wrote: post #24

Earlier quoted context omitted.

Also to add to that, an extreme number of new people immigrating to Sweden, especially under 2014-2016 [1] (which is my personal belief that is the leading cause to the biggest increases in prices). Many municipalities also letting up to 25% of these new people jump ahead the queues leaving Swedes to be even more forced to buy an apartment instead of renting [2]. Also in Sweden for apartments, you don't own it. Most…

> Also in Sweden for apartments, you don't own it. Most apartments for sale is so called "Bostadsrätter" which means you own a percentage of the association that owns the apartment building(s). If the association/organization has a bad economy and can't pay the debt they could be forced to sell the entire apartment building(s) and you'd loose your apartment while still having a loan to the bank. In the US we call the…

The Swedish system sounds closer to a strata system https://en.wikipedia.org/wiki/Strata_title

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

#283

Post by api »

maxxxxx wrote: post #25
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…

Totally agree. It seems one of the factors that helped the US until the 90s was that housing was affordable so people could move around easily. A "strong" housing market seems to indicate that there are no productive places for investing and no wage growth so people need to gamble on houses to rise instead.

There's been a number of great bits of research over the past few years arguing that our "strong" housing market is a primary cause of economic stagnation.

Let me count the ways:

(1) reduced labor force agility as you say

(2) high rent and mortgage cost soaks up money that could otherwise fuel consumer spending, creating a demand constrained economy

(3) high housing costs in major cities also contribute to poverty elsewhere by preventing people from circulating between high priced urban and lower priced rural areas

(4) high housing costs risk actually destroying centers of excellence like the SF Bay Area and New York by making it impractical for new talent to move there

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

#284

Post by lisper »

Retric wrote: post #273
lisper wrote: post #158

Earlier quoted context omitted.

> 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 also save that 500,000$ of appreciation when selling the second house. AKA, if house 1 gained 2 million and house 2 gained 2 million your better off than if house 1 gained 4 million. Now, you can get into cash flow issues etc. But, with home interest being tax deductible and long term capital gains being below normal taxes your almost always better off over time to sell after a bubble than before. PS: If your inv…

> if house 1 gained 2 million and house 2 gained 2 million your better off than if house 1 gained 4 million.

No, that's not true because the $500k cap gains exemption is per-transaction.

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

#285

Post by asabjorn »

sliverstorm wrote: post #275
asabjorn wrote: post #248

Earlier quoted context omitted.

What seems to matter more is that there has been a productive deployment of capital that gives you a reason to buy a new product, and that you have discretionary income after housing cost and other fixed costs are paid. High housing costs are an incredibly unproductive use of capital unless it leads to building new supply and is therefore effectively a temporary incentive for developers to build more. Landlords on th…

productive deployment of capital Right, and the economists argue a deflationary market makes capital scarce High housing costs are an incredibly unproductive use of capital Right; it seems desirable for housing costs to keep even pace with the rest of the market, and ideally stay close to depreciated replacement cost And even when computers were improving significantly every year and prices went down people on averag…

> Right; it seems desirable for housing costs to keep even pace with the rest of the market, and ideally stay close to depreciated replacement cost

In markets where there is enough housing supply, do we see people change housing ownership more often? E.g. buy a bigger apartment when they get kids or downsize when they are empty nesters.

In markets with enough housing supply, do we see higher expectations for housing being modernized and up to code instead of being resold with only cosmetic changes? E.g. most bay area housing is very drafty and energy inefficient since it was built in the 60s/70s.

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

#286

Post by quickthrower2 »

collyw wrote: post #256
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'?

I have been waiting 10 years for "emergency" interest rates to rise and the subsequent price fall here in Europe. So far it hasn't happened.

Sweden might be for you then

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

#287

Post by kgwgk »

lisper wrote: post #171
mbesto wrote: post #138

Earlier quoted context omitted.

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.

Do you mean “win” compared to the counterfactual where the house has appreciated and you don’t move to a similar one, or compared to the counterfactual where the house didn’t appreciate and you move to another one at the original price?

If there had been no appreciation, your final wealth (cash + home equity) would be lower than in the case where the houses are more expensive, even after paying taxes, so it’s hard to see where is the loss.

But of course if you expect prices to go down it’s a good idea to avoid paying taxes on a gain that may be reduced in the future.

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

#288

Post by jazzyk »

ollebro wrote: post #142
eikenberry wrote: post #95

Earlier quoted context omitted.

> 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.

We don't have a property tax in sweden. Also no inheritance or gift tax. Very good place to live if you are wealthy and don't make money the peasant way of going to work.

Why did a lot of rich people (Bjorn Borg, Ingvar Kamprad (IKEA)) move out of Sweden, then?

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

#289

Post by davidf18 »

Housing, just like any other input, is best for the economy when prices go down. The less money spent for housing, the more money that can be spent on other goods and services (the same is true of food, healthcare, fuel prices, ....).

Much of the cost of rising housing is because of the increasing scarcity of land in desired locations (read major cities such as NYC, SF, Boston, London, Paris, ...) though "rent-seeking" which in this case is politically induced scarcity through zoning density restrictions, overuse of historic landmark status, and overregulation. The "rent-seeking" causes market inefficiencies or "market-failure." Healthy economies rely on wealth creation. Rent-seeking is a form of robbing Peter to pay Paul without creating wealth.

Happily, the solution costs no money at all. It simply entails ridding the legislation that caused the rent-seeking, the artificial scarcity of land. For example, in Japan, the federal government overrides local laws that limit zoning densities.

See Economists Edward Glaeser and Tim Harford (in his case, Greenbelting) for more details.

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

#290

Post by jordanb »

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…

Rising housing costs used to be considered a public crisis that required intervention. For instance, in the 1960s Sweden responded to a housing crisis with their "Million Houses Program."[0]

But after decades of "ownership society" propaganda all we hear about now when there's a shortage of an essential good like housing is the comparatively few winners and their unearned windfalls. The much more numerous victims don't matter and aren't considered.

[0] https://en.wikipedia.org/wiki/Million_Programme

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