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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

#301

Post by thescriptkiddie »

mbesto wrote: post #136
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…

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…

>> 3. Higher property taxes

>Yes, this is a bitch in CA...see next point.

Property taxes in CA are extremely low.

https://en.wikipedia.org/wiki/California_Proposition_13_(197...

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

#302

Post by alkonaut »

ThrustVectoring wrote: post #272
jesusthatsgreat wrote: post #247

It's not just Sweden, it's almost everywhere (in the western world at least). It's almost entirely down to the effects of unprecedented quantitative easing over the past decade or so. When you print more money than you've ever printed before, it's only natural that the prices of things will rise as more people can afford to buy things. And even if more people can't afford to buy things, the money goes somewhere so it…

It's less about printing money and more about falling long-term interest rates (and thus, discount rates). Fundamentally, a house is worth the net present value of its use value. Lower discount rates means that more of that value gets pulled forward into its present valuation. An equivalent way of thinking of it is that house prices are fixed by mortgages to rents - when mortgage payments are lower than rents, people…

In Sweden though, pretty much no one rents a house. This may or may not be relevant to the above observation.

It's also generally not allowed to buy flats to rent them out which limits speculation in that market.

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

#303

Post by bobowzki »

paganel wrote: post #279
expertentipp wrote: post #30

Earlier quoted context omitted.

> 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. You've just summarized the situation in Prague, Czech Republic.

Same in Romania. For the first time in my life (I’m 37 now) I heard a couple of acquantainces saying something like “We’re 20,000 Euros reacher now compared to last November, our apparment is now worth 90,000 euros compared to 70,000 euros last November”. This discussion happened this summer, since then I’ve heard at least a couple other different couples saying pretty much the same thing (only the sums were differen…

I hear this almost everyday in Sweden.

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

#304

Post by patrickg_zill »

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…

My understanding was that you can avoid all capital gains taxes via "1031 like kind exchange": you sell your house, buy one elsewhere for about the same amount, and pay no capital gains taxes?

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

#305

Post by lisper »

ng12 wrote: post #291
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…

I feel like you're really making your own problem here -- you want to downsize while keeping a large portion of your equity. The ratio of profit you make moving from a $2m house to a $1m house is the same as moving from a $200k house to a $100k house in a "stable" area.

This has nothing to do with equity (except insofar as equity is part of your net worth). This has to do with the actual cost of a move, that is, the difference in your net worth at the end of the day once all the dust settles. The higher prices go, the higher that cost goes. It's easiest to see that when considering a purely lateral move, but the cost of a move doesn't really depend on the cost of what you buy with the proceeds of the sale, it just makes the math easier if the prices are the same.

We put a certain positive intrinsic value on a local move (and a very high negative intrinsic value on a remote move), because we like the area but the house we're in is not ideal. If the cost of a local move is less than this intrinsic value, we'll move, otherwise we won't. The higher prices go, the higher the actual cost of moving goes, and the less likely we are to move.

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

#306

Post by robinwassen »

pimmen wrote: post #209
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 f…

How do they "invest" in their home? Renovate it to the max, keep buying a more expensive one or paying off your loan?

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

#307

Post by seanmcdirmid »

nerfhammer wrote: post #269
bluGill wrote: post #110

Earlier quoted context omitted.

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…

Strangling the growth of cities and labor mobility is very much a rational economic problem: * https://www.axios.com/sky-high-home-prices-are-thwarting-thw... * https://www.citylab.com/equity/2017/06/the-other-side-of-har... Cf. China, which has seen unbelievably explosive growth in its cities in the last 40 years and China has also seen ~1 billion people lifted out of poverty during exactly the same time period.

Sure. This is inspite of the hukou system, which is basically a kind of apartheid that keeps rural migrants from receiving services in the urban locales they are working at.

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

#308

Post by marvin »

contingencies wrote: post #276
expertentipp wrote: post #30

Earlier quoted context omitted.

> 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. You've just summarized the situation in Prague, Czech Republic.

Same in China. Same in Australia.

Same in Norway.

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

#310

Post by FooHentai »

astura wrote: post #177
pacala wrote: post #133

Earlier quoted context omitted.

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 compa…

>if it were correct all businesses would always strive to buy their real estate as soon as they could afford

Unlike people, businesses do not reach a certain age then lose their capacity to earn (retire). A business can carry the cost of their leases as an operating expense, where individuals who do this will hit a roadblock when they retire as their operational funding is no longer able to cover the cost of rent.

There are of course exceptions for particularly high earners who manage to build up sufficient funds to be able to perpetually rent, even sometimes without drawing down on their principle savings. But this is far from attainable for most.

So equating the two is not valid.

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