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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

#311

Post by sjy »

bluGill wrote: post #243
aeorgnoieang wrote: post #187

Earlier quoted context omitted.

> 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 eco…

Generally rational economics assumes someone who is rationally trying to optimizes for other factors. You are correct that it is fully rational behavior for people. However that is not the definition used in economics. (sort of like physics tends to assume no friction where possible)

No such assumptions are made in the axioms of VNM-rationality[1] or any other model of rationality of which I am aware. If it is not rational to live near people you like it is difficult to see why it would be pay more for a house with any other luxury.

[1]: https://en.wikipedia.org/wiki/Von_Neumann–Morgenstern_utilit...

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

#312

Post by akgerber »

opportune wrote: post #40
maxxxxx wrote: post #25

Earlier quoted context omitted.

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.

I think a strong housing market may be the result of lack of productive capital, but I think it has more to do with supply and demand. Most average people pay for a house using a mortgage payment, so when buying a house, they'll be looking for a house that has an affordable mortgage payment. Let's say Joe wants to spend / can afford a $1000/month mortgage payment. If interest rates are 5% and the maximum mortgage per…

http://cityobservatory.org/the-origins-of-the-housing-crisis... A major reason why housing supply is so inelastic today is that zoning has become much more restrictive in the last two generations.

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

#313

Post by mbesto »

thescriptkiddie wrote: post #301
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…

>> 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...

That's not the parent's point. If I buy a $1M home in CA 10 years ago and I pay 1% in taxes then and the house is worth $2M 10 years later, I don't get charged 1% of $2M after 10 years. I get charged a marginal increase ever year and this increase isn't based on market norms (I forget what the actual # is, but it would be like paying 1% of $1.25M). This means, if I sell my $2M house after 10 years), and buy another $2M house next door, my taxes are way higher in my second home due to prop 13.

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

#314

Post by mbesto »

nitrogen wrote: post #235
mbesto wrote: post #223

Earlier quoted context omitted.

> 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.

Totally, but if you are wanting something of more value than yes there is a price to pay for that.

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

#315

Post by mbesto »

bzbarsky wrote: post #292
mbesto wrote: post #206

Earlier quoted context omitted.

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…

> 2017 - Buy new house for $1M (but smaller size) Assuming there's anything on the market for $1M. The problems start when there isn't.

But if you're downsizing then yes there is a cheaper house. That's how the housing market generally works ($ per square foot * # of square feet).

> The problems start when there isn't.

And the market always opens up when there isn't because it means the demand goes higher and thus creates new sellers. That also "rises the tide" and increase everyone in the area's house prices. So it nets it self out.

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

#316

Post by dijit »

phaemon wrote: post #104
staticelf wrote: post #47

Earlier quoted context omitted.

Well, if you are increasing the population a lot, all of those people are going to need somewhere to live. It isn't really hard to figure that out but most people don't seem to make that connection. Don't understand how it could even be remotely racist or popular. The statistics of housing prices correlates very well with increases in immigration. Of course, correlation does not imply causation but in this case I'm p…

> Well, if you are increasing the population a lot But you aren't increasing the population "a lot", now are you? You linked to a graph that shows around 350,000 asylum seekers over 5 years. What percentage of Sweden's population is that?

Bigger than the population of the third largest city in Sweden https://en.wikipedia.org/wiki/Malm%C3%B6

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

#318

Post by [deleted] »

hjnilsson wrote: post #278
rayiner wrote: post #135

Earlier quoted context omitted.

It's over 3.5% of the total population, which is equivalent to the U.S. adding about a million people. Also note that they're going to be concentrated into relatively few urban areas, instead of being spread out over the entire country.

Uhh, would be US adding 10 million, not one million.

[deleted]

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

#319

Post by eT8AZithxooKei6 »

notyourday wrote: post #260
lisper wrote: post #176

Earlier quoted context omitted.

> Capital gains has no effect on the second one. Of course it does. A loss is a loss. It doesn't matter whether it comes out of your checking account or your home equity. > What they would have preferred is that their property appreciated and the properties they wanted to move to did not. That's generally not an option if you want to move locally.

if you sell your asset for less than what you paid for it there's no capital gain, and hence there's no tax. > That's generally not an option if you want to move locally. You don't get to have your cake ( gain money on a sale of appreciated house) and eat it too ( buy at the price before the appreciation )

I believe that lisper is saying that he would prefer not to have his cake.

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

#320

Post by seretogis »

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…

Agreed. It's odd to hear people boast about housing prices being high, considering that shelter is a basic need just like food. You don't hear praise being thrown about when milk, eggs, and bread reach unaffordable prices as they are in northern Canada.

Perhaps basic human needs shouldn't be subject to the same market forces as caviar and champagne are...

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