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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

#361

Post by staticelf »

pimmen wrote: post #200
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…

Increase in immigration absolutely increases the demand for housing, but it's often not enough to increase the housing prices alone. Look at what happened in the early 90s during the Yugoslav Wars, Sweden took in more refugees than ever before in history yet the housing prices went down and threw the country into economic recession because of all the investments into real estate. The financial regulations (or lack th…

I didn't imply that is was increasing the housing prices alone. If you read it again, I even start my sentence with "Also to add to that..".

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

#362

Post by sctb »

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.

It doesn't matter what you're responding to; the guidelines ask us not to post like this.

https://news.ycombinator.com/newsguidelines.html

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

#363

Post by lisper »

kgwgk wrote: post #357
lisper wrote: post #298

Earlier quoted context omitted.

> 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? Either one. We put a certain intrinsic value on a local lateral move. If the cost of moving is less than that intrinsic value, and we find a house we like, we'll move. If the cost o…

I understand your point, but saying that "rising prices are as bad for the owners as they are for everyone else" is hard to justify. In your case, you can a) stay where you are or b) sell the house, pay the tax, and buy a similar house (or a cheaper one elsewhere). An alternative you that didn't buy that house at that time, and got lower after-tax returns on that money, doesn't have option a) and has less capital ava…

> saying that "rising prices are as bad for the owners as they are for everyone else" is hard to justify.

You're right. I retract that. (Unfortunately, it's too late for me to go back and edit the original comment.)

Let me rephrase: rising prices are not always an unalloyed good even for home owners.

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

#364

Post by opportune »

cylinder wrote: post #350
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…

Many healthy countries have been held hostage by others doing ZIRP so they had to cut rates due to their currency being too strong.

I don't know much about this. What would have happened if the other countries/currencies didn't cut rates? Is it just capital flight to the lower-interest currency?

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

#365

Post by dredmorbius »

hackerguy99 wrote: post #334
littlestymaar wrote: post #300

Earlier quoted context omitted.

> Either politicians are stupid, or more likely, they know that "homeowner policy" like this can make them and their other rich buddies even richer. It's not a malice vs idiocy situation, actually there is a third explaination : economy needs a growing money supply to work properly (and the money creation need to compensate the economic growth AND the reduction of money velocity[1]). But since the late seventies, mon…

How else can money be created except through credit?

And what prevents the arbitrary extension of credit?

The present primary reliance on fractional reserve monetary is not a carved-in-stone requirement of financial systems, only the present norm.

If you're interested in ideas and thoughts on money, I'd suggest William Stanley Jevons writing as a starting point for modern views. A. Mitchell Innis's "What is Money?" (1913) is not entirely mainstream, but strikes me as among the more insightful enquiries I've read:

https://www.community-exchange.org/docs/what%20is%20money.ht...

I'd stumbled across that here: http://neweconomicperspectives.org/2013/09/money-created-ove...

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

#366

Post by staticelf »

pimmen wrote: post #339
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…

So, could you explain why the housing prices fell in the 90s when we took in more refugees than ever before? And why they rose considerably when immigration slowed down in the mid 2000s? Because, for some reason you're convinced immigration is the main cause of rising housing prices and that the two clearly correlates, even though you can only back that up with stats that are about a decade old, any older than that a…

I don't really have any data from the 90s and I wasn't very old back then so I cannot really say anything about it.

And stop putting words into my mouth. I wrote that I believe immigration is the main cause of the most extreme increases not the main cause of rising housing prices in general.

The difference is that the number of people Sweden has recieved is so much larger 2013-2016 so basically every system we had failed and all municipalities was forced to buy apartments.

If you have stable immigration that are predictable it's easy to plan ahead and adjust the society for it but when it comes like 160k people in one year to such a small country as Sweden everything fails. Of course this will have economic effects such as in the housing market.

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

#367

Post by Danihan »

styrophone wrote: post #294
Danihan wrote: post #249

Earlier quoted context omitted.

>What is infinitely more toxic than 'complaining' about first world problems That's just like, your opinion man. >Complaining about the ergonomics Look, complaining about work is a typical first world problem, sure. And of course we're all lucky to do the work we do and not live in [wherever.] Complaining about 20% taxes on $200k of a ~$700k windfall is truly more like a .00001% issue and is pretty obtuse by any meas…

It seems your comment is characterizing the OP as a complaint mostly in search of sympathy. That doesn’t strike me to be the purpose of the post at all. The OP is using him or herself as an example of a real behavior in response to real economic incentives, no matter how unsympathetic you find their circumstance. The fact that this situation discourages moves that most other markets encourage is a worthwhile point to…

Please tell me where my math is off here.

They bought their house for something like $600k and now it's probably worth $1.3M. They pay 20% capital gains taxes on $200k, so $40k, and they lose 3% if they use a broker. That's another $40k, so $80k total. Let's make it an even $100k. So they have $1.2M to throw around after the sale. Subtract $500k to pay off the existing mortgage, that's $700k free and clear.

$700k is a hell of a down-payment, even in the ritziest areas of Marin. They can buy whatever they want.

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

#368

Post by dredmorbius »

akgerber wrote: post #312
opportune wrote: post #40

Earlier quoted context omitted.

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.

And what's driving zoning?

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

#369

Post by staticelf »

nikanj wrote: post #282
lg wrote: post #68

Earlier quoted context omitted.

> 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

It's a shitty system, thats why we also now have "Äganderätter" which basically means "owned rights" which means you cannot be forced to sell.

Unfortunately, not many buildings have that.

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

#370

Post by shostack »

maxsilver wrote: post #236
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'?

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 becaus…

For many it is also tied to expectations of what they should be able to afford that are born out of what they saw their parents afford and what they grew up in.

If you grew up in a modest but well-kept house in a decent neighborhood, that is your baseline. If you then go on to reach some level of success in your career such that you are roughly on par or exceeding your parents income, your expectation naturally is that you should be able to afford something similar or better. Unfortunately the market dynamics have completely shifted since parents bought, and so people are having to take a really harsh look at the reality of their past expectations and how they align with their current reality. It often means paying way more than they ever wanted or thought was necessary to buy something way crappier.

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