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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

#391

Post by mercutio2 »

patrickg_zill wrote: post #304
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…

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?

1031 is only for business property. Specifically doesn’t apply to primary residence.

But CA Prop 60 allows Californians over 55 to downsize their house and maintain the same tax basis they had before the exchange, which very well might apply here, although IIRC it has weird county by county restrictions.

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

#392

Post by skybrian »

sliverstorm wrote: post #270
skybrian wrote: post #188

Earlier quoted context omitted.

On the other hand, prices of computers and electronics are always dropping due to technology improvements. Stocking up on computer equipment in advance rarely makes sense since next year it will be better. But this doesn't seem like a bad thing. Would you prefer the alternative, that technology improvements stop and computers become more expensive, so they become good investments? And people do still seem to buy lots…

Generally speaking, lower prices are better. Not an economist, but I believe that statement needs to be indexed to inflation/deflation. Lower prices relative to income, in other words higher purchasing power, is good. But you can't inflate/deflate your way to lower real production costs or higher wages. prices of computers and electronics are always dropping due to technology improvements Right, the electronics marke…

Yes, I agree, lower prices are better except for wages. If most prices go down and wages stay the same, that's measured as an increase in productivity.

Technology hasn't stopped in agriculture. For example, there are automatic milking machines [1], and there's a well-funded startup that wants to grow lettuce in warehouses built near distribution centers [2].

I wouldn't expect the price of milk to change much in the short term. In the long run, who knows? Maybe biotech improvements will mean we don't need cows?

[1] https://www.nytimes.com/2014/04/23/nyregion/with-farm-roboti... [2] https://www.bloomberg.com/news/features/2017-09-06/this-high...

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

#394

Post by megy »

wott wrote: post #211
dmode wrote: post #175

Earlier quoted context omitted.

If your house didn't appreciate you would not have any profits either. Very confused on what the issue is. Let's say your house is 1mn and stays 1mn. You have zero gains and pay zero taxes. Net cash in your bank = ZERO Now your house becomes 2mn. So you have 1mn profit, first 500K is exempt. And you pay 25% on your next 500k. Net cash = 750K. Are you suggesting that you would rather have zero dollars in your bank acc…

He does not want to fill his bank account and be homeless. He wants a house. To be bought with the same money. That does not go into the bank account but into the new house.

He has the original $1m to buy a house.

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

#395

Post by vasilipupkin »

opportune wrote: post #345
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…

Very good point. My pet theory is that the emphasis on asset-ownership as a means of retirement is what is decreasing the velocity of money. For example, let's say we had a system where instead of purchasing a home/stocks/bonds to save for retirement, you could instead pay the government $X which essentially goes toward an annuity with payout determined by the age at which you retire. The government could just immedi…

I'm sorry I think you are confused. When you buy stock, you are providing capital to the company issuing that stock. Yes, even in the secondary market, although indirectly. The company then invests that money productively and the economy grows.

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

#396

Post by mbesto »

bzbarsky wrote: post #338
mbesto wrote: post #315

Earlier quoted context omitted.

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.

> But if you're downsizing then yes there is a cheaper house. Sure. But it might be $1.6 million, not $1 million, in your example...

Ok, so what? It's still cheaper than $2M....so they can still afford it....

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

#397

Post by zzzzzzzza »

breakyerself wrote: post #393

It's getting harder and harder to keep inflation on target. Universal income may become attractive from a monetary policy position at some point on top of the other reasons that have already been discussed.

personally I like "quantitative easing for the people" - it doesn't provide guarantees like ubi, but it does a very similar thing, and, I think it would be a more powerful tool to combat inflation that the qe we know today, (which just swaps long term gov bonds for cash... two almost equivalent asset classes)

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

#398

Post by redtexture »

vasilipupkin wrote: post #395
opportune wrote: post #345

Earlier quoted context omitted.

Very good point. My pet theory is that the emphasis on asset-ownership as a means of retirement is what is decreasing the velocity of money. For example, let's say we had a system where instead of purchasing a home/stocks/bonds to save for retirement, you could instead pay the government $X which essentially goes toward an annuity with payout determined by the age at which you retire. The government could just immedi…

I'm sorry I think you are confused. When you buy stock, you are providing capital to the company issuing that stock. Yes, even in the secondary market, although indirectly. The company then invests that money productively and the economy grows.

Ah, no. The moment the company gets money, is when it sells the stock. After that, unless the company sells more stock, or buys and re-sells its stock, it receives zero more capital financing dollars, unless it undertakes other financing activity, such as the sale of bonds.

There is no indirect means to receive money, except for profit, and that it is not related to stock.

Profit is ultimately the primary means for company cash liquidity, held as retained earnings, after the company has survived its initial years of inception and growth.

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

#399

Post by alexasmyths »

littlestymaar wrote: post #300
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…

> 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…

"But since the late seventies, money creation is only possible through the banking system via credit."

? I don't know how the Kroner works, but usually a central bank issues currency into the market in exchange for some kind of asset - this is the primary mechanism for controlling interest rates.

Yes, more credit is created through fractional reserver, but this is taken into account.

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

#400

Post by vasilipupkin »

redtexture wrote: post #398
vasilipupkin wrote: post #395

Earlier quoted context omitted.

I'm sorry I think you are confused. When you buy stock, you are providing capital to the company issuing that stock. Yes, even in the secondary market, although indirectly. The company then invests that money productively and the economy grows.

Ah, no. The moment the company gets money, is when it sells the stock. After that, unless the company sells more stock, or buys and re-sells its stock, it receives zero more capital financing dollars, unless it undertakes other financing activity, such as the sale of bonds. There is no indirect means to receive money, except for profit, and that it is not related to stock. Profit is ultimately the primary means for c…

Sorry, you are missing the point. A liquid secondary market is what enables the company to go public in the first place. There would be no initial sale of stock without it at all. In addition, liquid secondary market enables the company to incentivize its employees and undertake other financing activities, as well as gives value to its remaining treasury stock.
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