401–410 of 456 posts
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> 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....
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Via being backed to some tangible good, eg gold.
Or bitcoin ! Wait, this is ridiculous we have like two centuries showing us that commodity currency is a failure in an industrial economy.
http://saifedean.com/Saifedean%20Ammous%20The%20Bitcoin%20St...
A slowdown a la Thiel due to fundamentally flawed monetary policies.
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> 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 Ukraine
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…
Because you can't operate the housing market in isolation. Housing market is basically everything connected to the housing markets. Plumbing to paint, it includes everything.
The economy is a whole. Sectors are only for our understanding. Economy works as largely a monolith, so its just free market economy at the end.
Only thing that matters in a set up like this is Demand and supply equations.
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> #1 only consumes a percentage of profits, sit it can't make a sale unprofitable. Yes, that's true, but it makes a move less efficient. If we sell our house and buy another one of equal value, the higher the price, the more we lose in capital gain tax in the transition. If our house had not appreciated, we would pay zero cap gains. The higher prices go, the more expensive it becomes to move locally.
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…
So if your house is 1m and 10 years later stays at 1m, then you can swap for any other house in the neighborhood.
If your house was 1m but in 10 years becomes 2m, and all the other houses in the neighborhood are now 2m... you would hypothetically not be able to swap for another home. You now have 1.75m to buy with. A good problem to have, no doubt.
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Ok, so what? It's still cheaper than $2M....so they can still afford it....
You don't get to keep the whole $2M. That's the point.
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You don't get to keep the whole $2M. That's the point.
Uh what? If I have a house and I sell it for $2M cash and then I buy a house for $1.6M, I now have $400k in cash and $1.6M in assets.
Real-life numbers will differ, but that's roughly the point.
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.
* 1st sub-$400 all-in-one with 6dof, face and finger tracking + 5 years
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There's some indication that Adam Smith was aware of this: The plenty and cheapness of good land, it has already been observed, are the principal causes of the rapid prosperity of new colonies. The engrossing of land, in effect, destroys this plenty and cheapness. The engrossing of uncultivated land, besides, is the greatest obstruction to its improvement. But the labour that is employed in the improvement and cultiv…
Nice subreddit, I agree with a lot of what you write. In particular I wish more people were looser, as you seem to be, with the assumption that actors within an economy act rationally. It's impossible to act rationally given the huge amount of information asymmetry in the economy, and especially given that others' information asymmetry will cause the economy to not behave rationally regardless of whether you can make…
Rational actor theory seems to be crumbling rapidly as behavioural economics progresses, so there's that.
There are tons of things inflating house prices. The most important for Sweden are - Deduction of interest expenses from income tax. - Too long mortgages (100 years or more) means nominal prices are high which add to the risk - Historically big mortgages (90, 100 or even 110% of the cost could be financed - yes negativev down payments existed in the early 2000's). - Rent control of almost all flats, meaning no one wi…
100 year mortgages? Why is this? Because prices are too high for average folks to purchase otherwise, or because people prefer "owning" (renting from a bank) instead of renting from a landlord?
[1] in the econ/ferengi "maximize profit" meaning