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What broke Sweden? Real estate bust exposes big divide

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Re: What broke Sweden? Real estate bust exposes big divide

#341

Post by arthur_sav »

lawn wrote: post #311
jdmoreira wrote: post #61

I'm in the highest percentiles of income in Sweden (public data is available) and it doesn't matter. It's basically impossible for me to afford a house / apartment for my family in the best neighborhoods. What's the point? What is the point of trying to be a high performer if wealth can't be acquired by income? Why would I want to work for anyone in this country? Only way out is equity and that game is even harder to…

The only way to win is to stop playing the game by avoiding the "best" (more expensive) neighborhoods and towns. If you work remotely, as software developers can, you don't have to give up salary either.

Bingo.

I moved to a lower tax country and my income almost doubled (no more 50% Swedish tax). Sweden is a bad deal high earners.

Re: What broke Sweden? Real estate bust exposes big divide

#342

Post by theshrike79 »

moltar wrote: post #13
timkam wrote: post #10

A key problem in Sweden -- besides the weird interaction of privatization and legacy over-regulation -- is that the current inflation and rising interest rates break the social contract: a relatively even salary distribution allowed many people to have a solid middle-class life style, recently albeit with never-ending mortgages. Now, the interest rates are too high for these mortgages to be even superficially sustain…

I think you could say exactly the same story about Canada. And imagine many other countries soon. Interest rates will spoil the party.

The difference in Sweden is that they gave out ridiculously long loans for housing. Like 60-100 years. The kind that was never meant to be paid back.

Re: What broke Sweden? Real estate bust exposes big divide

#343

Post by [deleted] »

tpmx wrote: post #156
jdmoreira wrote: post #61

I'm in the highest percentiles of income in Sweden (public data is available) and it doesn't matter. It's basically impossible for me to afford a house / apartment for my family in the best neighborhoods. What's the point? What is the point of trying to be a high performer if wealth can't be acquired by income? Why would I want to work for anyone in this country? Only way out is equity and that game is even harder to…

This is the thing I'm always fascinated by in these stories - the complete lack of understanding for why not everyone can have everything in a particular place with finite resources. > I'm in the highest percentiles of income in Sweden Which one is it then? 80th? 90th? 99th? 99.5th? > It's basically impossible for me to afford a house / apartment for my family in the best neighborhoods. Which are the "best neighborho…

[deleted]

Re: What broke Sweden? Real estate bust exposes big divide

#344

Post by peterashford »

satvikpendem wrote: post #195
OnlineGladiator wrote: post #192

Earlier quoted context omitted.

The simplest solution is a wealth tax. Once you reach a certain amount of wealth, you are taxed for it. So for instance you might be taxed 50% of your wealth above $1 billion, annually. You might be taxed 25% of your wealth above $100 million (up to the next cutoff, so a billion in this hypothetical). You might be taxed 10% of your wealth above $10 million but below the next cutoff, and so on. We could even take this…

What is wealth? How do you define it? How can you tax it? If it's in stocks, what does it mean to tax it? If I own a company worth X billion, does that mean I have to sell my shares to withdraw enough cash to pay my taxes, thereby tanking the value of my own company? If I pay a lot in a downturn but my company does better in a boom, will I get refunded the extra tax I paid? It's not as simple as "make it illegal to h…

"What is wealth? How do you define it?" I think I've done myself an injury from rolling my eyes too hard. Tax departments have this incredibly hard question covered, for some time now

Re: What broke Sweden? Real estate bust exposes big divide

#345

Post by tannhaeuser »

watrami wrote: post #103

It seems like it's the same story everywhere I look. Housing is the main driver of inequality and there is little change happening. We have the same problem here in Germany. I am currently living in Munich to finish my CS Master's at TUM and build a startup, and it is absolutely impossible to find anything remotely affordable. I am supported by two startup scholarships and make enough to get by, but no landlord even…

> And it's not just Munich. Every city in Germany has this problem.

That's nonsense. Larger Munich is the most expensive place to live in Germany (except for the island of Sylt), and has been for many years, but is still nowhere near London, NYC, or SF. In contrast, you can purchase entire houses in abandoned (but well connected) places in east Germany for as little as 10k EUR.

Re: What broke Sweden? Real estate bust exposes big divide

#346

Post by vintermann »

kfarr wrote: post #202
kshacker wrote: post #181

Earlier quoted context omitted.

You can twist the supply demand imbalance only so much. Go farther than required for longer than required, and some cracks will eventually show up. Like they did for Silicon Valley bank. So it is hard to say when those cracks appear since the global market is quite a big market and can sustain imbalances for a long time, but then the bigger the bubble the bigger the crash. Foreigner limits, tax on no. Residents, star…

I think the difference here is fundamentally there is insufficient supply for the demand of housing globally, or at least US, UK and EU. The previous generation made new builds extremely difficult or impossible in many jurisdictions.

If it was that, then some jurisdictions would be doing much better than others.

Unless the parent generations all decided to make new housing construction hard, all over the world. In which case it seems likely that whatever changes they made were for a good reason, if they could all agree on it.

Re: What broke Sweden? Real estate bust exposes big divide

#347

Post by vkou »

nemo44x wrote: post #223
baseline-shift wrote: post #213

Earlier quoted context omitted.

In Japan, there are empty houses going cheap as old people die off. In a few decades, possibly there will be some effect as the de-population bomb from lowered birthrates globally begin to affect real estate prices. Let's hope.

Japan is unique for a few reasons: 1) Very insulated culture with nearly no immigration coupled with low birth rates. 2) They build houses very differently. They aren't generally made to last centuries if taken care of and renovated. The strategy is to build small units cheaply and tare down after 2- years. It's like Ikea for homes. 3) I agree, depopulation is a problem. We really need to incentivize middle and upper…

> 3) I agree, depopulation is a problem. We really need to incentivize middle and upper middle class people to have large families.

No, what we need to do is figure out how to run our economies without pyramid-scheme population growth. Human societies have managed to do this sort of thing for centuries, before the industrial revolution, and then the green revolution ballooned our population.

Surely, we can turn some of those productivity gains that technology has given us over the decades to solve the problem of a slightly smaller than-what-we're-used-to wage-worker-to-non-wage-worker ratio.

It's completely possible, but it may require the capital owners to take a haircut.

Re: What broke Sweden? Real estate bust exposes big divide

#348

Post by hurril »

It's more todo with the interplay between a broken (regulated) rental system and a subsequent need for owning instead of renting.

One idealogical group thinks that if we have artificially low prices on rental properties, then we can have access to cheap living when we need it. But what ends up happening is that people keep these contracts (often renting them out, second hand.) So the regulation actively hinders access to cheap for-rent apartments instead.

This means that all of us have to buy instead of rent, causing a much higher demand in this market.

And the second hand for rent market is also a lot more expensive than the regulated prices to boot.

So no one can afford anything as a result. Without support from huge loans and/ or rich parents and/ or having bought and sold apartments, riding the wave up in prices.

I personally entered late so had to save tons of money and in-debt myself to afford a place. All because one idealogical side has this misguided sense that this regulation somehow exists to help _me_. Me being someone that moved to an urban area for work. Now these same people somehow feel resentment in that I own something expensive that they don't, and that this provides me access to all this printed money. As if I'm not indebted up over my head just to have a decent place to live. It's really stupid.

Re: What broke Sweden? Real estate bust exposes big divide

#349

Post by neural_thing »

UncleOxidant wrote: post #119
rhaway84773 wrote: post #45

The Sweden story sounds so much like the SF story. Area doesn’t building housing, leading to a massive increase in house prices and a destruction of class mobility as the rich get richer (as their houses get more valuable) and the poor get poorer (as they pay more to rent the same living space). The growing wealth inequality leads to all sorts of other dysfunction including increased crime, worsening services, etc. a…

> The Sweden story sounds so much like the SF story. It sounds like the same story being repeated all over the world. There was someone on comments here on another thread talking about how this is a problem in Ireland now as well. It's not just SF in the US, it's all over the place. A friend recently told me about his search for a place to rent in rural western Washington and they said it was just impossible to find…

Not in Singapore! Very different things happening here. Then again, 80% of the country lives in public housing.

Re: What broke Sweden? Real estate bust exposes big divide

#350

Post by mo_42 »

nemo44x wrote: post #172
Bellend wrote: post #155

Earlier quoted context omitted.

I believe we are in a time where everyone is milking the 90s-20s real estate bubble and no one wants to be first to fold. Internationally, not just on a per country basis. As soon as say, French real estate collapses (or UK or USA or Germany etc), the whole rotten castle of cards will fold as well. If it doesn't you can enjoy the expensive property, but you won't be eating farmed foods, won't be in a clean environmen…

Why would it collapse? There’s insatiable demand for extreme limited property. Interest rate hikes may lower the price of property but the interest will rise proportionately. Do people really think at sone point no one will want premium property and I’ll finally get it cheap? Of course that will never happen.

> Do people really think at sone point no one will want premium property and I’ll finally get it cheap? Of course that will never happen.

Well, the economic landscape can change drastically. Compared to other assets real estate has quite some costs. With all the environmental regulations, for example, the EU is planning, real estate might be much less lucrative. For individual landlords, it might be even impossible as they don’t have any money for investment.

I’m not dismissing your point. Just adding some balance.

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