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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

#31

Post by im_down_w_otp »

joshuaissac wrote: post #21
varispeed wrote: post #14

Earlier quoted context omitted.

> but for some reason that route is never explored. The reason you are looking for is called corruption. There is a very strong lobby of landlords and the rich treating residential housing as a store of value. It offers better returns than keeping money in the bank and it is safer, especially if you are from a country where your assets could be in danger - it's much harder for foreign states to take control of the pr…

> The reason you are looking for is called corruption. It could just be democracy. Homeowners are an important vote bank and they generally want house prices to rise. A government that substantially increased housing supply would cause house prices to drop, which would make homeowners unhappy.

I try to remind people in the US that there’s exactly one constituency that wants affordable houses.

People who don’t have houses yet.

Everybody else wants housing to continue to be a growth investment, and thus increasingly unaffordable. Developers want to make & sell more expensive things. Lenders want to make more & bigger loans. Existing owners want the value of their most valuable asset to go “up & to the right”.

That’s a very big hurdle to overcome politically. Even worse in the US where real estate investments are a central pillar of the broader economy, and if the “growth investment” patina of it starts to fade, then a cascading catastrophe will likely follow. The situation might be untenable as prices keep going up, but there are so many incentives working against any kind of intervention, that I never expect one to occur.

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

#32

Post by styren »

nivenkos wrote: post #7

The main problem is the terrible rent control system - with a lucky few getting rent-controlled first-hand contracts, and everyone else facing a cut-throat almost completely unregulated market of sub-letting. Rent control never works.

I'm not sure, I live in a rent controller apartment and it certainly is great for the many people in my apartment who work in the city but could never pay the rents.

Thankfully me and my girlfriend can afford and we're therefore planning to buy and lose our contract, but to be honest it probably going to go to someone who needs it. Because owning your own place, being able to modify it to your liking and having people that live there take care for it just makes it much better to own instead (in my opinion).

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

#33

Post by gruez »

styren wrote: post #32
nivenkos wrote: post #7

The main problem is the terrible rent control system - with a lucky few getting rent-controlled first-hand contracts, and everyone else facing a cut-throat almost completely unregulated market of sub-letting. Rent control never works.

I'm not sure, I live in a rent controller apartment and it certainly is great for the many people in my apartment who work in the city but could never pay the rents. Thankfully me and my girlfriend can afford and we're therefore planning to buy and lose our contract, but to be honest it probably going to go to someone who needs it. Because owning your own place, being able to modify it to your liking and having peopl…

> I'm not sure, I live in a rent controller apartment and it certainly is great for the many people in my apartment who work in the city but could never pay the rents.

That's kind of like saying "What's so bad about zoning restrictions? I own a house and it's not affecting me at all!". Of course it's great for you and other people who have a rent controlled unit. The OP explicitly acknowledges this. The issue is for everyone else who doesn't have a rent controlled unit.

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

#34

Post by dogma1138 »

jjoonathan wrote: post #28
ChuckNorris89 wrote: post #8

Earlier quoted context omitted.

Of course it doesn't. The only way to bring down prices is to build more supply than the demand, but for some reason this elephant in the room is always ignored because always a million reasons come up against it, mostly being just NIMBYsm in disguise. Keeping a limited supply artificially price capped through regulations, sounds good at first, and will most likely be popular with clueless voters, but it will lead to…

Misguided handout-seeking poor are not stopping construction. Rent control doesn't solve the problem, but it doesn't cause the problem either. > NIMBYsm in disguise Yes, this is the real problem: the same capitalist incentive structure that pulls forward the future returns of a new housing investment also pulls forward the consequences of future supply normalization onto current owners. Capitalism also guarantees tha…

Forced rent control definitely causes a problem as it suppresses supply.

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

#35

Post by suddenclarity »

ChuckNorris89 wrote: post #20
belorn wrote: post #16

It should not be a major surprise that the gap between the haves and the have-nots will widen if you have a large compareable influx of have-nots, or to speak more precisely, an influx of new citizens with low social-economic status compared to those who already were ctiziens. In a very dispassionate perspective, it is just plain math. It is going to take time to return back to the same levels as before.

>if you have a large compareable influx of have-nots I'm not in Sweden but why are we always pointing the finger at the poor immigrants? Do you think there are no native Swedes being fucked by this real estate market? Granted, having an open borders migration policy is not a good idea when you have a housing shortage. If you're struggling to provide for the locals, then the newcomers will have it even worse and won't…

> I'm not in Sweden but why are we always pointing the finger at the poor immigrants?

It's not about pointing fingers but rather that people with one foreign born parent have increased from roughly 16% to over 40% in the working age population during the last 30 years. When you become half of the population, you'll have a major impact on all statistics. People outside of Sweden most likely aren't aware and might draw rushed conclusion if they don't know why different stats are currently changing rapidly in all areas.

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

#36

Post by nickez »

patall wrote: post #29

Not sure about the main story about the article. However, construction on that Ursvik/Rinkby construction site has been very slow since long before the current crisis. I was biking through the neighboring bridge of the one mentioned here (that is about 100m down the road, so much about that new bridge alone enabling crime) for about 8 month and while my way through changed a few times, progress was very slow. (Not th…

The SEK used to be locked. That lead to another kind of crisis in the nineties. You are right that we should've adopted the euro though.

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

#37

Post by gruez »

jjoonathan wrote: post #28
ChuckNorris89 wrote: post #8

Earlier quoted context omitted.

Of course it doesn't. The only way to bring down prices is to build more supply than the demand, but for some reason this elephant in the room is always ignored because always a million reasons come up against it, mostly being just NIMBYsm in disguise. Keeping a limited supply artificially price capped through regulations, sounds good at first, and will most likely be popular with clueless voters, but it will lead to…

Misguided handout-seeking poor are not stopping construction. Rent control doesn't solve the problem, but it doesn't cause the problem either. > NIMBYsm in disguise Yes, this is the real problem: the same capitalist incentive structure that pulls forward the future returns of a new housing investment also pulls forward the consequences of future supply normalization onto current owners. Capitalism also guarantees tha…

>Rent control doesn't solve the problem, but it doesn't cause the problem either.

It causes the problem by diminishing the returns for new construction. That in turn disincentivizes people willing to fight through the bureaucracy to get new construction approved.

>Capitalism also guarantees that these owners are the ones with power. It gives them the means and the motive to torpedo new development. So they do.

I'd be sympathetic to this if all the home owning NIMBYs are funding super-PACs or lobbyists to "torpedo new development", but they're not. They're just people showing up to local government meetings in their spare time.

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

#39

Post by 908B64B197 »

xienze wrote: post #30
bilbo0s wrote: post #22

Earlier quoted context omitted.

So true. Immigration is an entirely separate issue. Conflating it with the fact that hard working Swedes can’t secure good housing only serves to make those Swedes, who are already pissed off, more pissed off. It’s bringing the masses closer to taking to the streets with calls for Madame La Guillotine. Housing needs to be fixed asap in Sweden. (And in most of the western world if we’re being honest.)

> Immigration is an entirely separate issue. Conflating it with the fact that hard working Swedes can’t secure good housing How do you figure the two are unrelated? The native poor are competing with an influx of poor immigrants for the same pool of housing. I find it hard to understand how those same poor natives would be worse off in terms of housing prospects if the immigrants never showed up, all things being equ…

> Immigration is never 100% of the reason behind housing issues, but it’s more significant than most people want to admit.

Considering how the Swedish government tried to hide the crime wave that correlated with it's open doors immigration policy [0] [1] [2], I wouldn't be surprised if they were fully aware of the impact but were trying to withhold that information as well.

[0] https://twitter.com/KirkegaardEmil/status/117684901756682649...

[1] https://emilkirkegaard.dk/en/2021/11/sweden-finally-publishe...

[2] https://www.bbc.com/news/world-europe-45269764

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

#40

Post by jokethrowaway »

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…

It's the same everywhere, not only in Sweden.

What a surprise. The government got your taxes AND screwed you with inflation over time.

Then COVID happened and they had to print more, postponing and aggravating the crisis.

Now it's time to pay and nobody will take the blame.

When are people going to rebel?

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