
The Shock of Sweden's Housing Market Is Hitting the Country's Currency - adventured
https://www.bloomberg.com/news/articles/2017-11-14/sweden-s-housing-shock-hits-krona-leaving-riksbank-few-choices
======
opportune
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 or tax policy so that their
assets - many of which they do not even actually own - can appreciate.

~~~
lisper
> High housing prices are great for those who already owned houses

Not really. _Rising_ prices (not _high_ prices) are great for people holding
houses _as investments_. But for owner-occupied houses, rising prices are as
bad for the owners as they are for everyone else.

my wife and I own a house in Northern California, which we bought during the
sub-prime crash. Since then it has nearly doubled in price. It is also too big
for us, so we'd like to sell it and move to a smaller house. But we can't.
Why? Because by the time you factor in:

1\. Capital gains tax

2\. Real estate agent fees

3\. Higher property taxes (even a smaller house costs much more than the
prop-13 basis in our current house)

we can't afford to move!

~~~
opportune
Capital gains is only applicable when you sell the house and it's _not_ your
primary residence, or if you made a ton of money on it. And it's only a tax on
the appreciation of the house, not its market value.

Real estate agent fees are only applicable on x% of the value of the house you
sell.

Higher property taxes do stink but are _not_ applicable after you sell the
house.

I'm not sure why you can't afford to move. Have you talked to a tax specialist
or a financial advisor? If you bought a house at X and sold it at 2x, even if
you haven't paid any of the principal of your mortgage(if you have one), you
would likely pay a maximum of ~25% of X between capital gains (if you own
multiple homes) and real estate agent fees. So you still made 75% of X from
appreciation. I don't really understand what you think your problem is.

~~~
lisper
Suppose I bought my house for $1M and prices are stable. I can sell my $1M
house and buy a different $1M house and the net cost to me is 6% agent fees.

But if prices have doubled now the net cost to me is much higher. The agent
fees are double what they were, and I have to pay cap gains on $500k. All that
is money I have to come up with somehow in order to complete the transaction.
I either have to write a check, or take on more debt. The higher prices go,
the more expensive a lateral move becomes.

Yes, I have more home equity if prices go up, but that only helps me if I cash
out and move out of the area.

~~~
gamblor956
Not understanding your complaint. You would have to sell your house for more
than $1.5M to have any taxable capital gains. You would have to sell your
house for more than $2.5m to have an effective tax rate of more than 10% on
the sale. (For example, if you sold your house for $2m, your effective tax
rate on the sale would be 5%, ignoring AMT and assuming no other significant
sources of income.) Boo hoo.

On the second point: the only cash you need to come up with is the down
payment for the new house, which you would get out of the proceeds from
selling your old house. If you sold your house for 2x the purchase price, you
have more than enough cash to pay the down payment. Boo hoo.

Complaints like yours are why people outside of the Bay Area really hate
Silicon Valley.

~~~
bzbarsky
> For example, if you sold your house for $2m, your effective tax rate on the
> sale would be 5%

The tax on capital gains in this case would be 20% federal, ~10% state (in
California), 3.8% ACA investment tax. That's an ~34% rate, not the 20% you
seem to think applies.

> the only cash you need to come up with is the down payment for the new house

Let's take the simple case where the old house was paid off, no mortgage. Are
you suggesting that it's unreasonable to want to downsize and still not have a
mortgage?

If you do have a significant mortgage, and are hence highly leveraged, an
increase in property prices is pretty good. If your mortgage is more or less
paid off, you can in fact end up in a situation where you can't buy any house
at all in the same general market after selling your existing one and paying
the property taxes. See a worked-out example at
[https://news.ycombinator.com/item?id=15706565](https://news.ycombinator.com/item?id=15706565)

~~~
gamblor956
The 3.8% net investment income tax doesn't apply to real property, it applies
to investment property. The NIIT specifically excludes gains from the sale of
primary residences. The IRS provides a helpful FAQ on this:
[https://www.irs.gov/newsroom/net-investment-income-tax-
faqs](https://www.irs.gov/newsroom/net-investment-income-tax-faqs).

Second, the 25% rate is an approximate rate that combines the federal and
state rates while taking into account the deduction for state and local taxes.
25% is a nice round number. I'm not going to prepare a detailed tax model for
an anonymous internet comment.

My point stands either way: he's whining about having to pay an effective tax
rate of 10-15% on his profits from selling his million dollar house while
people in other parts of the country are struggling to even afford rent. He's
acting like an entitled child and quivering about the exact tax rate he pays
doesn't change that.

~~~
bzbarsky
> The 3.8% net investment income tax doesn't apply to real property

Ah, I didn't realize that, thank you!

> he's whining about having to pay an effective tax rate of 10-15% on his
> profits

No, the key part of the complaint is that the combination of price rise and
tax structure mean that a lateral move requires liquidity he does not have.

It's a first-world problem for sure, but it's still a problem caused by the
fact that we have various fairly dumb tax policies.

------
alkonaut
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 will build places to rent,
only to buy.

\- Extremely low interest rates as the central bank refuses to look at housing
costs and interest rates when aiming for the inflation target.

This is the recipe for disaster. Now, it's not ALL doom and gloom, a lot has
actually improved. Down payments have been 15-25% for some time now, mortgages
are no longer infinite, and banks are using max-multiple-of-household-income
caps (typically 4-5x) to limit lending. I think the situation now is a bit
brighter than it would have been if we had been hit by a big correction in
2008 (which we were not). Many would welcome a controlled price correction
(say 10-15%), and it IS expected since all the above changes have yet NOT
changed the prices downward, even though the pool of prospective buyers gets
smaller and smaller the more restrictive lenders are. It would be very welcome
to see the correction _now_ that both domestic and global economy is decent,
interest rates are low etc.

~~~
staticelf
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 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.

Of course you would get that % of the profit, but since it selling in a time
of crisis, that would mean you would most likely get significantly less than
you otherwise would do.

It doesn't even matter if you have a good economy, the association must have
it as well. Lots of those associations or organizations have a really shitty
economy and are sensitive to market changes. Especially in Gothenburg and
Stockholm.

[1]
[https://www.migrationsverket.se/images/18.5bc6881815e14db675...](https://www.migrationsverket.se/images/18.5bc6881815e14db67502366/1510566869185/Total_s%C3%B6k.png)

[2]
[http://sverigesradio.se/sida/artikel.aspx?programid=98&artik...](http://sverigesradio.se/sida/artikel.aspx?programid=98&artikel=6457520)

EDIT: If you downvote / disagree, please explain why? What I stated is pure
fact a with a touch of stated opinion which is backed by the numbers.

EDIT 2: I've added sources for the stuff regarding to immigration.

~~~
lg
> 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 these co-ops and they are mostly an NYC phenomenon. Fun
fact, some co-ops don't own the land they sit on, they rent it. And those
rents get renegotiated every 30 years, potentially making a bunch of co-op
owners suddenly unable to afford their monthly maintenance payments.

~~~
nikanj
The Swedish system sounds closer to a strata system
[https://en.wikipedia.org/wiki/Strata_title](https://en.wikipedia.org/wiki/Strata_title)

~~~
nisse72
It's not actually. Unlike strata, in a Swedish "Brf" you don't actually hold
title to any real estate.

As the GP says, you own a share in a co-op that itself owns the real estate,
and that gives you the right to use the apartment that corresponds to your
share.

Something similar to strata title has been discussed for many years in Sweden:
ägarlägenheter. I don't know whether anything has ever come of it, however.

------
estomagordo
The combination of removing the wealth tax and the introduction of a 30%
rebate on all interest costs for individuals have really combined to
clusterfuck the Swedish housing market.

Now, the interest rebate seems politically impossible to touch, even long term
and through minor transitioning. Home ownership is so important to the economy
and affects so many voters, that the property owning class always must be
looked after.

People have been talking about the bubble bursting for years now, but it's
only in the past year or so that the decline truly has been expected. Only a
few weeks ago, there was an article in a major paper about a couple who
quinnied about not being able to sell their house with the expected 1000%
profit (over 30+ years). How ever would they manage, once they'd sold the
house, bought an apartment, and didn't have the cool million SEK to splurge on
whatever people in their 70s enjoy?

~~~
pimmen
I absolutely hate speaking to Swedish people who invest all of their
retirement savings in their home. It just breaks my heart to know that they
are taking on a very high risk by putting all of their eggs into one,
figurative basket when other types of investing are not only less risky but
also often present more of a reward too.

And, add the fact that investing in your house is one of the least helpful
investments for creating new jobs and wealth for future generations. The
people who had this idea have my pity but I won't refrain from using their
story as a cautionary tale.

~~~
robinwassen
How do they "invest" in their home? Renovate it to the max, keep buying a more
expensive one or paying off your loan?

~~~
pimmen
They buy more expensive homes than they need (or stay in the one that housed a
family of four way after their kids have moved out) and pay off the mortgage.
That's "saving" for retirement; they expect to get the money they've payed on
their mortgage back when they sell it. Some practically only pay off the
interest because we can do generous deductions off it and we have low demands
of paying off the principal (or at least we used to have, now the Department
of Finance is advising the government to require that banks make higher
demands of paying back the principal) and why should I pay off the mortgage in
full if the property prices always go up? At least that's the reasoning.

I have nothing against paying off your loan, but seeing it as your one and
only retirement investment is something I have serious problems with. You
should live where you are most comfortable living, I don't want people
speculating in their homes on a casual basis "knowing" it always pays off. If
you're going to really invest in your home, renovate a floor and rent it out.
That way, you're contributing to the economy, you're not just speculating
you're value investing and you know what the revenue stream of your investment
really is. I had the privilege of growing up in a wealthy household with 7
bedrooms and after me and my brother moved out my parents decided three rooms
was enough and converted the house into three apartments, living in one and
renting out the other two.

Many of the neighboring families however don't like the idea since it means
work, but they also don't want to move into something that won't grow as much
over time. They're staying put even after the kids have moved out in hopes of
cashing in right before retirement.

------
jesusthatsgreat
It's not just Sweden, it's almost everywhere (in the western world at least).

It's almost entirely down to the effects of unprecedented quantitative easing
over the past decade or so.

When you print more money than you've ever printed before, it's only natural
that the prices of things will rise as more people can afford to buy things.
And even if more people _can 't_ afford to buy things, the money goes
somewhere so it probably means the rich people get richer. And they'll go out
and buy things they know poorer people will always need i.e. property.

It all works well until property gets so expensive that the only people that
can afford to buy it are other wealthy people. Eventually someone gets forced
in to selling at a loss and the whole house of cards collapses as the wealthy
who _can_ afford to buy more property sit on the sidelines and wait / hope for
a catastrophic collapse.

Rinse, wash, repeat and yet we still question why the rich get richer... the
only way to prevent property getting out of control is by regulating it so
that it remains affordable and that speculators are discouraged from entering
the market and encouraged to sell. But that won't happen either because most
politicians own large amounts of property and they've a vested interest in
seeing the price of property rise...

~~~
ThrustVectoring
It's less about printing money and more about falling long-term interest rates
(and thus, discount rates). Fundamentally, a house is worth the net present
value of its use value. Lower discount rates means that more of that value
gets pulled forward into its present valuation.

An equivalent way of thinking of it is that house prices are fixed by
mortgages to rents - when mortgage payments are lower than rents, people buy
houses and rent them out, pushing house prices up. Falling mortgage interest
rates push mortgage payments lower at the same principle amount, which
convinces people to buy and push up housing prices.

~~~
alkonaut
In Sweden though, pretty much no one rents a house. This may or may not be
relevant to the above observation.

It's also generally not allowed to buy flats to rent them out which limits
speculation in that market.

~~~
ThrustVectoring
The analysis generally works for the value of owner-captured imputed rents,
too. If shaving 10 minutes off your commute is worth $100/mo to you, that's
going to cause homes closer to jobs to rise in price with interest-rate
sensitivity.

------
jacknews
While a drop in house prices might, in theory, negatively effect the economy
in the short term as homeowners, in theory, have less disposable income, in
the long term land prices/speculation (and when people talk about house
prices, they really mean land prices) are a huge rentier suck on the economy,
and should be taxed to the point that speculation or 'investment' in land
itself (not the development of it) reaps zero gains.

After all, why should anyone profit merely by owning land, when the value of
that land really reflects other people's economic activity and development in
the surrounding area.

------
baursak
I don't get it. When prices are high, it's a housing crisis. When prices are
going down, it's a housing crisis. It's almost as if news articles just need
to be written regardless of the reason.

~~~
dfhdfhfdh
Maybe housing shouldn't be a market system. Instead, housing should be free
and landlords should be abolished.

~~~
lolsal
Your mindset completely boggles my mind.

~~~
zanny
Alternate economic views are incomprehensible?

~~~
lolsal
No, not at all. Other economic views are definitely comprehensible to me,
however this particular one is mind boggling because me and OP seem to have
genuinely incompatible principals and values. "housing should be free" \-
according to who? What entity is coercing the 'should' in that sentence? What
law of nature says that housing should be free? It implies in a society that
you have a right to someone else's time and labor. That's amazing! It makes me
wonder why the OP thinks that way and what circumstances led them to think
that way.

~~~
zanny
I mean, in every modern country you have the right to someone elses time and
labor. Most places have socialized medicine, literal usage of someones elses
time for free and compensated by society as a whole, you use roads you didn't
directly pay for, etc.

In a lot of places you can (or used to) get free water. Literally other
peoples work for free.

Almost all the structural parts of modern society are built on providing
people with services _for free_ that come from the tax pool. You can even,
depending on country, get _free_ housing through poverty programs!

But in general, modern states exist in part to forcibly take from some to give
to others by the whims of the majority. They all do it. "Public" housing is
just another proposition in that spectrum of policies.

But specifically:

> according to who?

Currently them, but if it were according to most in most democracies that
would mean it would eventually become law.

> What entity is coercing the 'should' in that sentence?

States, as with all other legal uses of force.

> What law of nature says that housing should be free?

No law of nature says property rights exist (especially intellectual
property), but we make those up to establish civilization.

You can definitely be ideologically opposed to those ideas! But their
existence shouldn't be a surprise, humans have been establishing radically
different rules of society for millennia from one another, and seeing someone
on the Internet propose something you find far out should be expected!

~~~
lolsal
> I mean, in every modern country you have the right to someone elses time and
> labor.

I notice you qualified this with 'every modern country'. Is this a coincidence
or do you believe that a 'right' to other people's time and labor is necessary
for being a 'modern country'?

> Most places have socialized medicine, literal usage of someones elses time
> for free and compensated by society as a whole, you use roads you didn't
> directly pay for, etc.

Usages of socialized medicine, roads and anything else that is compensated by
"society" are not rights. They are privileges paid for by taxes.

> In a lot of places you can (or used to) get free water. Literally other
> peoples work for free.

Getting something for no cost because it's given to you at no cost does not
constitute a 'right' to that thing. If I gave you a bottle of water, that does
not mean you have a right to my bottled water, or bottled water in general.

> But in general, modern states exist in part to forcibly take from some to
> give to others by the whims of the majority.

Now this statement is utterly fascinating! What are the other parts that they
exist for, in your opinion?

> Currently them, but if it were according to most in most democracies that
> would mean it would eventually become law.

Let's be clear, your statement about "housing _should_ be free" means "housing
should be free because the people that want housing decide it _should_ be
free". It's totally fine if you want free housing - 100% fine for you to want
it. That's your right. It's not your right however to get free housing.

> States, as with all other legal uses of force.

Not quite, or at least not yet. We're still just talking about "people that
think housing should be free". If you want to promote that responsibility to
the State you have to make it a law, which means you'd have to draft a law (in
the US at least) that did not violate the Constitution or the Bill of Rights.
Even if it's a law, it would still not be a right.

> No law of nature says property rights exist (especially intellectual
> property), but we make those up to establish civilization.

I would argue that nature says I have a right to whatever land I can take and
defend. If I can't defend it (by paying taxes, or whatever other modern
agreements there are between me and everyone else) it will likely be
repossessed. Society tends to support that natural right by acknowledging
things (at least in the US) like private property laws, trespass laws and
castle doctrines. Of course ultimately the state could just take my land by
force - that's nature's law in action!

The root of my objection is that no one has a right to my time and labor (or
yours or anyone else's). You can buy my time and labor, or we can barter for
my time and labor, or I can choose to give you my time and labor. People can
take it by force[1], but not by right.

[1] [http://www.endslaverynow.org/act/educate/human-rights-and-
sl...](http://www.endslaverynow.org/act/educate/human-rights-and-slavery)

------
mrec
The relentlessly negative reporting here would be funny if it wasn't so
pernicious. "risk ... backfire ... risks sinking ... worrying".

And yet they're explicitly talking about a _correction_. Making something that
isn't correct, correct. You might think that was a _good_ thing.

If you don't want a correction, stop pumping up bubbles. You can keep 'em
inflated a long time, longer than many people can remain solvent, but if you
shut out the younger generations then eventually the political calculation
_will_ change, and that change will not be in your favour. As Mark Blyth is
fond of observing, the Hamptons are not a defensible position.

~~~
matt4077
Entropically speaking, life on earth is also a bubble that will, at least over
the really long term, correct.

~~~
scandox
A correction devoutly to be wished

~~~
oblio
Why?

~~~
scandox
Just feeling misanthropic

------
soVeryTired
If falling house prices are so problematic, then _why_ do governments allow
house prices to rise so sharply?

If house price stability was explicitly a part of our central banks' mandate,
we wouldn't have such ridiculously low interest rates, people wouldn't be
borrowing vast multiples of their salary to buy a house, and we wouldn't have
the sword of damocles hanging over us in the form of another property slump.

~~~
staticelf
The housing market in Sweden has been like borrowing money to buy stock and
while everyone earns a profit, no one complains and it would be unpopular to
make a change politically.

------
bjourne
I wonder why this article is upvoted so highly. The article is not very
interesting and almost devoid of real content.

------
jesperlang
Some historical context:

[https://2.bp.blogspot.com/-tonEuOE0IXE/WfpBpIzy8rI/AAAAAAAAF...](https://2.bp.blogspot.com/-tonEuOE0IXE/WfpBpIzy8rI/AAAAAAAAFBk/PvhThXo1MaYG_BtcN9BkBWgR4bmQC_SzgCLcBGAs/s1600/realaBostadspriser1952-2017k3.png)

The interesting lines are apartment prices (yellow/orange) and salary (green).
Note that the small bump in the early 90s was the last economic crisis...

------
EGreg
Contrarian position: low inflation seems like a good problem to have. You can
always increase inflation much more easily than decrease it -- such as
printing more money and giving it to people or businesses to spend on things,
which spurs the economy.

What is interesting to me is that, even though it seems to take less Kronor
now to buy something, somehow it slumped against the Euro so it takes even
less Euro to buy that same thing? Yet the thing remained the same?

------
IdontRememberIt
A successful real estate agent once told me: the market price is driven by the
threee "D"s: Death, Divorce, Debt.

~~~
yxhuvud
I'd add a fourth, Delivery. As in new kids.

------
mmrezaie
As someone just bought an apartment in Stockholm two years ago I was shocked
seeing that I made 50 or more percent on how much I paid for my apartment but
when I checked the data there I saw not all the areas in Stockholm raised in
the same time and rate. I think there were many areas got hyped and there are
many old buildings which raised and if you check the data you will see the
start of falling in prices is not happening everywhere. I would guess prices
will continue falling for two or more years but to the point, before the scare
and excitement started which raised the prices too high in a year, and then it
will stabilize. There is a talk also to loosen the restriction on companies
which renting apartments. I really do not think this is like US's 2008 era
inflation.

~~~
estomagordo
I mean, buyers aren't going to be able to loan money at 1.5% interest (1%
effective) forever.

------
bracobama
As a foreigner here in Sweden I've heard about this mystical bubble which will
burst sometime soon causing morgage rates to skyrocket. If I was going to buy
something, say in North Stockholm, how long would you recommend waiting?

~~~
styren
I recently sold my appartment in central Stockholm, I am reinvesting my money
in stocks and renting for 1-2 years before hopefully entering a more healthy
housing market. Of course it is all a gamble, but most people I talk to
recommend waiting +1,5 years, if you can.

~~~
zeeed
Couldn’t agree more. The current market situation here looks downright bizarre
at times, I’m having trouble seeing how any substantial investment in this
makes sense.

Who did you talk to for advice in Stockholm?

------
jjawssd
What are the major tech hubs with the "weakest" housing markets? This would be
an interesting list of options for techies that do not want to pay so much for
land and housing.

------
djohnston
Does anyone have a good resource (book or site) that explains the interactions
between central banks and the economies they influence? My macro-economic
knowledge is lacking...

------
margorczynski
Are the regulations blocking the development? Considering the demand is so
high wouldn't the supply follow by e.g. scaling vertically?

~~~
ptaipale
Sweden has rent controls, which has caused long queues to apartments (we're
talking wait times of 20 years) as well as a significant grey/black market in
second, third and even fourth hand contracts, because the regulated first
contract is so valuable that people keep them and rent them onwards.

It has also created situations where e.g. trade unions and other organisations
(who own rental apartments) arrange nicely-located apartments to friendly
politicians (and their relatives) ahead of the queue at very advantageous
rents.

------
breakyerself
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.

~~~
zzzzzzzza
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)

------
hsjoberg
As a Swede owning an expensive apartment this sucks. Currently we only need to
pay mortgage down to 75%, so a lot of young swedes will loose a great deal of
money.

------
acd
Fractional reserve banking creating new debt of almost nothing. Hoping for a
block chain future.

------
WilsonPhillips
Crytocurrencies and blockchain based solutions like Bitcoin have a built-in
deflationary element from the start right?

Could that be a way to counteract the deflationary tendencies of this market?

~~~
jackcosgrove
Don't conflate cryptocurrencies with blockchains. Blockchains are merely a
decentralized way to prove stake in something.

Cryptocurrencies with a fixed supply like Bitcoin are deflationary, especially
since mining costs increase over time.

Cryptocurrencies need not have a fixed supply, and in fact a "currency" with a
fixed supply is indeed not a currency but an asset. Currencies must slowly and
predictably inflate to be useful, otherwise people don't spend today since the
"currency" is worth more tomorrow.

Currencies facilitate commerce and should grow in supply with the economy.
They should not be a speculative tool to benefit first movers.

tl;dr: inflation is necessary, deflation is bad, hyperinflation is the worst.

------
fredgrott
its a signal that the capital markets are out of balance as far as other
assets to invest in

------
robinwassen
Some of my thoughts regarding the housing market, they come from both
observing the market and from first hand experience by selling in Sept 2017.

\- A widespread mindset of people living in Stockholm has been that the
housing prices will continue upwards because they have been doing so for 15+
years. A change to this mindset was starting to be noticed in the spring of
2017 and recently rapidly changed. 66% believed in rising prices in September
2017 compared to 43% in October[1].

\- The time it takes to sell an apartment in Stockholm is up from ~3-4 days to
weeks.

\- It was previously possible to earn $10k - $50k by flipping a newly produced
apartment. This was done by commiting to buy the apartment when it is finished
by paying a deposit and then sell it when you get the keys. This opportunity
ceased to exist around the end of 2016.

\- Trusted sources such as Svensk Mäklarstatistik[2] and Valueguard[3]
indicate that the fall in prices is around 3% - 5% this far. Untrusted
sources[4] indicate that the fall is above 10%. Trusted sources uses formulas
to give better stability to their indexes, but they also react slower than the
untrusted sources due to that. I suspect that untrusted sources also use data
points that are removed even though they failed to close the deal.

\- The difference between renting and cost of ownership is still huge, would
estimate a 400% increase in interest rate would make the costs about even.

\- About 56 250 (24.96% of total) people aged 20 - 27 in Stockholm are still
living with their parents even though they would like to move to their own
place. In the central parts of the city this share is above 60%. [5]

\- Rising prices, difference between renting and cost of ownership and
flipping of newly produced apartments has attracted a lot of people that
invest/speculate in buying and renting out. They have probably not realized
until now when the prices start to dip that they are sitting with a huge
leverage on their investment/speculation and what risk that comes with. So
they are probably the first ones to panic.

\- Production of new apartments has exploded in Sweden the last 2 years, most
of these are quite expensive which might have saturated the higher end of the
market.

\- The increase of prices has acted as jet fuel for different industries since
a lot of people feel rich, increase their mortgage and consume the money.
Companies that work with home makeover will be the first to get hit, but new
car sales will also dip.

With this said I cannot be other than uncertain about the direction of the
market, there are still a lot of things that indicate that the prices will
increase (cost of ownership vs rent, demand for housing, interest rate
prognosis). But if the market keep going down I am quite certain that it will
drag a lot of other stuff with it and become a self fulfilling prophecy.

Edit: Sorry for a lot of typos and language that could be improved, just did a
brain dump in a rush.

[1] [http://www.privataaffarer.se/bostad/seb-hushallens-
boprisfor...](http://www.privataaffarer.se/bostad/seb-hushallens-
boprisforvantningar-rasar-941969)

[2] [https://www.maklarstatistik.se/omrade/riket/stockholms-
lan/s...](https://www.maklarstatistik.se/omrade/riket/stockholms-
lan/stockholm/)

[3]
[http://www.valueguard.se/stockholmbr](http://www.valueguard.se/stockholmbr)

[4]
[https://husmask.se/kommun/stockholm/](https://husmask.se/kommun/stockholm/)

[5] [https://www.svd.se/en-tredjedel-av-stockholms-unga-
tvingas-b...](https://www.svd.se/en-tredjedel-av-stockholms-unga-tvingas-bo-
kvar-hemma)

