[HN Gopher] What broke Sweden? Real estate bust exposes big divide
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What broke Sweden? Real estate bust exposes big divide
Author : SirLJ
Score : 56 points
Date : 2023-04-01 20:22 UTC (2 hours ago)
(HTM) web link (www.bloomberg.com)
(TXT) w3m dump (www.bloomberg.com)
| sgt wrote:
| Sweden is broken? That's news to me. Why isn't this in the media?
| tpmx wrote:
| Young people are upset they can't live centrally in the capital
| for cheap. Same story as everywhere else. Now go forth with the
| ritual flogging, er, downvoting.
|
| (I live and work in the countryside of Sweden. I recommend it.)
| ChuckNorris89 wrote:
| Sure, but try dating and building social circles while living
| in rural areas as a single 20-30 something year old.
|
| Of course young people want to live in dense walkable areas
| where it's easy to find other like minded people.
|
| Isn't Swedish population also statistically one of the
| biggest sufferers of loneliness in the world and also one of
| the largest consumers of antidepressants? Or was that
| Finland? I'm not sure.
| tpmx wrote:
| There are plenty of more affordable, densely walkable city
| areas in Sweden. Every single city in the country is built
| this way, from the smallest to the largest. That's not the
| factor. The factor is that everyone wants to have a cheap
| apartment in the same square mile that's the cool place.
|
| > Isn't Swedish population also statistically one of the
| biggest sufferers of loneliness in the world and also one
| of the largest consumers of antidepressants?
|
| No idea, but it sounds a bit like reverberations from
| Dwight D. Eisenhower's 1960 speech where he said that "sin,
| nudity, drunkenness and suicide" in Sweden were due to
| welfare policy excess, which then quite incorrectly caused
| americans to correlate Sweden with suicide and depression
| for many decades.
|
| At the moment there are more suicides per capita in the US
| than in Sweden but we're relatively similar in this
| statistic.
|
| https://ourworldindata.org/grapher/share-deaths-
| suicide?coun...
| ChuckNorris89 wrote:
| _> Why isn't this in the media?_
|
| Not Swedish but I assume the ones who run the real estate
| interest groups are also hand in hand with those who own
| mainstream media so they have no interest to dig up dirt on
| them and will turn a blind eye.
|
| I assume Germans initially also asked themselves why isn't the
| Wirecard fraud in the local media and only reports on it come
| from the US.
|
| Influential people in a country tend to scratch each other's
| backs.
| maximilianroos wrote:
| > Why isn't this in the media?
|
| Like on bloomberg.com?
| rejectfinite wrote:
| Housing is yea.
| belorn wrote:
| 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.
| jcz_nz wrote:
| Swedish immigration has been decreasing for the last 14 years.
| https://www.macrotrends.net/countries/SWE/sweden/net-
| migrati....
|
| Oddly enough, profitability of Swedish banks has been
| increasing for the last 14 years:
| https://www.macrotrends.net/countries/SWE/sweden/net-
| migrati....
|
| Maybe you can come up with an argument actually grounded in
| reality, rather than the same old BS "oh it's the poor".
| FpUser wrote:
| >"It is going to take time to return back to the same levels as
| before."
|
| Growing divide is universal and pending some tectonic changes
| in the way our society operates there is no coming back.
| ChuckNorris89 wrote:
| _> 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 like it, leading to more inequality, social
| divide, unrest and increased crime.
|
| But blaming immigrants is always a cheap shot politicians take
| to blame the demographic without voting rights for the problems
| they themselves are responsible for. _" It's not us who screwed
| you over with inflation and housing while taking your taxes,
| it's the immigrants who took your job and house"._
| suddenclarity wrote:
| > 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.
| bilbo0s wrote:
| 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.)
| xienze wrote:
| > 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 equal. Immigration is never 100% of the reason
| behind housing issues, but it's more significant than most
| people want to admit.
| 908B64B197 wrote:
| > 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/11768490175
| 6682649...
|
| [1] https://emilkirkegaard.dk/en/2021/11/sweden-finally-
| publishe...
|
| [2] https://www.bbc.com/news/world-europe-45269764
| rhaway84773 wrote:
| 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.
| as the govt cannot raise enough taxes.
|
| And finally, instead of solving the fundamental expensive housing
| problem, opportunists will blame the other. More often than not
| the other are the victims of the problems. Immigrants in Sweden's
| case, and since one can't blame immigrants for obvious reasons in
| SF, homeless people in SF.
| bequanna wrote:
| > The growing wealth inequality leads to all sorts of other
| dysfunction including increased crime, worsening services, etc.
| as the govt cannot raise enough taxes.
|
| Hold up. I don't think the people of San Francisco grew weary
| of increasing rents and decided to turn to a life of crime.
|
| Most of the "trouble makers" in the Bay Area are recent
| arrivals to the area and come because of poor policing and the
| government is generally more tolerant of them.
| [deleted]
| patall wrote:
| 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 that any of the
| many many construction projects in Stockholm has been fast). What
| the article misses is that the Swedish Krona has lost more than
| 10% compared to the Euro over the last year and that, while
| theoretically making exports more valuable, increase inflation
| for all import products. Which for me as an immigrant is the main
| economic flaw in this country: it should have adopted the Euro
| like Finnland or at least locked the exchange rate like Denmark.
| But no, false national pride has now made the entire economic
| down-turn even harder.
|
| (One should also note that mortage rate here in Sweden are still
| surprisingly low. My 3 month fixed rate right now is 3.65% of
| which I get back 30% via taxes. Hence I am effectivly borrowing
| at 2.5%)
| nickez wrote:
| 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.
| ChuckNorris89 wrote:
| Real estate can either be a lucrative investment or it can be
| affordable.
|
| Why are people continuously acting shocked when they realize it
| can't be both?
|
| And why are elected politicians everywhere continuously shrugging
| their shoulders as if the housing market is somethin completely
| outside of their control.
| pessimizer wrote:
| > And why are elected politicians everywhere continuously
| shrugging their shoulders as if the housing market is somethin
| completely outside of their control.
|
| This isn't what's happening. Any politician that promised to
| lower house prices would be demolished by middle class people
| who
|
| a) think that additional wealth from rising house prices is
| their just reward for being wealthy enough to own a house, and
|
| b) will be in deep shit on their mortgage if house prices go
| down, because mortgages are just highly leveraged investments.
|
| edit: whenever house prices seem like they might go down,
| governments inject huge amounts of tax money into the housing
| market. The people that tell us in the US that cancelling
| student debt is a subsidy to the rich will never fail to send
| direct subsidy to homeowners and prospective homeowners. In
| that way, government interventions into the housing market
| _only_ happen as a bubble is popping, and their intention is to
| maintain bubble pricing.
| havblue wrote:
| It's funny that it was sold as "affordability". Is it really
| more affordable to have a mortgage that lasts twice as long?
| Can we really consider interest only to be home ownership? You
| don't own that home, the banks do, Maverick!
| brabel wrote:
| If you invest your money on anything that gives , say, 5%
| yearly returns on your money, instead of paying off your
| mortgage, which used to be at less than 2% (but is not
| getting beyone 4%), you're just better off.
|
| Say you start with a 10,000 mortgage, and your payment per
| year is 500, not including interest. By the end of the year,
| you'll have a 9,500 mortgage left. If you just invested the
| 500 and only paid interest on the mortgage (which was common
| in Sweden until a few years ago), you'll still have a 10,000
| mortgage, but you have 525 in your pocket. You could now go
| and pay off some mortgage, resulting in you having now only
| 9,475 left (i.e. you're better off)... but why would you do
| that? Just keep investing that money!
| xapata wrote:
| Suppose a large, publicly listed real estate investment trust
| (REIT) owned a diversified portfolio of housing across the
| country and operated it all as rental housing. Tenants could
| buy shares in the REIT and thereby invest not only in their own
| house, but all the others as well. Less risk and more flexible
| than home ownership.
|
| The downside for tenants is not being able to renovate. The
| upside is not being responsible for maintenance.
| bugglebeetle wrote:
| Imagine the state did this instead using taxes and eminent
| domain. Congrats, you've invented Vienna, one of the most
| beautiful cities in the entire world.
| [deleted]
| ambientenv wrote:
| We somehow have this belief that the "market" is some immutable
| law of nature like say, gravity. The "market" is based on
| behaviour, albeit behaviour that is heavily manipulated and
| controlled (somewhat invisibly - complicity or otherwise - to,
| seemingly, most people). We acquiesce and, when life is good
| for us, ignore the fact that we have to the power to change our
| behaviour and our beliefs and values and, thus, the market. But
| that will take hard work over time and much sacrifice. And so
| it goes ...
| nivenkos wrote:
| 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.
| brabel wrote:
| Very true. I wanted to buy an investment property in Sweden,
| and rent it out while waiting for prices to go back up in a few
| years... but learned that this is not a thing here! If you want
| to rent out, you need permission of your building association,
| which normally won't give it... or you can buy a "detached
| house" (no association) which is usually much more expensive,
| but then you must deal with renters and find them yourself, as
| the real estate agents , apparently, are not allowed to handle
| that. WTF?! Makes me wonder how the heck prices got so bloody
| high in the big cities when investing in property is virtually
| impossible.
| styren wrote:
| 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).
| gruez wrote:
| > 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.
| ChuckNorris89 wrote:
| 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 shortages
| down the road and only the lucky few with money or connections
| will be able to afford.
|
| We had that in communism, except ironically, not with housing
| but with food and goods. Now the west has the opposite problem,
| everyone has plenty of food and iPhones, but no housing. Have
| Swedes never learned about this and the functioning of
| supply/demand in their excellent school system?
| varispeed wrote:
| > 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 property, sell it and recover the monies.
|
| Here in the UK we have the same problem. Good percentage of
| the ruling party (and opposition) are landlords, there is a
| ton of foreign money coming in buying up properties left and
| right and they don't even care if they are rented out,
| because empty property gives good enough return. We even have
| banks start to move in this business as well.
|
| It has gone completely mad.
|
| But since big money is all over it and our security services
| are not interested in looking into it, nothing is going to
| change it will only get worse.
| mihaaly wrote:
| I wonder why the rich and those in charge of regulating and
| steering policy think it will not end bad for them too when
| masses could not afford the housing on the highly inflated
| prices fuelled by passive money drawn out of economy into
| "investment" (more like sleeping) properties, hence
| crashing housing prices all around making them loose a lot.
| And that all that living cost hikes will not exacerbate
| things further accelerating this crash as people need to
| spend sooo much on housing less remains there for the
| functional parts of the economy? They hope they die before
| this comes or what?! They will not be in charge and could
| sip gin and tonic silently in a big warm garden somewhere
| before this happens? But what about their children and
| their other young family members? What will they do with
| properties woth nothing in a dissolving society where it
| will not be good or perhaps not even safe living due to
| unrest of the poor? A frequently repeting worry in articles
| and analysis here and there is the gigantic wealth
| accumulated for few stucked away suffocating the rest of
| the society and raising desperation yet what I can see
| people seem to mumble "it's ok so far, it's ok so far" to
| themselves while falling alongside a high rise building. Do
| they hope for a soft landing with this behaviour? They hope
| that printing cash in increased speed pumped into even more
| passive wealth here and there through the sliding middle
| and lower classes will last forever?
| varispeed wrote:
| The solution for this will be CBDC - electronic
| programmable money and social credit score. The class of
| the ultra rich that has developed and controls the
| governments will use the poor as means of production -
| since they already own most of the economy, there is no
| longer any need for markets in the traditional sense,
| that we know.
|
| At one point if you have 100 billion, it doesn't matter
| if you have 101 or 200. The capitalism has reached its
| end and the rich are preparing us for the so called
| fourth industrial revolution.
| joshuaissac wrote:
| > 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.
| im_down_w_otp wrote:
| 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.
| VirusNewbie wrote:
| If someone owns a condo and wants to buy a mansion, does
| it make sense for them to hope all real estate
| appreciates in price vs depreciates?
| varispeed wrote:
| There is no democracy if most parties have the same
| policies regarding this and the weaker parties can be
| easily influenced to drop anything against the status
| quo.
| jjoonathan wrote:
| 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 that these owners are the ones with power. It
| gives them the means and the motive to torpedo new
| development. So they do.
|
| Capitalism causes NIMBYism. Which is the real problem.
| dogma1138 wrote:
| Forced rent control definitely causes a problem as it
| suppresses supply.
| gruez wrote:
| >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.
| jjoonathan wrote:
| > super-PACs or lobbyists
|
| Presidents don't make zoning decisions. Next time you
| attend a zoning meeting, take a good look at the people
| who are most passionately creating friction (or their
| power base, if they are outsiders). You will find a bunch
| of property owners looking after their property values.
| gruez wrote:
| >Next time you attend a zoning meeting, take a good look
| at the people who are most passionately creating friction
| (or their power base, if they are outsiders). You will
| find a bunch of property owners looking after their
| property values.
|
| That's... exactly what I was arguing for? In the
| subsequent sentence:
|
| >They're just people showing up to local government
| meetings in their spare time.
| jjoonathan wrote:
| My point is that these people are directly motivated by
| capitalist incentives.
|
| > spare time
|
| No, not spare. Stopping new construction makes them
| money, sometimes a lot of money. They are expecting a
| large, dollar-denominated (or Krona-denominated) return
| on their investment of time, paid for by future renters
| and buyers who will not have the additional options they
| are so diligently trying to torpedo.
| boringuser2 wrote:
| Nobody likes to talk about the effect of moving large populations
| around globally without the housing infrastructure to support
| them.
| twodave wrote:
| Interesting undercurrent that the article presents: a Sweden with
| high immigration has a lot of the same problems as the United
| States. Maybe living in a utopia is only possible if you first
| ship away those pesky poor folks. /s
| brailsafe wrote:
| * * *
| oblio wrote:
| Paywall :-|
| ftyers wrote:
| https://archive.ph/rLm7B
| timkam wrote:
| 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 sustainable, people have less
| money at hand to pay for them, and there is no political will to
| relief the working and middle class, which means many will slide
| down the social ladder. As an immigrant living in Sweden I fear
| that the country will soon be pretty unattractive to live in for
| most 'internationals' who have a choice.
| jokethrowaway wrote:
| 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?
| moltar wrote:
| I think you could say exactly the same story about Canada. And
| imagine many other countries soon. Interest rates will spoil
| the party.
| varispeed wrote:
| > which means many will slide down the social ladder.
|
| That is intentional - part of you will own nothing and you will
| be happy - programme run by World Economic Forum and their
| politicians they penetrated governments with.
|
| Many people still don't believe it and develop cognitive
| dissonance, saying it's not happening, it's a conspiracy
| theory, despite having their own savings disappear, being able
| to afford less and less and so on.
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