Sunday, April 7, 2013

Dear Swedish Housing Market: I HATE YOU!

So we are just your average Svenmerican family, with 2 kids, a pretty decent income, a good sized nest egg in a BSCHCOL area in Sweden. And we want a house. But we are not willing to risk our entire financial future on the biggest purchase of our lives.

Basically we are fucked.

I have vented about the Swedish housing market before. I know. But it really pisses me off that those of us who have really tried to make smart financial decisions are the ones who are left out in the cold, and those who are willing to play financial roulette are the ones who have nice homes.

The price of homes in Sweden has doubled in the last ten years. DOUBLED where we live. NO ONE is amortizing their homes. A recent call for home owners to require amortization to 75% of home value was rejected by major Swedish politicians. The conservative ones.

Everyone only looks at the monthly cost – which is interest and fees. No one actually talks about the fact that you are borrowing half a million dollars and then NEVER paying it back.

And the houses? Does no one in Sweden have more than 2 children and work from home? Yay for open plan houses, but all of the new houses in our area have a maximum of 3 bedrooms and some only have one large open area that is supposed to be livingroom/dining area/play area – and these houses start at 600,000 dollars. We need an office/guest room and would love to have 2 kind of open areas – one for kids.

The housing market is starting to slow down a little bit. But it is just depressing. Of course we can wait. But if we are going to do this house buying thing, I would like to do it while the kids are little – so we can enjoy a yard.

And of course the bank is ready to throw money at us. Because who wouldn’t throw money at people they hope will pay interest for the next 30 years on a 500,000 dollar loan. They are combing in the money.

This housing model cannot be sustainable. I do not get it. But then again, I am not an economist.

I don’t want the bottom to go out of this for the sake of the Swedish economy, but when people with our income and with decent money to spend don’t feel like they can afford a house – who is left to buy up all these houses?


  1. I know it sucks. On the other hand I feel terrified of the house market here in the US. At least in the NY and NJ area....! Not even mention byuing any condo or so here in NYC! The prices are HUGE and I can not even understand how anyone can afford to buy here if you are not a superstar och have a job in finance at Walll Street or at any of the consulting companies like Mc Kinsey.... Specially if you have kids since all apts and houses in good school districts here are more than double so expensive!
    I can not gice you any advice, but feel that if you really would like a house and plan to live there for more than 10 yrs you should buy. BUT maybe have to buy a smaller one than what you'd prefer. And then maybe either switch or in a couple of yrs "extend" ("reconstruct"). we have friends who bought a fairly small house in the area they wanted to live. I think it was a bit more than 70 sq meters which is not ig for a house. But that was what they could afford at that point (not feeling as if they had to huge depth) and a few yrs after they started to bulid one new wall inside to "create" a new room for their second kid. And even some more yrs later that extended the house with an extra room added, so now it's bigger. I think they now have a beautiful house but without the initial super loans that so many others start out with. Just because they kind of "made their house" the way they wanted little by little.
    And regarding space. Well, as a New Yorker I have nothing more to add. Here EVERY NORMAL family live in shoebox size apartments and well it's not optimal but it actually works and we are pretty happy. ;-)
    Wish you the Best of Luck now!!!!!!!!

  2. If sweden sets off the next wave in the financial crisis, I'm going to be very dissapointed.

  3. Neither fairness or low prices are the objectives of a market economy, unfortunately... Obviously you want what too many others also want! Maybe you should start looking outside your area of preference, either with regard to size or location? I have my own business and work from home as well, and I try to think of at least 2000 sek of our monthly cost as an office lease. Also we opted for a house in a less popular area, which turned out to be great for us once we got to know it. We put up a huge curtain across the spacious living room, so that we can make it into two sections when needed. One section is for the kids, with toys and a big play mattress - which also doubles as a guest bed! The kids love to use the curtain for their "theatre shows". I actually like the fact that still, though they're 8 and 10, they love spending time in the living room - it's where we all hang out together. Letting the kids share a room is also an option. I hope it works out for you!

  4. @saltistjejen - I don't envy you the NY/NYC housing market that is for sure! I grew up in that neighborhood, and watched the craziness of the McMansion boom as well. I am glad I don't have to qualify for a NYC co-op, their requirements can get really crazy!

    @Youma - You & me both

    @anon - Don't expect it to be fair - but having just watched multiple housing markets implode, I am not happy about having this market be the market I am looking for houses in. My post was meant to be more about how this market is crazy, and while I like to believe it won't fail, I don't think I believe enough to borrow all of the money the bank is offering us (and never pay it back). I also think in general it is screwing my generation here for a significant amount of time, because so many people will be paying back so much money for so long. Yes, the Swedish market is not the same as the US & Spain, most of us are buying homes we live in, not rent out or speculate on. But the combination of low interest rates, an almost elimination of property tax, no ability to lock in a mortgage rate for more than 10 years (And nobody actually seemingly locking in mortgage rates for long periods at all, at the encouragement of banks (where did we hear that song and dance before?) and a rare few amortizing more than 25% of their loans -- to me? Seems like madness that could end very very badly for many people-- but eventually I may just have to suck it up.

    And yeah, I am of the mind that if I am going to be paying these insane rates, I would really like a house I want (or I will get something significantly cheaper and turn it into something I want -- but the fixeruppers here are also insane...)

    Also I have given up my dream of a Master bedroom/bathroom suite. I will have to wait for that until my company goes public ;)