Switzerland: How buying real-estate can kill you financially/reasons for stocks

Besides that, you will need to leave your shared apartment and go looking for one with at least 4 rooms. That'll easily cost you 2.5k-3.5k per month.

So while I agree that Switzerland is a nice place to be while 20-30, after that age it hugely depends on your situation. Got 2 kids and know some German? You might actually be better off in Germany.

The mortgage system we have in the United States--characterized by: domination by the government (in the form of GSEs), long (30 year) fixed rate mortgages with no prepayment penalties, high leverage ratios (up to 19:1 or higher), and low spreads--is not the system used elsewhere. Other countries also tax mortgages and homes differently, and may have far more widespread rent regulations in place.

Rules of thumb and folksy wisdom that was developed in the context of the US system probably won't translate well to a very different one.

I think we've already reached a point where people are starting to complain about corporations getting too big and becoming too powerful.

What drove increases in the stock market in the past few decades has been the replacement of many small businesses by few large corporate entities.

Economies of scale have been a double-edged sword; while they have allowed consumers to purchase non-essential goods and services (such as electronic devices and appliances, holidays, clothing, entertainment...) for cheaper, they have also been responsible for driving up the prices of essentials likes housing, transport, electricity, medicine, education, etc (e.g. by shifting the workforce to big cities where corporate HQs are)...

I think we'll reach a point in the near future when city-dwellers will start running out of resources to support basic living essentials and this will force them out of cities - This will drive real estate prices down but it will also drive down stock prices which depend on that lifestyle.

I think the bubble that we're in now affects every person on the planet so if/when it bursts, the repercussions will be massive.

But I would say that, here is Seattle, and probably all along the West coast, you do have foreign investment, mainly from China, driving up the cost of real estate.

How does one go about calculating that? Or reading someone else's calculations? For real estate prices I can check out the Case-Shiller, for P/R I got nothing.

At the end, I pay fewer taxes (I'm not expecting ever to finish paying my property in Switzerland), I pay less rent and I invest more in stocks.

This (my opinion) is coming from someone who's indifferent between renting vs. owning, so is trying to make the decision purely on financial factors.

Reasons why this article does't apply in the US:

(1) The "eigenmietwert" the author writes about is known as an "imputed income tax". The idea is, most assets generate income: bonds pay interest, stocks pay dividends, etc. A house, which is an asset, always generates economic benefit, it's just a question of the owner (who lives in it), or to a renter (who pays rent). When you think about it, it's kind of absurd that in the US, an owner pays income tax if they rent their house to someone else, but not to themself. Taxes like this are an attempt to level the playing field.

(2) The US allows homeowners to deduct mortgage interest (up to a point) from taxable income. Why you can't deduct interest on credit cards or auto loans, but you can on mortgage interest, beats the hell out of me?

(3) The US taxes capital gains. California, where I live, has a state-level _surtax_ on capital gains. I'm not sure whether the author is correct about Swiss tax treatment of capital gains, but have no reason to think he's wrong.

(4) Interest rates are artificially cheap in the US, as some others have pointed out, due to GSE interference in the mortgage market. There's absolutely no reason Fannie/Freddie should encourage people to buy houses. I also think it's ridiculous that the FHA uses taxpayer funds to let low-income borrowers get cheap loans. Let them rent. Renting isn't some kind of hardship, in many ways, it's better than owning, you have less downside risk and it's easier to relocate for a job.

(5) In places like California, where we have Prop 13, property taxes don't reassess -- ever. So, barring a sale, someone who bought a house 30 years ago pays essentially what they paid in property tax then, now. This encourages exactly what you'd think, people move less and try to stay in their homes as long as possible, even performing absurd tax gymnastics like "one-wall remodels" to avoid having their tear-down "remodels" reassessed.

(6) "1031 exchanges" and other gimmicks let property owners sell their properties--AT A GAIN--and trade up to a larger place, without ever paying tax. How crazy is this!?

(7) In most jurisdictions, property taxes are federally deductible; I get no such deduction as a renter, though it could be argued that my rent is lower as a result (due to the owner's tax writeoff).

At bottom, this stems from a cultural attitude we have in the US (really the entire Anglosphere) that homeownership is some sort of God-given right/natural thing to aspire to. I wish this attitude would change. I wouldn't mind renting but it's hard to justify given how tilted US law is toward homeownership.

LOL, not on the coastal states.

If it's the west coast, people earn 50k while starting house prices are 500k+