The housing situation in Sweden - Part I

I just typed a full post, one of my longer ones and more like an essay than a blog post, then accidentally deleted all the text. Unlucky for you, it's still fresh in my mind, so here goes.

What you are about to read is my understanding of the housing situation here in Sweden. It's a textbook example from Microeconomics 101, full of supply, demand and government regulation creating ineffieciencies in the market. Obviously it has captured my full attention. On top of that, it's so different from the U.S. that I couldn't help but want to understand how and why everything works the way it does. Now that I know what I know, I can't help but share, just because everything is so different from the U.S.

To begin, Miranda and I are still renting from my coworker. The housing market in Sweden hasn't fallen like it has back home, but it just started to slow down this summer. My coworker is more than happy to continue renting to us until it becomes a seller's market again, and we're pretty happy just to have a place. Ultimately we would like something larger than a 440 square foot studio, but at the moment we'll take what we can get. Miranda and I have also decided that we'd like to live up in Uppsala, 40 minutes north by train, where she goes to school. We actually decided that back in June, and have been keeping our eyes open for apartments ever since. As of now we still haven't found anything.

For the most part, city housing in Sweden is made up of apartments, and just to get it clear, an apartment in Sweden is the same as a condominium in the U.S. There are some apartments available to rent, but the Social Democrats, the controlling political party for the majority of the last 75 years, have passed a lot of laws to protect the renter, which in the end has driven landlords away. The main law is that no person can make a significant profit through property rentals, and that the rental price must also be fair to the renter, with the fair price being monitored and approved by the city government. In that case, why would a landlord want to maintain a property without making a profit? Consequently, most rental units are owned by the municipality, and many are being privatized and sold as condos as most towns would rather focus their energy on more typical city responsibilities, like schools and hospitals.

All of this has lead to a tremendous shortage in rental units. Most cities have a cuing system, and once you get to the top of the list you get first choice of the next available unit. In Stockholm it takes about 4-5 years from the day you enter the cue to the day you get offered an apartment. Due to the price restrictions the rent is very cheap, so apartment turnover is very low, which doesn't help the situation at all.

You would think that finding an apartment in Uppsala would be easier, considering there's a university with 40,000 students, but apparently Swedish universities aren't allowed to have their own housing, so the school depends on the city and private industry to provide housing. As stated above, there isn't much direct incentive for either the city or private industry to take on this role. Most housing that is provided is single-occupant, 200 sq. ft, shared bathroom, etc. Typical student room, and not something that would really work for Miranda and me. Anything larger takes about three years on a waiting list to receive, or perfect timing to find. At the moment our waiting list days are pretty low, and I guess our timing has been less than perfect.

So that's the renting situation. Many newcomers to Sweden tend to sublet for a very short period, and after learning just how screwed up the housing options are, opt for buying. There are some pretty goofy rules around subletting, so people buy mostly because of the lack of alternatives. This has been enough for today, so we'll touch on buying tomorrow, and subletting on day three. Trust me, we haven't even touched on the fun stuff yet.