@R.M. The fire insurance company takes over the house and makes a guaranteed profit on its balance sheet because it can never be lawfully sold at a loss. The balance sheet of the insurance company will continuously improves as the mark-to-market "value" of that house keeps on increasing. The condition of the house doesn't matter, it must never sell at a lower price than it was bought for. It is that simple!

@pjc50 Isn't there an important difference between price controls on consumer goods, and price control on durable assets and paper assets, such as houses and stocks? Government price controls of the latter, by imposing negative interest rates, is what totally dominates the price level and price trend in modern times, obviously. What if people lease or rent? That still won't make the housing bubble collapse under this law, would it?

@ErwinBolwidt "It really depends on how the law is formulated" So economic theory hasn't much to say about the consequences? That theory assumes that people commit crimes to cheat any law, so regulations are just random irrelevant noise with some avoidance costs depending on how many police the government employs?

I'm talking about PRICES here, not VALUES. When did you last hear a macro economist use the word "value"? (At least in its actual meaning). Macro economics is the accounting of simply adding up all the price tags one can find. "Aggregation". The larger the sum of them all is, the better.

@immibis Why would a bank ever want to sell any of the empty houses it owns after a customer defaulted on the interest payments? The empty house is a profit on the balance sheet. It's mark-to-market can only keep on increasing. A stronger banking balance sheet helps lowering the interest rates further and drives up housing prices, which just increases the balance sheet ever more.

@ErwinBolwidt Then why have any economic regulations of anything at all? For example, if paper moneies are cheaper to produce than digging up gold, then everyone will print their own monies. Is that how it works, that government IS irrelevant, and not only SHOULD be?

@SalvadorDali Basically, it is a perfect asset on the balance sheet, since it cannot legally lose value. Those who want to move to another house simply have to barter with a chain of people than can rotate their houses with each other. And each of them will profit from it because they all will sell what they had more expensively, and can thus increase their bank loans, which in itself is profitable since the interest is lower than the cost of living and the house investment impossibly can become a loss. Some "cannot", that's how it is already today. Next is: Status quo or crash?

But each and every house in Sweden is very much more expensive now than it was 20 (or 2) years ago. It's more here and less there, but there exists no area that's in less demand than before. Automatic profit from maximizing ones own debt at ever diminishing interest rate, and the guarantee that every house bought never could result in a loss. Banks don't need to sell or rent our empty houses, their legal minimal valuation remains intact on the balance sheet. And in no case did that legally minimal valuation decrease, since it never was sold for a price lower than the debt it was mortgaged for.

In Sweden the government since years is already desperately trying to get some temporary container houses built and to force small garden house owners to rent them out. But nothing of that has worked, because 50 year old "ABBA"-regulations require top quality only of all housing everywhere at any cost always everywhere with no regard to anything else. The only thing being built are a few luxury houses and a concert hall (and thousands of gypsy tents). You can safely ignore the possibility of an increased housing supply! The laws truly have enormous effect, they cannot be ignored by anyone.

Instead of demolishing the houses, the banks would simply hold them empty since they cannot legally sell them. It doesn't hurt their balance sheets at all since the government, with the force of law, guarantees that they never can be sold at a loss. Best bad loan ever! Just let it sit there on the balance sheet. Houses empty or not, who cares? The crash was avoided, my law succeeded. Maybe the bank could rent them out at corresponding 0.8% mortgage rate. Where else would people try to live? Sweden is a cold rainy place.

How does it really connect, or play out, that an asset could become depreciated if it is impossible to sell it at a depreciated price? If a broker finds (or if they find each other on social media) A, B and C such that A wants to move to B and B to C and C to A, and each of them adds $100,000 to their purchasing prices. It is just a roundabout and everyone involves and the bank all profit from it. No risk for any crash. Wouldn't my suggested law make safe that which is now a fear and a real threat?

Whenever did you hear a macro economist use the word "value"??? No, they are cash counters. Bookkeepers of "economic activity". But what I try to ask here is if a housing debt bubble crash wouldn't be made impossible if no one could sell his house to a lower PRICE than it was bought for? Regardless of values. And if it is bad, what bad things would happen?

@MontyHarder No no no. The banker gives the borrower the loan for free for 10 years, with the house as security. And 20 years later the banker has a 4 times more valuable house as loan security. +300% profit in case of default, and +400% basis for his 0.8% loan renewal rent. At least that is what has happened. I'm asking about forbidding sales at lower prices, in order to guarantee an eternal continuation of this lifelong bubble. And I cannot prolong this comment-chat anymore, sorry!