The Housing Market Is Nuts
nuts.logical.li
nuts.logical.li
I think this is a key detail people often miss. In other words a particular job in a particular neighborhood is great but if it can only be accessed by a small number of people in that neighborhood then it's quite a different dynamic than if a whole metropolis can essentially work and live anywhere within commutable distance.
And there are secondary components of this.. for example access to people who provide child care is easier in a well integrated metropolis than a federated byzantine instead of neighborhoods.. and childcare, school access, secondary care options are all critical components similar to housing hosts for families
Only suggestion is to ease the reader’s journey by telling them the entire journey as a summary of front. Not a tldr but a paragraph or two “overview” with the key points and conclusions.
Like, did you write this in another language and use LLMs to translate? Write an outline and LLMs wrote out the rest? Write this amount of text that was then edited by LLMs?
This text was drafted by myself and Claude Code "improved" the English, with lots of interference and rewriting from me - I can see that you do not like the "improvements" and maybe the overall result is not as good as it should. Not being an English native it is harder for me to judge (it does look OK to me) but this comment of yours is important.
I will consider rewriting this calmly. But it was important to get that data out - we have a social emergency in several countries.
(Also, your English is clearly very good, and doesn’t even need a cleanup.)
I have come to loathe the posts from people who are so filled with AI angst (hate) that they're looking to jump on anything they can. I would ignore the previous suggestion.
I can see at least four ways how this is happening today:
(a) Allowing private equity to accumulate large swathes of housing. No explanation needed. These purchases are made to turn a profit, and they will do. Whatever that takes: bribe, extort or steal.
(b) Banks giving individuals cheap financing for a second, third or fourth house. This was very common in the Netherlands. I.e. if you're reasonably well-off, a bank would give you a huge % loan for your second house while you still haven't paid off the first one. Your first house becomes a rental that pays itself off, and you pay off the second with your earnings. This effectively means that lower-income households are forced to rent perpetually.
(c) Counting the purchase of a house as an "investment" towards Golden Visa eligibility. This is very common in Portugal and Greece and effectively sets a floor for house prices. Everything else is then adjusted accordingly.
(d) Short-term rentals in popular destinations. Enough said.
TFA is essentially using number crunching to whitewash decades of bad housing policies. I'm not in a position to tell whether that was the goal, but it definitely is the result.
Imagine housing in these markets was like cars (or housing in Japan). Houses are worth less every year, no one wants to buy a old house for full price, housing is relatively plentiful + cheap, rents are low.
Private equity wouldn't buy houses even if there was financing since they would lose money. No one would keep their first house and rent it out as they accumulate more houses, because they'd lose money.
In fact if you started doing those activities it wouldn't change the housing market, you'd eventually lose enough money that you would have to stop.
Given a fixed housing supply, increasing demand, and no ability to increase the housing supply, removing market speculation may produce some changes in price, but they're not causing the underlying lack of houses, merely profiting off of if. An effective way to drive them out is to build a lot of housing (aka fix the market).
The housing supply is naturally inelastic, meaning, the ability to increase it is limited. For example, currently a significant part of the US construction capacity is tied up in building data-centers, increasing it is near impossible at anything approaching a reasonable cost, and even if it was possible, doing it would create problems in the future - this is a proven fact, not a conjecture.
> removing market speculation may produce some changes in price, but they're not causing the underlying lack of houses, merely profiting off of if.
You aren't connecting the dots. As it is today, both housing and data-centers are largely driven by speculation - on a mass scale. You severely underestimate the scope and role of speculation in today's markets - yes, we can dream about some imaginary world where competition, demand and supply solve everything but the reality is very different.
I finally got a job in a MCOL area and it's such a breath of fresh air. Yes my TC is lower, but for <$4k a month, I have a house in a nice area 30 minutes from the office AND I'm allowed to have pets. In the Bay Area or NY, pet friendly 3000sf houses like mine are rare, especially if you're filtering out long commutes and high crime areas. At best, I'd be getting a $2.5M mortgage or spending $8k on rent for a smaller house with a smaller yard, and my commute would be 90+ minutes a day.
It absolutely sucks that so many companies think it's impossible to open smallish offices in MCOL/LCOL areas that would transform their employees financial lives. Guess they're always optimizing for overhead cost per employee.
the number of months of gross salary needed to buy a single square metre (0.86 - 1.8)
18 years to repay, Amsterdam, 50m²
Yes, salaries in NL can be much higher but it's still a bleak picture. Almost every young professional is priced out of the market.
Author here.
From your numbers, the Amsterdam housing purchase effort is 8600 / 2600 = 1.91
But the article calculates averages at a NUTS-3 region level. It would be region NL32B (Greater Amsterdam) where the ratio is 1.1. That explains the difference.
As for the mortage:
8600*50 = 430k.
As you say, this does not fit repayment in 30 years for a single payer receiving 4500 gross.
It is borderline doable in 40 years with 3% interest rate.
So reality in an area with this price is different from the reality of the surroundings. This gets averaged at NUTS-# level. But hey, Eurostat averages it at a country level. So this is progress, I guess.
But people don't live in most places - most people leave in the worst places, when it comes to purchasing houses.
The number of years calculated per NUTS-3 region does not include the years one needs to save for the 10% deposit plus taxes plus safety cushion. It is written in the article.
Cities are attractive for people because they present more opportunities: more things to do, more people to meet.
More people == more commercial opportunities, which translates to jobs.
I then examined where they were opening their offices in a wave of rapid expansion. Almost invariably at the most expensive areas of each city. When I questioned that to the people in charge of their location strategy, they said "that's where the young people want to live".
These were rental-heavy, 1/2 bedroom rich, ultra gentrified high cost locations. As the offices grew and the "young people" started getting married and buying property, they would have to move far away.
We see some of that effect with places like State College PA with it's growth, decent job market, a couple hours from a larger city (Pittsburgh).
I think it's a bit of everything, but if we decentralize too much, it becomes less energy efficient, and energy costs more in Europe compared to a lot of countries. If you decentralize, you need more fuel to get groceries, to go to work, to heat your home etc.
There is a good middle ground. Probably by creating more jobs and flats in cities with 50-200k inhabitants.
They also often don’t match reality either.
yes, but there are levels to the amount of mismatch
National averages are a terrible tool. Isolated per-country indexes are insufficient. No statistic is perfect, but the European authorities could - and should - try harder.
Forgot to point that I am the author of this data story.
It's the wrong statistic! Either you earn enough or bought early enough to afford the house and the mortgage is not a financial burden, or you're not getting the mortgage.
Heck, even in my life my 2700 euro mortgage (of a very regular house) isn't a financial burden. My partner and i just about make ends meet. But we can't divorce and we can't get cancer. If that happens then yes, it's back to our parents with a child at 38-years-old.
This article is illuminating in that it demonstrates something many of us may have been thinking for a long time; one of the big drivers has been job concentration. I guess the life-hack takeaway is to find a great job not near an urban center? Remote work from the sticks and you're rich!
This guy lost me here, with the assertion that increased equity "hurts" / vanishes.
Presumably its AI slop? It's certainly a lot of charts / "effort" that have gone into analyzing some random datasets with no real revelation or conclusion.
It's still money out of pocket each month, even if equity increases. I assume it "actually hurts" because it's the majority of the payment.
Exactly.
Building equity in this case is not a luxury, unlike what the Eurostat burden indicator thinks. Given the cost of renting, buying at very high prices is sometimes the only option to not face an even worse outcome in the future. There is simply no good option for millions of europeans.
I don’t know that the phrasing is great and it’s good to build equity as we both understand, but in terms of your monthly paycheck or ability to afford to do or buy things it seems crazy to me to only measure the interest and not the entire payment.
> Presumably its AI slop? It's certainly a lot of charts / "effort"
Even if is AI slop (and as a policy please stop insinuating something is AI slop) it’s not much worse than the torrent of dumb human only bloggers who are making asinine posts about how the AI bubble is 0vER.
The story is talking about the portion of your monthly budget occupied by housing. If you only "count" the interest on a mortgage payment, then you're ignoring a material amount of money out the door every month, and that would render the whole dataset questionable.
The only honest way to discuss "is housing too expensive?" is to ask "how much do you pay someone on the first of the month to live in your home or apartment?"
This can take several forms, but the majority are either:
* "My rent is $X;" or * "My total mortgage payment, including interest and principal, is $X;" or, in some cases, * "My total mortgage payment, including interest and principal, is $X, and I also have to pay $Y in condo fees / HOA fees / building fees."
That last category might just be an American thing; I have no idea. I just know that many if not most condo developments/buildings have an additional fee you have to pay even if you own your unit outright, and it can be significant.
- The freeholder (owner of the building itself) is in charge of the maintenance of the building, usually delegating it to a management company
- However the freeholder is not responsible for _paying_ for maintenance, that's what service charge for the flat owners (leaseholders) is for.
- So the freeholder has no incentive to look for a cheap management company, or to do preventative work, as they don't pay for maintenance
- The management company does not have incentives to be cheap and do preventative work either, as their client (the freeholder) is not the payer.
- Where it gets really fun is that management companies actually _give a kickback_ to freeholders on maintenance costs, to get their business. So when leaseholders are charged £100 for maintenance, £2 of that goes back to the freeholder!
- So the freeholder actually has an incentive for maintenance to be _expensive_, it's a source of income.
When you have countries much larger and wealthier than you, they will pump the housing market to unsustainability, driving the locals out of their houses.
But hey, GDP and the waiter wages have increased, so there's that.
They've been full for quite a while, turns out land in desirable places is not infinite and there's no supply. So don't increase demand by allowing wealthy foreigners to buy out everything.
This is true of every location, of course. Major metros are just where the population, and acceptance of density, is highest, so it's the obvious example to look at.
I’m not sure about the effect of “wealthy foreigners” since if they are wealthy they are probably competing for more expensive properties that your school teacher or grocery store worker aren’t.
But you’re on to something here which isn’t being addressed which is the effect of mass migration to some of these countries. Obviously the migrant workers too want to and gravitate toward the cities with the most jobs, which would place additional pressure on housing prices since they join an already hyper competitive pool of buyers.
Same goes for Europeans moving to East Asia to live the high life and causing similar problems for the locals. The only difference is that, unlike in Europe, East Asian countries have some guardrails on property ownership to avoid being overrun by foreigners. E.g. you cannot own land, and most houses are on a lease.
The following expat groups buy the MOST property in Portugal, according to the country's housing transaction stats:
1. Brazil (9,808 homes purchased)
2. Angola (4,145)
3. France (3,765)
Brazilians accounted for almost 1/4 of purchases by foreign-buyers.
If we focus on just luxury property demand in Q4 2025, it is: UK, USA, Germany, France, Spain...
Just for the record.