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Comment by tacostakohashi | Hacker News Reader

> Worse, the statistic counts rents and mortgage interest but not mortgage repayment. A household paying €1,500 a month on a mortgage - of which €400 is interest and €1,100 is principal - shows up as spending €400 on housing. The other €1,100, the part that actually hurts, is invisible.

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.

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Not sure what is confusing you.

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.

yeah most countries have version of that: service charge (and ground rent) in the UK. Not usually supposed to be very expensive, but service charge can be predatory: in London it can be in the thousands of £ for no apparent reasons. There's all sorts of messed-up incentives driving up this service charge, too:

    - 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.

It's incredibly fucked up, I don't understand how it's legal. Add onto that building insurance shenanigans and you get service charges of £3k or £4k for a one-bed flat (I've seen up to £8k). Which makes the flat entirely unsellable of course, so the flat owners are stuck in sometimes _very_ desperate situations.

Don’t forget property tax and insurance.

> The other €1,100, the part that actually hurts, is invisible.

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.

> It's still money out of pocket each month, even if equity increases.

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.

You either pay your mortgage down or you pay your landlords down really. That part is basically even, but at least you get to own the house eventually in one case.

> This guy lost me here, with the assertion that increased equity "hurts" / vanishes.

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.

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