It’s not secret that money talks and.. Well, you know the saying. Nothing could be more true in the international real estate game than the fact that economic decline brings on desperation for those holding mortgages. For Spain in particular, banks there appear to be in a frenzy to unload bad paper. Want a great property investment? Check out that Spanish villa you always dreamed of.
Spain’s economy, not unlike that of Greece, is pretty much in a shambles. Banks there, left with hundreds of building projects unfinished, and millions of unsold homes on the back burner, have been forced to offer 100 percent financing. These loans, basically for anyone with a job, spell a boom market for any buyer with cash in hand, or even buyers without. Prices are being slashed as bankers try and get out of the business of being commercial property lords too. While some say these 100% mortgages are a repeat of the same mistakes that brought on the housing bust worldwide, most others are lined up to get into the game.
Spain currently has over 1.2 million new homes no one so far has been able to afford. Considering the investment by banks for this segment alone, it’s easy to see how come those left holding the proverbial bag there might consider any type of “creative” negotiation even, just to remain afloat. Still, with almost 10 percent of Spain’s bank loans in arrears one has to wonder at the sanity of selling not only at tremendous discounts, but with ever more lax qualifying standards. While no one is reporting of substandard qualifiers yet, it seems logical to assume some banks might jump at any chance to get our of red ink.
With prices down over 23 percent since 2007, most experts say Spain bankers will have to chop that figure to something over 50% to get out from under. And, if bargains and opportunity come with distressed economics, so too instability and potential disaster cohabit where Spain is concerned. Record unemployment, an ever shrinking economy, protests, all this and more make things very difficult for not only the government and banks there, but for the real people on the street. The EU is, in fact, very worried about the fate of Spain at this moment.
All in all though, Spain and the Spanish people have overcome far worse. For the long term investment minded then, snatching up bargains is a reality divergent from the woes of European banks. This article reflects just how severe Europe’s investment players took it on the chin in 2007, so Spain bankers divesting themselves of bad loans, however they can, is just a fact of the whole matter. What does that mean for you, the would be Spain land baron? An opportunity, of course.
For an instance, look at Mar de Canet’s 308 units up for grabs. The New York Times brought to light these bargains, choice vacation digs for basically half price. That article speaks of literal “ghost towns” in Spain, once thriving developmental glee now left waiting for tumbleweeds to blow through. There are more pluses and minuses though, obviously. On the plus side, $140,000 gets you seaside new construction with two-bedrooms, two-bathrooms, 900 square feet, plus a balcony minutes from everything. Rent the condo for over $700 a week in Summer then…
The down side of condo bonanzas though, junk properties at developments that never should have been, there’s a lot of that going on too. The best way to come out ahead always being doing your research in person and right, can eliminate the bad taste of a bad investment here. As for the stability of Spain in the short term? It seems like a better than 50-50 chance the country will not kick out foreign investors any time soon.
Check out sites like Bromley Estates and Sotheby’s for pictures and info on some of the developments and deals available in Spain. These agencies even list properties financed at up to 107%, if you ever heard of such a thing.