In Spain, traditionally, most people owned their homes. Spain is Nº 1 worldwide in this regard.
Long before marriage, young people started to save towards a downpayment. So when the European Bank lowered its interst rates, there were lots of people ready to buy. Spanish real estate prices rose quickly, making it advisable to buy the flat today rather than tomorrow.
This was how the bubble had started. For about 10 years prices had risen, buoyed by banks who offered longer and longer payback terms.
To build all those houses, Spain had taken in thousands of foreign workers who incidentally added to the demand of housing. They were also easier to cheat since they could not read the mortgage contracts which they signed.
Young people ended up with debts payable over 30 or 40 years even if the bank took their flat back.
There were at least 1 500 000 unsold flats and houses. House kept falling, but "stopping the housing slide involves fixing the economy, and fixing the economy involves stopping the housing slide" (Edward Hugh).
As it turned out, young people had lightheartedly signed away their lives for housing and infrastructures they could not possibly afford.
Peridis: The Eviction -- El País news online, Madrid http://elpais.com/autor/peridis/a/
The courts became loaded with foreclosures of houses and flats that nobody wanted. Where would the evicted families go?
And where did the cash go?
Drawing by Erlich at
It is a good question.
Partly it went into the best roads, train tracks, train stations, airports.
Madrid train station photographed by Daderot in public domain at
More locally, the money went into parks, public buildings, schools, hospitals, and into residential development.
Some of these constructions have become too expensive to maintain, many have become victims to vandalism and theft.
Below there is a photo of a road leading nowhere and lined with building plots, each marked by a street light, each equipped with sewer pipes, power and communication lines.
And Spain, who used to have the most diverse little towns and pueblos, many of them despised as "pueblo feo", now has come to this: