The Housing Pain In Spain Has Not Bottomed

Tyler Durden's picture

The pain in Spain is reaching the upper-class. Foreclosures has previously disproportionately affected lower-income immigrants but is now spreading to formerly well-to-do families, as Bloomberg Businessweek notes that they are running out of ways to pay mortgages in a deepening recession. Home price drops are re-accelerating as "repossessions are encroaching further into the city centers, like an overflowing river."


The path to this end sounds very familiar as "Bank managers, who had aggressive targets to meet, did all they could to lend to those who wanted to carry on buying into the bubble" and the saddest case of all as parental guarantors were used to spread the risk as "The kids lose their homes, go live with mom and dad and then mom and dad lose the home that they worked all their lives to pay for because it backed their children’s debts."

At the peak of the housing boom in 2007, purchasing a home in Spain cost 7.7 times a family’s annual gross income on average, compared with 5 times in the U.S. Labor market reforms, under Rajoy's austerity measures, making it cheaper to lay off traditionally secure workers are expected to accelerate defaults on retail mortgages. The situation is grave and summed up sadly "These people completely lose their purpose in life, everything they had or will ever have in the future will go to the bank."


(h/t @Not_Jim_Cramer)

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Lohn Jocke's picture

It's bottomed here though, right? RIGHT?!?

krispkritter's picture

The only way the Florida market can get more underwater is if Al Gore turns out to be right...

GetZeeGold's picture




There's always room for it off with a little more pain.

Middle_Finger_Market's picture

Parents as guarantors = long wayyyy to goooo. School boy error really. 

Sudden Debt's picture

The people in Detroit like to think so, yes.

Lohn Jocke's picture

I hear that there are plans for a Zombie theme park to go up in Detroit. A dystopian run down neighborhood will be filled with meth heads for an adventure that the whole family can enjoy!

Sudden Debt's picture

do you get to shoot the zombies?

dugorama's picture

didja realize that in Spain when your house is foreclosed the debt is still not discharged?  In other words, even after you've been evicted, you're still making payments.

bigdumbnugly's picture

"These people completely lose their purpose in life, everything they had or will ever have in the future will go to the bank."


over here it just goes to the ex.

Sudden Debt's picture

and what's left goes to ex n°2...

gamera9's picture

Fools just stop paying the mortgage, live rent free for years, then get a 400.00 a month modified loan. Oh you're talking about Spain, never mind.

kito's picture

when are the spainards going to show some cajones???????????........................

Wizard of Finance's picture

Cojones, you mean?

How is having more cojones gonna help with their mortgages?

Phrnsck's picture

Only Swedish show cajones (drawers)... Spaniards need to show some cojones...

No Euros please we're British's picture

Okaay, so we're not talking Swedish meat balls? Right?

timbo_em's picture

As long as mark-to-myth (or long-term value estimated by the troika) is still en vogue and legal, all should be fine. Plus, Spanish politicians argue that this decline is only temporary and there is a hockey stick recovery right around the corner.

andrewp111's picture

Everything goes to the bank, and everything in the bank goes to "money heaven" when the bank fails.  In the end, nothing is left. Goldman Sachs or George Soros buys up everything for pennies on the Euro, and becomes the Supreme Landlord.

The situation is grave and summed up sadly "These people completely lose their purpose in life, everything they had or will ever have in the future will go to the bank."

LawsofPhysics's picture

What is wrong Spain?  No Fed to buy your ponzi bullshit paper and mortgage-backed securities?

Let me know when it's time for the guillotines.  Nothing will change until then.

krispkritter's picture

I beg to differ on the loss of purpose: "These people completely lose their purpose in life, everything they had or will ever have in the future will go to the bank."

Gerald Celente: “When People Lose Everything, They Have Nothing Left To Lose, And They Lose It” I expect that the 'pushback' against banks and government is going to be epic when food is too expensive and/or unavailable...wonder how far we are going to be behind them...

Col_Sanders's picture

"I expect that the 'pushback' against banks and government is going to be epic when food is too expensive and/or unavailable..."

Yes - At that point, the peasants will truly be revolting...

Cognitive Dissonance's picture

"These people completely lose their purpose in life, everything they had or will ever have in the future will go to the(ir) bank slave masters."

Sounds uglier when I use the words "slave masters" doesn't it? Welcome to the new plantation......(pretty much the) same as the old plantation. Only now all races are welcomed.

Please explain to me how it is that simply because our accommodations have been significantly upgraded, we get to vote for our "representatives", and we have a greatly expanded freedom of choice (rather than simply freedom) that we are that much different from the founding fathers slaves?


eigenvalue's picture

It is often too easy to blame somebody else rather than oneself. In the case of those poor Spaniards, did the banks put a machine gun to their heads and ask them to purchase large homes? 

Cognitive Dissonance's picture

Not at all.

Real hard though to shake the slave mentality when we have been raised as mental, physical and emotional slaves from birth. The brilliance of the conditioning is that we convince ourselves we are not what we are........with a little help from our masters.

I am reminded of this every time I am told by an "authority" that we must "help" our multinational corporations with grants, tax breaks and bloated contracts or they will not continue to provide us with our slave quarters jobs.

ebworthen's picture

Coming soon to the U.S.S.A. housing market.

Cramer, paging Jim Cramer...

Shevva's picture

I hear Merkel's visiting next week, should cheer them all up.

Randy Goodnight's picture

I'm no fan of the banks.  Feel sorry for people in distress.  However . . . who twisted their arm to buy at the top of the market?  Who twisted their arm to over-extend?  Same could be said (maybe more) for us in USA.


ebworthen's picture

Who gives Doctors or Lawyers a license?

If a Doctor gives you unecessary surgery, or a Lawyer gives you bad advice, who's responsible?

If banks give loans out to people who can't afford them, and then gamble with mortgage backed securites and lose, why should they be bailed out and why should they not be put out of business or in jail?

s0lspot's picture

Plain and simple. If the State allows it, if northern european money flooded the markets, if the banks kept their evil cooking hidden, if the job situation was looking good, then people felt confident taking the risk that is a mortgage.


IT IS ONLY SLIGHTLY THE PLEB'S FAULT! I'd say 30% to us, for disdaining citizen intervention and transparency overlook in the democratic process, BUT 70% to the State and Financiers for making laws & creating a situation where THEFT is the NEW MORAL NORMAL. Let's not get all protestant in here and start the "holier than thou" blame game on the Spaniards, Greeks & southerners. May I remind everyone that the most pro-capital countries in the western world, US-UK-JP are looking not just at some random turd hitting the living room's fan if not the whole bloody septic tank hitting the god-damned supersonic turbojet fan...


TrustWho's picture

The entity that creates the rules of the game is THE GOVERNMENT. The real enablers and crooks are the political leaders who take money from businesses and create the fuzzy laws (these people are the Godfathers), so the hacks who execute the theft never go to jail. Am I upset with the hacks (immoral corporations), you betcha; however the true evil resides in local, state federal legislative and judicial houses.

Has David Stern been put in jail?  

MillionDollarBoner_'s picture

Follow the cascade:

1950's - one wage earner for a four-person family. Mortgage paid off in 25/30years. Comfortable retirement.

1960's - one wage earner (plus overtime) for a four-person family. Mortgage paid off in 25/30years. Comfortable retirement.

1970's - two wage earners (plus overtime) for a four-person family. Mortgage paid off in 25/30years. Modest retirement in own home.

1980's - two wage earners (plus overtime) for a four-person family. Mortgage not paid off - has to be rolled. Sell home on retirement for a modest retirement experience in a retirement home.

1990's - two wage earners (plus overtime) for a four-person family. Mortgage interst-only basis. Sell home on retirement for a modest retirement experience.

2000's - two wage earners (plus overtime) for a four-person family. Mortgage interest-only basis plus necessity to make repeated "equity" drawdowns from housing value in order to enjoy life and send the kids to college. Sell home on "retirement" from main job. Continue working in deadbeat store/Mc-job until drop dead in harness.

What is behind this cascade is the ongoing drop in real earnings I.e. raises not keeping up with inflation. This is the flip side of the increased Gini co-efficient in the developed world: see

So, will one of the smart-asses posting above who think it is the fault of the workers/borrowers/mortgagees kindly explain what the fuck ordinary people were meant to do? We didn't make the world, we just got to live in it for a while. Maybe you have rich Mummy and Daddy but most of us have to work our way through life the best we can and don't have a safety net below us. Nor would we want to leech off our families even if we could.

So, basically, go fuck yaselves ya bankster-lovin' trolls !;o)

The Count's picture

Yes I used to wonder exactly why when I was a kid in the 60's my dad could easily afford a comfortable life for the familiy WITHOUT GOING INTO DEBT (other than a mortgage) and now the situation is as described above. Well, it is nothing else than inflation. Inflation is not only when prices go up, inflation is when you get less for your money. Examples...smaller packages, substituting one ingredient with a cheaper one, having to check yourself in at the airport, you fill up your own gas tank, etc etc. The government will happily play along with these ploys because they want to make sure the 'official' inflation rate stays low to keep the mirage going. And when necessary they will simply change the formula for calculating said inflation. Smoke and mirrors my friends...

Totentänzerlied's picture

Slave morality at its very best. Your masters would like to thank you for easing their masterly burden by enslaving and pacifying yourself, allowing them to focus on the finer things in life while you labor away for a pittance.

If you think like a slave, you are slave. There will always be people willing to be your master. So the only question is, will you let them?

Judging from 5,000 years of human civilization, the answer is an emphatic and unequivocal YES, MASTER!

orca's picture

"Formerly well-to-do families are running out of money to pay their mortgages"
You are not well-to-do if you have a mortgage, period.

Bahamas's picture

That's probably a preview of how the NWO will be inacted. If the final purpose is to abolish all private property and create a global communism kind of Brave New World, confiscation through foreclosure of houses seems to be a very likely step towards that direction.

acetinker's picture

Hey Tyler!

One of the frogs has a Goddam thermometer!

giggler123's picture

All this NWO stuff - At least you have guns to shoot yourself in the States, in ye'old Blighty there is nothing of the sort... :(

youngman's picture

Does anyone know if they did the dumb loans like we did...110% loan to value..liar income no job loans....????


I would love a nice house for 20% of the value...when when when...I know where

Duplex's picture

The banks give us credit which they produce from thin air. We then use this credit in bidding wars raising the price of real estate. When the bubble bursts the banks demand repayment of money they never had in the first place. Our fate is to be debt slaves. (Except for lucky few who read ZH) 

Blond Viking's picture

I've posted this once before, but in view of the subject I thought a repost was justified.


Newspapers and sites like ZH give us the big picture. But sometimes a snapshot (like the photo from the Greek central bank) can say much more than so many analyses. The text below is one of those snapshots. Originally published as a reader comment on Swedish financial daily, I thought it was so good I saved it and translated it into English for wider distribution. This is what a Scandinavian living on the Costa del Sol has to say:


“The banks are on the verge of bankruptcy. They don’t have any money left. They have tens of thousands of flats and construction projects estimated at fantasy amounts on their balance sheets.


A lot of the objects are impossible to sell and have a negative value since demolition is the only option. The rest may have a maximum market value of 20% of the book value.


The banks cannot sell since this would force them to lower their prices and the whole house of cards comes tumbling down.


I have a flat on the Costa del Sol, in a complex where the banks own roughly 80%. Those who bought their flats for cash desperately want to sell, since the whole area is decaying. The banks do not pay the maintenance fees, and have not done so since 2008, in the hope of shifting these accumulated costs onto future buyers. Private buyers who once paid cash and are trying sell have lowered their prices to EUR 30-50,000, but nothing much is happening. The banks have their flats for sale for the same price as in 2007, app. EUR 200,000, otherwise their balance sheets will crash. Those who bought with mortgages have long since stopped paying the banks and have abandoned their flats. Many of those who have left did not even empty their pantries and fridges, so the places are full of vermin and cockroaches.


During the golden years a lot of people from South America came to Spain, got jobs, bought houses and flats with mortgages of 110%, no problem. They were the first to abandon their houses and flats and left Spain. Subsequently many other foreigners and Spaniards have abandoned their overleveraged houses and properties.


Up until 2007, thousands of very poor quality houses and flats were built along the coasts. The aim was to build as much as possible in as short a time as possible, sell fast and make a pile of cash. Now, after a couple of years, it turns out that some of these buildings were constructed on foundations that shift and/or move, so the houses are falling apart all on their own. I have seen examples of people who have paid their life savings for their dream house and after a couple of years they are banned by the authorities from going anywhere near them. It's too dangerous since they have ten-inch cracks and are falling apart.


The banks have also lent money to thousands of houses that were constructed without building permits, where local authorities demand demolition. These negative value properties also have fantasy valuations in the banks’ books.


The banks have lent money to practically anything, with incompetent bank employees granting loans of 150% of a fictitious, out-of-proportion value (since all prices would continue to rise in all eternity and the envelope with the 5% kickback does wonders). Building permits and things like that could just be ignored. Faked building permits could always be bought from local civil servants, if necessary.


The Spanish real estate market is an utter morass, a complete disaster that few people realise the full scope of. Reality is scary, with banks and a building trade that have acted in hair-raising ways. The real deficits in the banks are gigantic, of Biblical proportions!


And the banks have desperately hoped that the market would turn around and a miracle would happen. But miracles don’t happen often and now reality has caught up.


So the Spanish state, which is bankrupt, is going to refinance a bankrupt banking system with money from northern Europe’s tax payers via the ECB?


Somebody has to put a stop to this!”




midtowng's picture

Surely the right-wing will find a way to blame these families for losing everything, and thus when they go out to protest they will be labelled "parasites".

Element's picture

That looks a whole lot like the house price curve of Ireland.

just sayin


Looking at it again all I can say is, whocouldaknowed?