Supply & Demand but No Transactions
I just read an article in the Economist on the Spanish housing market. It seems there is tremendous demand. The supply is huge. The builders are still building and people are not buying because the price is going down so fast. The credit crunch in Spain is not from foreclosures. The rules on home lending in that country have prevented that. The problem loans in Spain are with the builders who have too much inventory and whose inventory is too expensive.
Another major problem there is unemployment. The article did not discuss immigration and the problems developing there. Spain has one of the easiest immigration policies in the world. It has long been a haven for people from Latin America and North Africa. I know that in Latin countries remittances are really an important part of the economy. Who loses the job first the native Spaniard or the Immigrant? Considering that building will probably come to a screeching halt very soon, I can’t help but think the immigrants will be the first to go.
Spanish builders and developers have been working in Latin America and Eastern Europe for several years now. What will they do as these markets dry up?
David Segrest is a REALTOR in Charlotte NC. His website is http://www.segrestrealty.com His email is david@segrestrealty.com
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