Spain Housing Market Tumbles

Spain's housing market is now falling in line with the United States with many recent home buyers now owing more on mortgages than their homes are worth. While as recent as September 2007, the Spanish economy seemed robust and moving at a faster pace than most in Europe, the recent spike in inflation, rise in unemployment and general downturn in the local economies has caused even the government's Prime minister to lower the 2008 economic forecast by -.2 percentage points.  With many suggesting this forecast is still a bit too optimistic in light of the recent downward departure across the country.

A reporter in Madrid, Leslie Crawford writes on January 9, 2008, an unidentified bank manager  near Barcelona stated that families had visited the bank and turned in keys t their home for fear they had no other opportunity to make monthly payments and surrendering keys was the only option to end their indebtedness.  Bank of Spain, however, disagrees and suggests there is enough money to meet demand in spain even if bad loans increase to three-fold the current situation. 

 
Yet, a number of real estate developers state that parties who have placed downpayments on new development projects are backing out of their agreements.  They state the parties prefer to lose the down payment than to follow thru with the purchases.  Many agree Spain's economy will become the main battleground between the socialists and the opposition party in the coming election in March. The country's economic analysts are split between who will reap the benefits of the new sluggish spanish economy.  It appears to be a toss up with election day only a little more than two months away.