The Spanish Housing Bubble
May 10, 2009, 07:59 PM
A+
|
a-
Print Friendly and PDF
Whenever I write about the California-centric origins of our economic crash, I get comments saying to the effect of, �Hey, what about Spain? They had a huge Housing Bubble in Spain, too. Spain is totally different from California, yet the same thing happened there.�

I was at a charity event held at Cal Tech yesterday and I got talking to a Spaniard from Andalusia in sunny southern Spain. I asked him about the Housing Bubble and Bust in Spain. He said that immigrant retirees from Northern Europe with big pensions bought up all the good land near the coast, so the locals started buying up houses on the bad land in the inland deserts on the logic that, hey, it was Spain, Spain is a Mediterranean country, so anywhere in Spain must have a Mediterranean climate, so the price of houses must go up forever everywhere in Spain, no matter how hot and dusty.

I said, that sounds a lot like the Bubble and Bust in California’s Inland Empire.

He said, Yes, very much so.

He went on to say that Spaniards can deal with hard times better than Americans can. So much of the economy is off the books in Spain in good times or bad that you can always get by by moving in with your relatives and doing unreported odd jobs for your uncle or cousin-in-law, even if you are officially broke. American nuclear families aren’t as resilient, he P.S., I don’t know very much about the Florida Housing Bubble. Was there a big Northern Baby Boomer retiree aspect to what happened in Florida? (There wasn’t in California, as far as I can tell — only the rich retire to California anymore. The Arizona and Nevada Bubbles were driven by the California Bubble, with Californians cashing in their expensive houses and buying cheaper, but unfortunately still overpriced ones, in the inland desert states. Some of those Californians moving inland were retirees.)

Perhaps the Spanish Bubble was like a cross between the California and Florida Bubbles.