I have a dream to someday own a flat here in Madrid City. It wouldn’t have to be in the Old downtown – although that’d be nice in concept. But where would you park if you own a car? Nor would my would-be house have to be within the M30 inner circular city highway loop. But it would be in the city of Madrid itself and not in the suburbs. Afterall, HOW could I maintain my MadridMan persona if I didn’t live IN the city of Madrid?? (okay, now’s not the time to ask me now about BarcelonaMan or GranadaMan, okay?)
First, let me clarify for those not familiar to what “houses” are in cities like Madrid, Barcelona, Rome, Athens, and the like because it causes a lot of confusion with Americans with whom I talk on this topic. Because when they hear “house”, they think a single structure home with four sides, one to three floors, a driveway & garage, maybe a porch or deck, and a yard. In these big European cities – much like in New York City – THESE kinds of “houses” don’t really exist except for the richest of the rich.
“Houses” in European cities are “flats” or as called by many of my American friends back home, these are “apartments”. But the word “apartments”, to me, is deceiving because they’re not always rental properties which, to me, are what apartments are. “Houses” here are one unit within a multi-level, multi-unit building where residents enter their residences through one door on a floor where there may be several other doors leading to neighbors’ residences. These residences may have 1, 2, 3, or more bedrooms, 1 or 2 or more bathrooms, sometimes a basement garage (but they’re rare, except in the newly built buildings), sometimes a balcony or suspended terrace, sometimes there are elevators but not always, and oftentimes your out-the-window view is that of the wall of the building from across the street. THIS is a “house” here in Europe. Stand-alone “houses” as we know them in America are called “Chalets”, a word in many parts of the world refer to a kind of “Swiss Chalet” or a house in the country.
So anyway, for the last year or so I’ve been following the posted flats on Idealista.com, bookmarking flats which fall into my amenity and price range. Each month I check on those bookmarked flats to see if they’re still available and/or if their prices has changed.
In about half of the cases, the prices fall monthly as owners find their homes are not selling at all or the market value is dropping below the asking price for the house. Sometimes prices fall only 5,000 Euros but in some cases they fall by 10 or 20,000 Euros! That’s incredible!!
This is the result of the housing crisis in Madrid, in Spain, in Europe, and throughout the world. I love finding a house online, bookmarking it, and then, 6 months later, seeing that its price has dropped by 50,000 Euros!! And the prices keep dropping. Sure, there’s a bottom to this economic crisis. But “the end” will not likely parallel the recovery of the housing market. There will be significant delay. So even if the economy hits bottom and beings to improve tomorrow, the house price will likely continue to drop for a considerable period of time. Am I too optimistic? If so, please do tell me so.
Just today I toured a house for sale, a very nice house, but clearly out of my price range. I wanted to know how the house looked now and will ask the owner in 6 months time if they have dropped their price. I am nearly sure they won’t be able to sell it at their asking price but some people still think they’re living “in times of old” where you could ask nearly any price in Madrid and get it because the prices were rising so fast and a lot of people made a lot of money. Now the opposite is true. The house prices are dropping like stones and no one is buying because A) potential buyers have lost their jobs, B) banks won’t lend the necessary amounts, C) buyers are waiting for the prices to drop even lower, and D) potential buyers can buy a new house until they sell their old house – which they can’t do unless they drop the asking price below what THEY paid for the same house just a few years before, and no one wants to do this.
So is the end in sight? Not yet, I don’t think. Those who have cash ready to spend – and/or those who have banks ready to lend – are going to get some real bargains. But are they really “bargains” or are they merely a stabilization to fair pricing within the market itself? For years house prices were so unnaturally inflated and houses were still being snatched up by speculators and investors. Not anymore. Now those speculators are stuck, filing for bankruptcy, or just waiting for the next housing boom.
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