NY Times:
It is a measure of Spain’s giddy construction excesses that 250 row houses carpet a hill near this tiny rural village about an hour by car outside of Madrid.
Most of these units have never sold, and though they were finished just three years ago, they are already falling into disrepair, the concrete chipping off the sides of the buildings. Vandals have stolen piping, radiators, doors — anything they could get their hands on.
Those few families who live here keep dogs to ward off strangers.
Yebes is hardly unique. The wreckage of Spain’s once booming construction industry is everywhere. And much of it sits as bad debt on the books of Spain’s banks, which once liberally offered financing to developers and homeowners alike.
Just how big a loss the banks are facing is unknown, at least publicly, and that has investors worried — the cost of financing Spain’s debt rose 18 percent in the last month alone. But the potential costs of failure go far beyond that. Spain’s economy, the fourth largest in Europe, is orders of magnitude bigger than Ireland’s or Greece’s, and a bailout of its banks could be far more costly, an event that could push the government into default and end up dooming the euro itself.
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You get the feeling that neither the banks or the developer did any market research to determine who would be interested in buying these homes. There was a similar problem in Ireland which also has some new ghost towns. While US banks have a big inventory of homes they are mostly repos from buyers who were sold homes they could not afford. That was mainly the fault of Democrats who required the banks to make bad loans. Spain and Ireland do not have that excuse.
Image via Wikipedia
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