I told you I was back!

I basically found a bit of inspiration in Jesus Encinar’s presentation at the last First Tuesday event. Despite all of this talk of crisis, it was nice to be inspired by someone who is a bit “Idealista“, someone who I also consider a friend and a very good person. (We’re soon publish an interview that I did with Jesus while he was here in Barcelona on nuroa’s redesigned blog.) And since he’s always chastising me to get back to blogging, I’m determined to participate more actively in the conversation relating to the Spanish real estate sector, which is currently facing one of its biggest challenges in recent history.

In any case, following is a summary of some of the news stories that I was going to blog about but then got distracted by other stories that inspired me more.

• Increasing the spread: This was the topic of my post yesterday. As El Pais reports, Spanish banks receive money more cheaply each time that there is a rate cut from the ECB (rate cuts designed, in theory, to spur consumer spending), but they charge consumers more to get mortages by increasing the spread from, for example, Euribor + .75% to Euribor + 2.0%.

• Interest-rate Floors: In nuroa’s Spanish-language blog, we also reference La Vanguardia, which notes that Spanish banks have instituted interest-rate floors in many mortgage contracts. In other words, if you originally agreed to a mortgage of Euribor + 1%, with a interest-rate floor of 4%, you wouldn’t receive any benefit from the ECB’s rate cut yesterday. Euribor + 1% would now be 2.5%, but your bank would continue charging you a 4% interest rate, essentially guaranteeing that the bank keeps all of the benefit of the interest rate cut without sharing any of the benefit with the intended beneficiary — the consumer.

• The toughest mortgage conditions in Europe: La Vanguardia reports today that over the last 5 months Spanish banks have instituted the toughest conditions in Europe for getting a mortgage, and that Q4 2008 saw a sharp drop in the number of new mortgages.

Other interesting real estate news:

• Real estate sales in free-fall: According to the Spanish Ministry of Housing, Spanish real estate sales decreased by 32.55% in 2008 to 584.464 transactions. Second-hand homes fell by 45.6% (231.038 transactions), while new homes dropped by 19.2% (333.426 transactions). In Q4 2008, 34.7% fewer homes were sold, 74.970 of which were new homes (30% less) and 50.449 were second-hand homes (40.6% fewer). Cataluña was the region that fared the worst, with a 45.3% fall in 2008 home sales. Madrid and the Pais Vasco fared a bit better with 30.3% and 20.5% drops in home sales, respectively.

• Spanish developers’ lobby criticizes the Spanish Goverment for its inaction in the face of the crisis: ElEconomista.es is reporting that the President of one of Spain’s main lobby of real estate developers has chastisted the Spanish government for doing “absolutely nothing”, even as the stock of unsold properties will likely approach 1 million by the end of 2009, for an aggregate value of €300 billion in real estate assets that is currently illiquid. The lobby claims that if the Government injects €10 billion to help the developers free up some debt, the Spanish real estate market will begin to re-activate and the resulting transactions will help to reanimate the Spanish economy and, in particular, the Spanish banking sector.

• One Spanish real estate authority claims that it might take 3.5 years for Spain to recover from its current hangover of unsold properties.

• According to Real Estate Press, 23 Spanish savings banks (including the two largest ones) have formed a company to advise, manage and sell about €3 billion worth of their real estate assets. The group is hoping to convert the company into Spain’s biggest seller/landlord, taking into account that among the banks there are already 17.000 branch offices.

One depressing piece of news not directly tied to real estate, but that I find interesting nonetheless, is that the EU has concluded that, other than Latvia, Spain has the largest percentage of its population at risk of poverty. Latvia’s has 21%  of its population at risk, and Spain has 20%, which is the same level as Italy and Greece. Not very good news.