Housing Problems

SWOT Threat: Housing Problems
With unemployment rising throughout the country of Spain, the housing market has gone through a real estate bubble. The bubble inversely lead to the collapse of the construction industry, which triggers the surge in unemployment.

"Whoever wins in Spain's general elections on March 9 will be spending his term dealing with the economic consequences of the bursting of Spain's housing market bubble. And, within the constraints of euro membership, he will be doing so without the benefit of an independent interest rate or exchange rate policy at a time when global credit markets are under unusual stress. At the heart of Spain's forthcoming economic problems will be the bursting of the country's extraordinary housing bubble of the past decade. Between 2000 and 2006 alone, Spanish home prices increased by around 130%, making the American housing market bubble pale by comparison. As in America, this extraordinary increase in home prices is now showing every sign of unwinding.

Housing issues tend to slow down any type of economic growth, because the accumulation of wealth in one's home is a catalyst for domestic spending. When unemployment rises, this increases a strain on homeowners to pay the loans back to the banks. The two issues feed off each other."

Source:http://www.nysun.com/opinion/housing-pain-in-spain/72501/