The paradox of those who bought in 2008 and have already paid off their home

Buying at the peak of the bubble: the move that today pays off the mortgage

Buying at the height of the bubble seemed crazy to many. Today, that craziness has become the only profitable move compared with rents of 1,300 euros for a tiny flat. The story of a buyer of subsidized housing (VPO) in 2008 illustrates it better than any macro analysis.

The VPO won in 2007 and delivered in 2010

At the peak of the bubble, a buyer won a VPO (Spain's government-subsidized housing) in 2007 and signed off-plan in 2008. Delivery was delayed until 2010, just when prices had fallen 17% from 2008. Those who laughed at the deal were wrong: the property appreciated over time, and interest rates, which stood at 5% in 2007-2008, eventually fell. The investment, despite the risks (bankruptcies of developers like Martinsa-Fadesa, unpredictable neighbors), turned out perfectly.

Buying in 2008 vs renting today

A recent case: a buyer paid 180,000 euros for a flat in a Madrid housing development. Today, in the same development, flats sell for 400,000 euros. That flat is rented out, and its owner lives in rural Spain in a family home. Meanwhile, some people pay 1,300 euros a month for a room. The difference between buying at the height of the crisis and renting now is enormous.

The question is whether this trend will continue. With current interest rates, the answer is not so clear. But the fact remains: those who bought at the worst moment now own an asset that has doubled, while others keep paying rents that build no wealth.