Why Spain's poorest can end up with more cash than the middle class
A flat bought for €21,000 in a cheap area could sell for €95,000 years later. Those who stayed out of Spain's housing bubble kept their savings and watched them gain value.
English · Original discussion in Spanish · Published
It is not that the poorest have more money than the middle class: it is that those who did not buy property at the peak of Spain's housing bubble kept their savings and saw their purchasing power rise when prices fell. The value of money is relative to the price of what you want to buy.
The key is when you buy. During Spain's housing bubble, which peaked around **2007**, part of the middle class took on mortgages of **€300,000** for homes that later lost value. Those who could not afford it stayed in more modest homes or in subsidised housing (viviendas de protección oficial) and kept saving.
## The savings that never went into bricks
With the bursting of the bubble, those savings gained relative weight. A calculation that circulates illustrates it: **€66,000** saved in **2005** seemed little; a decade later, in **2015**, in certain areas that money could buy up to three flats that were being sold from **€21,000**. It is not that the saver had become rich: it is that the price of what they wanted to buy had collapsed.
Subsidised housing worked in favour of those who already had it. It was not bad, and above all it did not carry the debt of an oversized mortgage. Those who kept their modest flat and their liquid money could move when the market turned.
## From €21,000 to €95,000
The same property that could be bought for **€21,000** came to be sold for **€95,000**. It seems little compared with the **€300,000** in cities, but on such a low starting price the appreciation is enormous. And the modest flat that was kept also rose, by around **€30,000 to €45,000** in gain depending on the case.
Therein lies the paradox: those who could not get into expensive bricks ended up with more margin than those who took out a mortgage at the peak. Money is not worth anything in the abstract; it is worth what it buys. And for years, in areas hit by the crash, it bought a lot.
It is worth remembering that these figures are estimates and that each situation depends on the area, income and specific decisions. There is no shortcut without risk.
The key is when you buy. During Spain's housing bubble, which peaked around **2007**, part of the middle class took on mortgages of **€300,000** for homes that later lost value. Those who could not afford it stayed in more modest homes or in subsidised housing (viviendas de protección oficial) and kept saving.
## The savings that never went into bricks
With the bursting of the bubble, those savings gained relative weight. A calculation that circulates illustrates it: **€66,000** saved in **2005** seemed little; a decade later, in **2015**, in certain areas that money could buy up to three flats that were being sold from **€21,000**. It is not that the saver had become rich: it is that the price of what they wanted to buy had collapsed.
Subsidised housing worked in favour of those who already had it. It was not bad, and above all it did not carry the debt of an oversized mortgage. Those who kept their modest flat and their liquid money could move when the market turned.
## From €21,000 to €95,000
The same property that could be bought for **€21,000** came to be sold for **€95,000**. It seems little compared with the **€300,000** in cities, but on such a low starting price the appreciation is enormous. And the modest flat that was kept also rose, by around **€30,000 to €45,000** in gain depending on the case.
Therein lies the paradox: those who could not get into expensive bricks ended up with more margin than those who took out a mortgage at the peak. Money is not worth anything in the abstract; it is worth what it buys. And for years, in areas hit by the crash, it bought a lot.
It is worth remembering that these figures are estimates and that each situation depends on the area, income and specific decisions. There is no shortcut without risk.
Summary of a discussion on Burbuja.info - Foro de economía, actualidad y política., translated from Spanish and reviewed before publication. Read the full discussion (8 replies).
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