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Have you thought of a vacation home in Spain?

When I first time visited Spain you could still hear Spanish spoken in Costa del Sol. By late 60s you could hear more Swedish and Norwegian. Scandinavians traveled to Spain in search of the sun, frequenting beach resorts as far south as Canary Islands and considered Costa del Sol somewhat of a Scandinavian enclave.

By early 70s Costa Brava and much of the coastal resorts of Valencia and Granada saw great influx of vacationers. More resorts sprung out along the long coast. With the opening of the Alicante airport took off development of Benidorm resort town and taking has become most thought after beach vacation for millions of Europeans.

All was well and Spain continued to boom though it was still retaining the laid back flavor of Mediterranean Europe. And it was that way right up to the time Spain joined European Union in 1986.

I visited again in the 90s and things were clearly on the move. Many retired Americans enjoyed affordable rental spending mild winters in Spain. It seemed unlikely Spain would become another Germany any time soon, preferring to maintain the siesta and late nigh dinners pace.

In 2002 I traveled to San Sebastian and got a taste of Spain in the 21st century Europe. The people seemed arrogant and unfriendly, and would not give you the time of the day especially if they sensed an American, much like French in the 70s, though they seemed to have overcome that characterization since.

Bullet trains, subways, fast pace of contemporary Europe was noticeably the mainstay of Spain. I visited Barcelona, Madrid and Seville. Spain was booming. Open door policy brought scores of Eastern Europeans and North Africans in search of blue color jobs. Real estate prices soared year after year.

Then in 2007 the real estate bubble started to burst, much like it happened in the United States. By now real estate prices in Spain have plummeted as much as 30% from their peak in 2007. If Greece seemed to personify the worst of EU nations’ problems, the Spanish one is a lot worse. Being the fifth largest economy in Europe Spain’s financial collapse will have an impact with a global reach.

In the US we are face unemployment of 8.1% that seems to have halted, and we feel things continue to improve at snail’s pace. Young Americans face run away university education costs and nil prospects of finding a job after graduation; if they are lucky they may find one only at Mc Donald’s.

In Spain the unemployment rate for young people under 25 is now above 50%. By comparison our youth unemployment rate of approximately 18% seems trivial.

Spain”s banking system is essentially insolvent, inundated with bad loans. The economy is not just stagnant, it has contracted, the annualized economic growth running in the red almost 2%. The overall, total unemployment is nearing 25%. Spain’s stock equity index is down over 20% since the beginning of the year, and nearly 60% since the economic meltdown started four years ago. Spain will require a bailout much the same as Greece and the European Central Bank will have to print much more Euros than up to now in order to assist.

Or should Spain leave the EU, give up on the Euro and return to peseta in order to save its economy? What is going to be the outcome of Spain’s dilemma?

Most Americans don’t want to speculate about Spain’s problems as we are yet to climb out of our own hole and see a little light at the end of the tunnel. But for those with deep-rooted feel of affection for Spain, this may be the time to keep an eye on those villas on its coast. While the rich and well off likely own their real estate free and clear, as life becomes harder and harder for those, as here in the US, who bought when the prices were still going up, and now are being swept by the housing market crash, they may soon find themselves facing foreclosures.

The tide of foreclosures in Spain is now in its fourth year and it will only continue. The housing market collapse is in a full swing and the home prices are expected to drop possibly as much as 50%. In 2011 foreclosures increased by whopping 11% and with rising unemployment and as Spain is drifting into depression, the worst is likely yet to come.

If Spain has ranked high on your list of countries in which to retire, buy a vacation home or simply a country in which to invest, and much of your portfolio is currently held in cash, this may be the time to take a trip to Spain and start looking for your dream Spanish villa, a house or an apartment. Just as many wealthy Europeans, Arabs and other foreigners took advantage of the depressed American property market in Florida and bought foreclosed properties, they are likely to take a closer look at the depressed housing market in Spain next.

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