Approximately 1 in 5 Spaniards is unemployed. More shocking is that almost 1 in 2 young Spaniards is unemployed. Many of those young unemployed citizens have taken to the streets to lead the Indignados movement to protest the government’s proposals, and now, to keep unemployed people from being evicted from their homes when they default.
The movement and protests of the Indignados (“indignant ones”) began in May as Spain’s economic situation continued to deteriorate and concerns over the debt and unemployment rate escalated as the country held provincial elections. The protest movement began in Madrid and spread to city squares across the country, with protesters expressing frustration of the inaction of the Spanish government to stimulate the economy, create jobs, and lessen the ballooning national debt before Spain follows in Greece’s fiscal footsteps.
Similar to the United States, the housing bubble in Spain burst in 2008, and since that time the rate of foreclosures has accelerated dramatically. According to the body that oversees Spain’s judiciary system, Spanish courts carried out a record 93,622 foreclosures last year, which is nearly four times the amount in 2007.
Also like the U.S. in the years leading up to the bubble burst, consumers became highly leveraged by taking out mortgages that were not realistically affordable. The Bank of Spain reports that in the five years prior to 2009, mortgage debt nearly doubled nationwide. Now with property prices falling and its unemployment rate reaching the highest level of any industrialized country, Spain finds itself in a very precarious economic situation, leaving many unemployed citizens without the means to provide financial security for themselves.
This exact issue is what the Indignados have latched onto. In the past few weeks, the decentralized group has prevented dozens of evictions by gathering outside the home of unemployed residents, thereby preventing officials from delivering the eviction notices. The protesters have organized through social media as a way to recruit for these eviction challenges and to plan where to meet.
In an eviction gathering this week, 200 people gathered outside the home of a woman with a handicapped, grown child to keep her from being evicted that day. According to AFP, the family still owes $267,600, and only receives $939 a month – which is solely from government assistance.
Due to the attention that now surrounds these evictions, the Socialist – led government announced it will try to provide mortgage relief to troubled homeowners. But since Spain is struggling with its own budget shortfalls, relief in the form of a monetary gift to its citizens seems unlikely.
One severe factor affecting the housing sector is the law regarding foreclosures in Spain. According to Spanish law, if a bank forecloses on a home and evicts the borrower, the former homeowner still owes the balance of the mortgage to the bank.
Unfortunately for Spain’s banks, evictions do not promise much of an alternative to taking a loss through missed payments. The market is so weak that at the end of 2010, some 700,000 properties were still empty across the country from when the market collapsed in 2008.