Like many countries around the world, the real estate market in Spain has been hit hard by the current financial crisis. It is estimated that there are as many as 1.2 million new homes sitting on the market unsold, many of which have yet to be completed. In some spots that are more popular for those purchasing vacation homes, including the Costa del Sol region, the market peaked as early as 2004. Recent months have seen a significant wave of foreclosures, with more expected to follow.
However, the luxury home market in Spain hasn’t seen as dramatic an impact as other segments of the market. It is estimated that these homes have only dropped 15% to 25% of their value since they hit their peak. This includes more unusual homes or those that have a unique historical appeal. It is likely that the prices have held up better because wealthier buyers aren’t as dependant on financing. Many of these sellers are also more likely to be able to hold onto the properties until the market improves.