Maps 2015 (2) The blackout of the bubble

As I have already said some years ago, the central issue for the blog this year will be the grain of the city; i.e., how the detail that you see on the urban space is formed by aggregation of circumstances. The bylaws applied two centuries ago are the fodder of today’s tourism guides, and the old crisis often explain how a neighborhood took its shape (try to explain the XVth district of Paris and its architectural mix without the brutal economic discontinuity of the inter-world-wars period…).

The issue today is the way in which the real estate crisis spread over Spain in the recent years. The real estate sector, central for economic growth since the second half of the 1990s, based its expansion on the construction of new homes, mainly in peripheral zones. In terms of landscape, this means that large sectors of urban outskirts (often still without building, and probably with many years ahead in that situation) were prepared for development by building streets and infrastructure, by contrast to urban cores where existing streets received sometimes a face- lifting, but buildings got not that much of an upgrade in general terms.

The end of what has been called the real-estate bubble has not been homogeneous on the land. This can be analysed in many ways, and this is how I did it. The Ministerio de Fomento, the Spanish Government’s body more related to housing (an attribution of the regions) publishes each quarter data on the evolution of the selling price of the sq m of housing, for a set of 283 municipalities over 25.000 residents, recording differences between homes completed less than 2 years before and the older stock. I did not focus on price itself, but rather on when there has been a “blackout” in data due to a lack of statistic representatively of available data. I’m fully aware that there are other resources, authored by private agents, that have different data, but I chose this one as it is public and everyone can use it, and it also has chances to stay active for some time. A remark for those willing to use the source: for the analyzed period (first quarter 2005- third of 2014) a municipality was added to the list; I used an homogeneous series excluding that one.

This is what I did:

Data "blackouts" in new homes price statistics in Spain. To see again the animated image, uptdate the page.

Data “blackouts” in new homes price statistics in Spain. To see again the animated image, uptdate the page.

  • A map of the data “blackouts” (upper animated image, you can see green turn red): It identifies the last available data for each municipality concerning homes under 2 years. Just two municipalities (Madrid and Barcelona) have had a record of no data blackout in any quarter, and as of the third quarter of 2014 there were only eight municipalities with data: Almeria, Barcelona, Caceres, Madrid, Merida, Las Rozas de Madrid, Madrid, Teruel and Zaragoza. In some cases, as Madrid and Barcelona, metropolitan areas with many points can somehow mask the visibility of still “on the radar” municipalities.

graf-tas-EN

  • A chart of the evolution by quarter of the number of cities without statistically representative values for the price of homes overall (no age class distinction), and for those under 2 years old (new homes). It is clear that in 2009 things became complex, and that the first quarter of 2011 became a clear threshold. By comparing the chart to the evolution of free homes (homes sold in a free market without public subvention to purchase) completed and the average price of a sq m of urban land in municipalities over 50.000, there are many parallels. Homes under 2 years old reduce, as there are no longer produced in large amounts.

graf-ind-pr-viv-EN

  • A comparison between the charts of the home prices, in national average, in Spain, Colombia, France and the United States, by quarter, from the first 2007 to the second 2014, taking the valuest of 1st quarter 2007 as 100%. It is clear that France has not seen a drop in home values (a reduced residential output), in the US the 10% correction seems over (even if the difference in country size probably would deserve a more detailed analysis, and Colombia has a chart clearly reminding that of Spain five years earlier, something that doesn’t seem good.

graf-pobl-tiemp-EN

  • A cross tab vision of the demographic size of municipalities and the number of quarters (regardless of their order) in which they have been “under the radar” for new homes prices. It is clear that size matters, and more populous municipalities (that in Spain are often those with the larger physical areas and have large developments) are those that seem to have best survived the crisis, with wider markets and, against all odds, a better stock of price- stabilizing elements for the housing demand (transportation, distance to jobs, facilities)

All this doesn’t imply automatic answers to questions regarding the future of these municipalities; any plan must face a future that, by definition, is uncertain, and so needs a certain degree of flexibility. But the lesson would rather be (as will be seen in future posts) that long term plans have a sense in urban planning if you grasp the idea that buildings will also be built long term. And therein lied the rump here, as development was drawn without a clear demand for the buildings that had to pay for the streets and pipes and electric lines that were built (leave alone the land itself, often bought at astronomic prices…).

6 comments

  1. This is fascinating. I have to add that I am glad you mentioned that the point turned from green to red. I didn’t notice any changes and I thought I was missing some plugin or something was outdated in my browser. I am color blind, and it’s very hard for me to distinguish between red and green. I was able to see it if I clicked on the image and zoomed in just a bit 🙂

    1. Sorry for the colors… It is an animated GIF just to avoid the problem with plugins, but the color-blidness was something I did not think about… in terms of image size, I’m afraid that is related to the wordpress theme and its width settings. Anyway, have you been able to understand it at full size?

      1. Yes, I can see it quite clearly when I open the image full size. As soon as I read you comment about what would happen, I knew what was going on.

        We have lots of developments that are in various states of completion here. What’s interesting to me is when I see a development in one town lying fallow after being given up years ago but new ones starting now in the next town over. I know that there are many variables and many reasons for why these things happen, but from a distance, it doesn’t make sense.

      2. I’m affraid the answer to that problem you feel as without sense is the concept of private property. I think private property is a good thing, but some problems “run with the land”, so if you are a developer and you are in the business of developing, you are getting more profit from starting a development from scratch than from getting the trouble of negociating with all the people touched by a foreclosure. So sometimes a little more power (and will…) from the part of the local administration would do a difference. But it is quite complex. Anyway, as you say, if you look at it as an environmental problem, or just a problem of how efficiently the whole society spends the money, it makes no sense

      3. You’re right. And you have the whole issue of someone parking a project until they can make back what they put in at the start. It’s all very complicated, but it’s interesting to see the results. I haven’t read much about the fact that the City of Detroit gave up (unincorporated) large tracts of what had been part of the city. I’m not sure they even went through with the plan. It was big news here for a while last year and then dropped off the radar.

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