"The value that the banks put on the property just isn't real," Alvarez said. "And as a result the banks don't trust each other, they aren't lending to each other and if they don't lend to each other there's no credit for Spaniards."
Juan Carlos Caballero bought his 3-bedroom Sesena apartment with a terrace overlooking the residents' pool in 2008 for euro185,000 ($240,000) after his retired father jumped into the real estate action to buy the same style of apartment at a lower pre-construction price.
Father and son were both convinced housing prices would continue to rise as they had since the mid-1990s. They now are stuck with homes in a development that doesn't have a drug store or good public transport to Madrid.
The only pizza restaurant is open just three nights a week and on Saturday afternoon when there are enough clients to justify operating, and the roast chicken takeaway only opens Friday nights and Saturday afternoons.
Apartment blocks have ground floor commercial space for small businesses so people can walk to buy whatever they need. But most units are sealed by brick walls scrawled with cell phone numbers of owners offering to sell or rent them.
The 33-year-old Caballero, an unemployed chauffeur, last rented his apartment for euro750 ($980) a month two years ago, and is now asking just euro500 ($650) per month. Similar apartments are being offered at euro375 ($490) monthly, but he's asking for more because his is in immaculate condition with new furniture and appliances.
His father, Jesus, is offering his apartment for sale at euro108,000 ($140,000), meaning he stands to lose tens of thousands of euros in a bid for retirement cash now that he's reached age 67. But banks selling foreclosed property in Sesena have smaller apartments listed as low as euro65,000 ($85,000).
"Selling or renting now is like winning the lottery," said the younger Caballero, who lives with his parents and shells out euro500 ($660) of his euro700 ($900) monthly unemployment check to pay his mortgage and other apartment costs.
In the town of Yebes more than an hour's drive from Madrid, 9,000 apartments and small houses were supposed to be built in a bucolic country setting next to a high-speed train station so workers could get downtown in less than 20 minutes.
But only 1,500 were finished before developers went broke, 3,000 people live there instead of the projected 30,000 and government officials never launched the train service.
"The station is built, the trains are bought but they never started running," said Mayor Joaquin Ormazabal.
The euro240,000 ($315,000) home he bought would now sell for about half the price. The population in Yebes is increasing somewhat as banks sell off foreclosed properties at low prices, but Ormazabal said it could be decades if ever before the rest of the land is developed.
"Nothing's going to happen until the Spanish economy comes back," he said. "Right now no one is thinking about building anything in Spain."
Carlos Velazquez, Sesena's mayor, said the development fiasco has one positive side: Spanish real estate speculators aren't snapping up apartments anymore in his town.
Those that are buying "are people who are going to come here to live, pay their taxes and want the place to be nice for their children."
Harold Heckle contributed from Madrid.
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