Water pistols and housing in Barcelona
On housing, over tourism, the rise of China, and some positive health news
AI, ICE, Alligator Alcatraz, Iran and Israel, layoffs, and more… the news cycles have been rough lately.
I’m frankly a little tired of talking about AI. Immigration and war are things I can pontificate about but not solve, so I thought I’d take a different tack and talk about a few other topics: cities and living, China, and health news. Though not wholly uplifting, here are some less mainstream, but interesting topics on trends now and over the next decade.
Barcelona, overtourism, and the cost of living
It's been nearly two years since I moved back to Spain, this time to Barcelona, and with my wife and kids in tow, not as a single 18-year-old.
Moving to Barcelona with my family has been quite the adventure, full of ups and downs, kids learning Catalan and Spanish simultaneously, delicious tapas, navigating Spanish bureaucracy and immigration, and much more.
It's been rewarding. I love Europe, I love Spain, I'm beginning to love Catalunya (Catalan independentistas també), I'm learning Catalan, figuring out my company, getting settled in Barcelona, finding my favorite restaurants, the best bike short cuts when I'm running late to get the kids, the best skate parks, beaches, etc.
Also, we're finding community here with the school and other parents, with our neighbors, and with members of the synagogue we attend.
And this brings us to Barcelona’s current topic de jure in the news cycles: overtourism.
Maybe I’m contributing to the problem by moving here, but I think that the key difference between a welcome immigrant and an annoying expat or tourist is integration, and at least my family and I are integrating.
When you read about the overtourism complaints in Barcelona and now the rest of Southern Europe, and protestors spraying tourists with water guns… they’re upset about housing, overcrowding, and to a lesser extent expats that only speak English and gentrify central neighborhoods.
Overcrowding
Let’s look first at overcrowding. Barcelona has so many tourist now during tourist season that there’s a loss of spaces that previously belonged to residents, shitty overpriced food on not just Las Ramblas but almost everywhere in the city center. By the way, never eat paella from a place that has pictures of paellas on a menu board outside the restaurant… it will be previously frozen, microwaved, shitty, and overpriced.
The overcrowding is a problem, but it's something that can be managed... one idea is to try to spread tourism out over larger parts Barcelona, and Spain in general. I live close to the Arc de Triomf, and there are a lot of tourists where I live, but just one or two blocks further from where I live and the tourists evaporate, not to appear again until you get to the one block radius of La Sagrada Familia. There are whole parts of Barcelona with no tourists. In fact, there are whole parts of Spain with very little tourists.
Should there be fewer tourists overall, maybe yes, but it would feel better if they weren’t so heavily concentrated in a few key areas of Barcelona, or even if a few million of Barcelona’s annual tourists went to lesser-known cities around Spain.
Digital nomads and expats
Digital nomads and expats often get lumped in with overtourism complaints, but they are significantly less of a problem for the city. Just by staying longer in a city, it changes how they interact with the city, and it also increases the amount they invest into the local community. As an example, they need to go grocery shopping, get a phone SIM, get their haircut, eat all around the city, etc. These actions contribute to the local economy far more than the tourists getting off a cruise ship for 3 hours to eat microwaved frozen paella. Gentrification is difficult on the residents it impacts the most, but its also a manageable problem in larger cities, especially if there’s more housing for residents to move to in less expensive areas. Which takes us to the biggest problem here.
Housing
The biggest issue here isn’t the tourists themselves, they’re a highly visible, often annoying, very easy group to scapegoat. The real anger of the water pistol holder is housing and rising housing costs.
I reviewed several sources and averaged the numbers together; it’s a bleak picture. Over the last decade, rents in Barcelona have risen by ~50%, home purchase prices by ~60%, while real wages have only grown by ~3%.
That means:
Rent is now 1.5× more expensive
Buying a home costs 1.6× more
But Barcelona citizens’ paychecks are nearly the same as 10 years ago….
That’s the problem right there. We can talk about tourists, overcrowding, the contribution of AirBnB, foreign investors, avocado toast eating expats and gentrification, but the real issue is that it costs a lot to live here and the wages haven’t grown much in the last decades.
The worldwide rise in the cost of housing
Barcelona is a rather rough case, but not far off from many other cities. When looking at other comparable major cities, we see:
Rent up across global cities: ~50%
Home prices up ~50%
Wages up only ~25%
The housing costs have outpaced wage growth by roughly 2× in most major cities across the Western world.
Why is housing so damn expensive?
What’s going on here? Why is this a common phenomenon across the Western World? I’ve spent years looking at this issue, in San Diego, San Francisco, and now here in Barcelona, and I’ve studied it, talked to tons of people, and written on the topic before.
It comes down to a few key problems.
Building too little, too late
Look around every city that has a housing crisis and ask them when the last housing boom was. Ask them when the average home was built. It’s always decades and decades ago. Every major city in the Western world, from Los Angeles to Berlin, is not building enough to keep pace with demand and especially in the last 2-3 decades.
Urban migration
Over the last 100+ years, we’ve had an ever-increasing move from rural to urban areas as we moved away from an agrarian society to a knowledge and service economy. At this point, cities are where all the good jobs are. Maybe with more remote work we can reverse this trend, but it’s been running for decades. Meaning demand is very high for the fixed supply of housing in cities.
Housing speculation and investment
Though not as great of a contributor as the former two trends, investors buying up housing supply — and often just sitting on it, not renting — is a large contributor to an increase in housing costs through both a decrease in available supply for renters and through purchasers driving up demand for available homes to buy.
How do we fix this?
Ok, but what to do about this?
Well, it’s much easier said than done, but governments, both local and federal, need to tackle each of these 3 drivers systematically.
There are a variety of reasons that not enough housing is built, but they can be fixed. It often comes down to overrgulations, height restrictions, in some cases ill conceived environmental laws that get weaponized against building more housing, and local opposition by vocal NIMBY groups. But growing YIMBY movements, and governments the world over are slowly beginning to address these. The most recent of which was California’s overhaul of its environmental review laws that were long used by opponents to stall housing projects.
On urban migration, this one will slowly alleviate itself over time with an increase in remote work and various schemes being proposed, like visas for digital nomads if they live in rural areas. There are also some more creative projects being implemented in smaller cities in Europe and the US to attract and retain citizens. We will see a lot more of these schemes in the coming decades, especially as internet improves in rural areas AND remote work becomes more normal.
Addressing investors is perhaps the easiest problem to solve in theory, as it only requires governments to disallow it. Examples:
Cap how many homes a single investor or investment fund can own in a given area
Potentially ban or severely limit institutional investors like Blackstone from owning homes
Impose steep taxes on homes left vacant, especially if in urban areas
The hard part is that the investors are pretty good at lobbying the government not to fix the problem, and sometimes governments can impose legislation that hurts small landlords who are trying to be good. But, overall, this is pretty easy to fix, just requires political will and a few well-written laws.
Barcelona wages and fixing them
In Barcelona, the effects of tourism and housing price increases are particularly pronounced due to the lack of increased wages over the last couple of decades. In a future article, I’d love to talk about how a country and a city like Barcelona can effectively increase wages. Unfortunately, I’ll have to write that with the caveat that AI will probably mess up the playbook for governments in the coming decades.
China, China, China, the future is Chinese?
It’s pretty clear to anyone paying attention that China is on the rise economically, technically, socially, and culturally. It’s especially pronounced when compared against the unrest in the US, stagnation, and even the US rejecting clean energy and embracing the past in Trump’s Big Beautiful Bill.
China embraces renewables
In article after article, I’ve been reading that China is rapidly embracing solar and batteries. These are the energy sources of the future and part of the electrification of everything. With economies of scale, you have solar panels coming down further in cost.
China is ahead of schedule on installing solar
China leads on electric cars
China produced more than 70% of the worldwide electric cars last year. China is now the global leader in making the cars of tomorrow.
Electric cars are now more than half of the cars sold domestically in China, compared to 9% in the US
Leading Chinese carmaker BYD is outselling Tesla in Europe
The Times
It sometimes feels like Europe and the US have been the most important worldwide, but that’s a recent phenomenon. China has been a very important part of Earth’s history, development, and advancement for millennia. What we’re seeing right now is the emergence of China into perhaps the leading superpower of the world, or perhaps a proper competing superpower to the West. It remains to be seen what the US decides to do, and whether Europe can get over its internal divisions and bureaucracy, or we’ll see China leading the world order pretty soon. I’d personally prefer to see the EU lead the world, or the US — both have a better track record in the last 50 years on human rights, freedom, and liberty.
Health
In fascinating reports in the US, obesity has begun to decline for the first time in decades. Peak obesity in the US is now in the past.
This is purely due to Ozempic at the moment, but as more research is pouring into the topic, we may be able to solve obesity with minimal side effects through science.
More from one of my favorite writers on Substack:
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Till next time!
Barcelona is one city am in awe of. It's one of the best designed cities in the world. I hope to see it in my lifetime
Dan,
We enjoyed staying in Barcelona doing all of the tourist things many years ago. I appreciate your concerns about getting more housing build in cities like San Francisco and Barcelona. More density will help but limiting companies willingness to invest money to build housing will not help. Charging very high fees for keeping a house or an apartment vacant might help. This "control" on the free use of property will only affect a few very wealthy people but if the fee was high enough to force them to sell and extra apartment would become available.