The Dark Truth of Why Italy Is Giving Away Free Houses

Maybe you've seen these headlines, towns all across Italy are giving away houses for literally one euro, or they will even pay you thousands of dollars to come and live there. But while this has been a popular feature in the travel section of news websites, it hides an important question. Why are they doing that? And why would a country like Italy need to pay people to live there? Well, if you look deeper, this seemingly funny news story reveals what life in Italy is like because while we tend to see Italy as an idyllic place, Italians themselves might disagree. And beneath the surface, there is a grim economic reality that is slowly becoming more and more obvious. So why is Italy paying people to move there? Why are there so many empty houses? And why is all of that really bad news? While it used to apply only to remote mountain villages, now it's a story that's repeated all over Italy. In all parts of the country and in towns of all sizes, there are millions of empty homes and the number is rising every year. And many of them are beautiful historical houses in some of the most picturesque parts of the Italian countryside. Houses that are literally part of Italy's cultural heritage. That's why in order to save them, towns across Italy have been launching so-called one euro schemes. Basically, the towns offer the empty homes up for a sale, usually aiming to attract foreigners for the symbolic price of one euro, meaning that the houses are basically given away for free. They do come with some conditions and usually the buyers are required to contractually agree to spend a certain amount of money on renovation, since most of the houses have been empty for quite a while, but even so, the cost of the renovation is quite low and it's usually between 20 to 30 thousand euros. And so while a potential buyer gets an extremely cheap property, the local town has one less crumbling house to worry about. But while that's where the articles about this usually end, this is where the really interesting part begins. Because the real question at the bottom of this is why are there millions of empty houses in the first place? And what does that say about Italy? And well, the answer, unlike the Italian countryside, is not pretty. But to explain why there are so many empty homes, we need to explain something else first. And that's the fact that Italy has been, for quite some time now, facing two major crises and completely failing to deal with either of them. The first crisis is the fact that since the mid-1990s, the Italian economy has basically stopped growing and it has been stagnant ever since. Now, this might be surprising. After all, Italy is one of the world's largest economies and home to some of the most famous brands and companies, from fashion and cars to banking. And for a long time, the question of why exactly Italy forgot how to grow has been a bit of a mystery. But recently, a leading Italian economist came up with a pretty complex theory explaining the cause of what he called the Italian disease. And it's not that Italians are lazy, but rather that Italian managers and businesses have remained stuck in time. He explains that businesses in Italy have always been rewarding loyalty and connections rather than performance a lot more than in other countries. And they continue to do so to this day. But while prior to the 1990s, this didn't matter that much, with the rise of IT, where meritocracy and performance mattered a lot more, this practice started to keep the economy from growing. And since Italy and its businesses failed to get rid of their nepotism and adapt to the 21st century, the country soon started to fall behind others. Add to this a series of unstable governments, chaotic legal system, massive tax evasion problem, and one of the largest public debts in the world, and you'll start to see how Italy went from one of the leading global economies to becoming more and more dysfunctional. But this is where Italy's problems are still only beginning. And if you're waiting to find out what's going on with the empty houses, don't worry, we're getting there. Because on top of the non-existent growth, Italy has had for decades consistently one of the with around 10% on average, and 30% for young people, meaning that for two generations, a third of young Italians have not been able to find a job, and those that do, often have to settle with a salary that's not exactly a reason to celebrate, a situation so common that it's known in Italy as the thousand euro generation, nickname for a generation of people in their 30s with degrees and high qualifications working white-collar jobs who still make less than thousand euros a month, and struggle to get by. And so contrary to our view of Italy as a little paradise, it's maybe not that surprising that it has been for years reported as one of the unhappiest countries in Europe, and mostly due to how bad the economic situation has been. But how could you have a positive economic outlook knowing that even in America, half of the people making six figures are living paycheck to paycheck? And when even the most successful hedge fund manager in history is saying that the system is breaking down before our very eyes, making our salary work for us through investing is not as easy as it used to be. As a result, CEOs and fund managers are pouring hundreds of millions into low-correlation assets, because these assets can continue to climb even if markets do not. And according to Citibank, the asset with the lowest correlation is art, as last year, while stocks and bonds struggled, art prices rose an average of 29%. And so it's not surprising that Masterworks just saw over 6 million dollars in investment in a single day last week. Masterworks lets you invest in multi-million dollar paintings without spending millions, and when one you're invested in sells again, you see a potential return. So far, Masterworks has built a track record of 11 exits, every single one of them profitable, with the last three returning 10, 13, and 35% net to investors. And so it makes sense that Masterworks has had new offerings sell out in minutes, and there's even a waitlist now. But with the link in the description, you can all get VIP access to their latest offerings right now. Just check the description below. And now, back to the video. Now, all of the economic problems are bound to have some consequences, and in Italy's case, this has resulted in a massive exodus of young, qualified, and ambitious people from the country. Since 2008, at least 2 million young Italians have permanently left the country, and hundreds of thousands of people keep leaving every year. And this is not the only demographic problem that Italy is facing. On top of the massive levels of emigration, just like Japan, Italy has been struggling with a trend called the Silver Tsunami. It now has the third oldest population in the world, and it keeps aging faster than any other EU country. That, combined with the third lowest birth rates in Europe that have been steadily decreasing for the past 15 years, means that Italy has less and less people in productive working age who can start businesses, build value, and drive the economy. The number of those who need to receive pensions from the state and be cared for by others is constantly increasing. All while there are less and less children being born, and while hundreds of thousands of people in the productive age choose to leave. And while many countries are dealing with one or two of those challenges, Italy has the perfect combination of all three at the same time. And that's why it has been, for nearly a decade, going through a major demographic crisis that is getting worse every year. Since 2014, Italy's population has been steadily decreasing by almost 200,000 people every year. And it's not going to stop. Predictions say that in the next 50 years, Italy's population is going to shrink by further 20%. And you don't need to be an expert to know that that's not good news, for the economy or for the country itself. So how do the empty houses fit into all of that? Well, because of the economic situation and the demographic crisis, Italy is simply running out of people. And the places where most of the empty houses are, usually smaller towns and villages, are hit the hardest. The lack of job opportunities and infrastructure in these areas makes it difficult for young people to find work and build a future for themselves. And so they are leaving behind these deserted, abandoned villages and empty homes that are then marketed as holiday homes for sale to Brits and Americans, in a desperate attempt to save these places from dying out completely. Weirdly enough, at the same time, Italy is one of the countries with the highest percentage of adults living with their mom and dad. In 2021, 70% of adult Italians under the age of 34 still lived with their parents. And even in the age bracket 30-44 years, 25% of people still lived at their parents' house. And while that's also a result of the Italian close-knit family ties, many live with their parents not so much by choice, but rather by necessity. With youth unemployment being so high, it's increasingly difficult for young Italians to even rent their own place, and buying their own property has become basically impossible. Which sounds like it doesn't make sense if there are houses sold for a euro across the whole country. But since there are no jobs and no opportunities in the areas where these houses are, young Italians are not going to buy them even for a euro, since they would have no way how to make a living there. The only people who will buy them are those who don't need an income, mostly foreigners who will use the properties as vacation homes. And while there's nothing wrong with that, they won't solve the underlying problems. That's why the program to give away free houses is mostly a sign of just how desperate the situation has become. While Italy is struggling to keep its small towns and villages alive, the empty homes are a stark reminder of economic decline. And meanwhile, with the economy being the reason why so many people leave Italy, which then further strangles the economy, the country is locked in a spiral that's increasingly hard to get out of. And the situation is only getting worse.