An editorial today in Spain’s largest newspaper, El Pais, argues that for the real estate market to recover faster prices need to drop faster.

Let’s put a few numbers in perspective.

In 2007 roughly 800,000 homes were sold in Spain. In 2008, just 560,000. So far in 2009, it looks like there will be 300-350,000 sales.

It’s estimated that there are roughly 1.2 million homes unsold, on the market. This may or may not include a further estimated 400,000 homes which have been repossessed by Spanish banks due to foreclosure.

What an incredible overhang of inventory on the market. At current sales rates, it would take 3-4 years to completely remove the unsold housing, without accounting for any additional supply in the market. One newspaper today went so far as to estimate that banks will need 10 years to clear out their foreclosed, or repossessed, properties.

The only way for true market prices to re-emerge will be for these homes to be sold at whatever price people are willing to pay today for them, which is probably much, much lower than current asking prices. But there is no choice in going down this route- it’s a case of severe pain now, or slow pain over time. The ability of buyers to pay 2007 prices are long gone, and not coming back anytime soon.