Cuba’s Housing Market Realignment
HAVANA TIMES, Nov 17 — It should be recognized that from a legal and social standpoint, Cuba’s new housing law was much more thought out and worked through than the one pertaining to vehicles, whose constitutional inconsistencies were discussed in some depth in a previous post.
This thoroughness was positive since the housing situation affects the lives of many more people. Car owners are a tiny minority, whereas 84 percent of Cubans own their homes and apartments.
Among other things, this reform will bring some order to real property ownership. By “whitewashing” buying and selling, it will legalize five decades of illegal transactions, and the money that had gone into the pockets of corrupt officials will now be paid into the government treasury as taxes.
Against all predictions, this law has neither unleashed rage nor triggered a booming housing market. People are taking it calmly; it’s completely new territory and they need to study carefully what they’ll do – because like a mother, we only have one home.
This is something that will remain, since the new law maintains the authorization of only one residence per person. This is an attempt to prevent an accumulation of properties, which could be catastrophic in a country where there’s a huge housing deficit.
The solution found for those who emigrate seems to pursue that same goal. They have no right to keep their house or apartment, but they can sell it before leaving. Otherwise, they can freely transfer the title to the next of kin.
The idea violates the laws of the market, but ultimately these haven’t worked well in countries like Spain, where the purchases of millions of homes for speculative aims led to prices soaring to heights unaffordable for most families.
In Cuba, more than a real estate market we’re seeing a market of realignment. Most people want living space that suits their needs or their affordability, something that prohibitions made almost impossible.
During the crisis of the ‘90s, I met an old woman who owned a fabulous home in Centro Havana. Still, she didn’t have anything to eat, despite the fact that the sale of her house would have provided her with enough money to spend the rest of their days in comfort.
Many people are continuing to make use of la permuta (house swapping) and others hope to find the house they’re looking for before putting theirs on the market, otherwise “we wouldn’t have anywhere to live in the meantime,” said one woman who intends to sell her house in the Playa municipality.
The paradoxes began in 1959 when the rich “temporarily” left the country, leaving their homes in the care of their servants. Instead of letting these properties crumble, the revolutionary government gave land titles to those people who they found living in the houses.
The new owners brought their relatives in from the countryside, thereby increasing the number of people living in those structures to the point of turning them into tenements. But very soon the number of confiscated homes would be insufficient.
In the 1970’s, “microbrigades” were created and built hundreds of thousands of apartments across the country. Notwithstanding, these too failed to meet the needs of a population that had doubled in 50 years and suffered the constant poundings of violent hurricanes.
To make matters worse, under the form of socialism that reigned in Cuba, everything had to be organized through the government, thereby allowing the individual citizen very little chance to build their own home based on their own resources and efforts.
Over time the situation deteriorated to where nearly half of the existing homes and apartments are now in poor condition and there’s a shortage of 600,000 housing units across the country.
Seeking a solution to the crisis in the long term, the government took three key steps: it allowed the unrestricted sale of building materials, authorized the building of houses by individuals and has now legalized home sales.
The problems are continuing and will continue, but in this area the average Cuban is beginning to see a ray of light at the end of the tunnel. This is the case with Marta Biscet, a food service worker who has begun to build her own house – something that until recently was an unattainable dream.
Now we’ll have to wait and see how the market adjusts from the prices of the state home-appraisals, ranging between $200 and $500, while individuals appear on the internet selling their homes from $15,000 to $1 million (USD).
The realignment will cause some collateral damage in the long run. The most serious seems to be that social classes will become divided by neighborhoods with the consequent emergence of a gap between the rich and poor, just like in the rest of Latin America.
This is something the market has clearly not been able to fix [in other countries], but the Cuban government could perhaps alleviate it with a progressive tax policy that allows a balance between the most exclusive communities and the most disadvantaged ones.
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An authorized translation by Havana Times (from the Spanish original) published by BBC Mundo.