A "for sale" sign seen outside a house in Centro Habana. As you walk along the streets of the Cuban capital, you see a variety of "for sale" signs on a number of houses. The same is true in cities and towns in Cuba's 168 municipalities. CREDIT: Jorge Luis Baños / IPS

By Luis Brizuela
HAVANA, Oct 16 2023 (IPS)

To emigrate to the United States and fulfill her hopes for a better life, Ana Iraida sold almost all of her belongings, including the apartment that, until her departure, saved her from the uncertainty of living in rented housing in Cuba, a country with an unresolved housing crisis.

“I inherited the apartment in Havana from my maternal grandmother, who passed away in 2015. It was small, but comfortable. I sold it for 6,000 dollars to pay for my documents, paperwork and airfare,” the philologist, who like the rest of the people interviewed preferred not to give her last name, told IPS."It is difficult to sell, because many people want to emigrate, and they are practically 'giving away' the houses. But at the same time hard currency is scarce and a person with thousands of dollars prefers to use them to leave the country." -- Elisa

From Houston, Texas in the U.S., where she now lives, the young woman said that, thanks to loans from friends, “I raised another 4,000 dollars. I got to Nicaragua in December 2022 and from there I continued by land to the U.S. border.”

Ana Iraida said she feels “fortunate” to have had a home that was “furnished and in good condition,” with which she covered her expenses. She said that others “have a more difficult time because they do not have a home of their own.”

In the last two years, emigration from Cuba has skyrocketed amidst the deterioration of the domestic economic situation, fueled by the COVID-19 pandemic, the tightening of the U.S. embargo, partial dollarization of the economy, the fall in the purchasing power of wages and pensions, shortages of essential products and inflation.

Errors and delays in the implementation of reforms to modernize the country and the ineffective monetary system implemented in January 2021 have also played a role.

In this country of 11 million people, in 2022 the exodus led some 250,000 people to the United States alone, the main receiving nation of migrants from this Caribbean island nation, from which it is separated by just 90 miles of sea.

To stem the wave of immigration, on Jan. 5 the U.S. government extended to nationals of Cuba, Nicaragua and Haiti a humanitarian temporary residency permit program, known as “parole”, similar to the one implemented in October 2022 for Venezuelans and previously for other nationalities.

As of the end of August, more than 47,000 Cubans had obtained the humanitarian permit, of whom 45,000 had already immigrated, according to U.S. Customs and Border Protection.

A view of Havana from Cerro, one of its 15 municipalities. This city of 2.2 million inhabitants, the biggest in the country, has the largest housing deficit in Cuba, exceeding 800,000 housing units. CREDIT: Jorge Luis Baños / IPS

One of the requirements for the temporary residency permit is to have sponsors who are U.S. citizens or hold some other legal status, in addition to having the financial resources to support the beneficiary or beneficiaries.

Swapping or selling parole

Owning your own home can also be an opportunity allowing whole families to move abroad.

“People are swapping houses for parole status. A few weeks ago I facilitated the exchange of a house for five parole permits to the United States. And in another case, with a residence in Miramar (a wealthy neighborhood in western Havana), nine people were the beneficiaries,” said Damian, a historian who privately engages in buying and selling, for which he charges a commission.

Damián explained to IPS that “residents in the United States ask for 10,000 to 12,000 dollars to provide a guarantee for parole status. The number of people they give a guarantee for depends on the value of the house. When the process is completed, the property is sold to a relative or friend of that person in Cuba.”

Walking through the streets in the Cuban capital, the most varied signs reading “for sale” can be seen on crumbling or remodeled buildings. The same is true in other cities and towns of the country’s 168 municipalities.

On online sites and Facebook groups for buying and selling activities, there is a proliferation of advertisements with photos and information about the properties, such as the number of rooms, the presence of a landline telephone line or an electrical installation that allows the connection of 110 and 220 volt equipment.

Some negotiate the price with or without furniture, others negotiate with buyers who pay cash in hand, or who pay in dollars, euros or make the deposit abroad.

“It is difficult to sell, because many people want to emigrate, and they are practically ‘giving away’ the houses. But at the same time hard currency is scarce and a person with thousands of dollars prefers to use them to leave the country,” said Elisa, a lawyer who told IPS she is interested in settling with her husband and son in Spain.

She said she has been trying to sell her apartment in La Vibora, another Havana neighborhood, for a year. “I can’t find a buyer, not even now that I dropped the price to 10,000 dollars, half the initial price, and it’s furnished,” she complained.

In Cuba’s informal real estate market, offers range from 2,000 dollars or less to a million dollars. The lowest of these figures is far from the average monthly salary, equivalent to 16.50 dollars on the black market.

A man pulls a cart loaded with building blocks past a house for sale in the municipality of Centro Habana. In view of the government’s diminished construction capacity and the decline of funds for housing, since 2010 the government authorized the free sale of various materials for construction, repairs, remodeling and expansion. CREDIT: Jorge Luis Baños / IPS

Hurdles despite the reforms

Now, Cubans can sell their properties even to move away from the country, a situation very different from 15 years ago, when only swaps of houses between two or more owners were possible. Homes could only be sold to the government, and they were confiscated if the people living there emigrated.

Under laws passed in the early years after the 1959 revolution, most citizens became homeowners.

The Urban Reform Law of 1960 turned housing properties over to those who lived in them, prohibited their sale or lease, and abolished private construction and mortgages.

After decades of prohibitions, in October 2011 the 1988 General Housing Law was amended and the doors were opened to free purchase and sale between Cuban citizens and even foreign residents, endorsed before notaries and with the payment of taxes.

The law also eliminated certain formalities and official regulations on swaps.

Prior to the restitution of the right of ownership of residential units, in 2010 the government approved permits allowing people to build, repair or expand their own homes.

In view of the government’s reduced capacity for construction and the decline in housing funds in that same year, the free sale of cement, sand, gravel, cement blocks and corrugated iron bars was also authorized, which until then had been exclusively centrally allocated or sold in convertible pesos (CUC, a now defunct currency equivalent to the dollar).

The authorities promoted the granting of subsidies to vulnerable families, especially those affected by hurricanes, and micro-credits to build, expand or remodel homes.

These measures helped drive a boom in private construction and repairs.

As in other areas marked by the scarcity of materials, red tape and unequal purchasing power, the granting of housing and sale of materials is not exempt from corruption, theft and poor quality work, which has given rise to repeated complaints from the public.

There is still a housing deficit of more than 800,000 homes, while one third of Cuba’s 3.9 million homes are in fair or poor condition.

The largest deficits are concentrated in Havana, a city of 2.2 million inhabitants, as well as in Holguín, Santiago de Cuba and Camagüey, the other three most populated cities.

In 2019, a Housing Policy was launched, aimed at eliminating the housing shortage within a decade, based on the incentive of local production of construction materials and recyclable inputs, in addition to the contribution from the government and the centrally planned economy.

But the policy has run into hurdles as a result of the economic crisis, and multiple factors such as delays in paperwork and procedures, loss of material resources, unfinished subsidies and financial resources tied up in the banks.

The shortage of foreign currency and insufficient investment stand in the way of increasing production and incorporating equipment to boost construction capacity and sustainability.

Official data show that in 2022, more than 195 million dollars were dedicated to business services, real estate and rental activity, including hotel construction, which represented almost 33 percent of investment in the sector.

On the other hand, only 8.5 million dollars were allocated to housing construction, or 1.4 percent of the total, according to the government’s National Statistics and Information Office (ONEI).

Since 2019, 127,345 housing units were completed and 106,332 were remodeled or repaired, said Vivian Rodriguez, general director of Housing of the Ministry of Construction, during the most recent session of the Council of Ministers, on Oct. 1.

The authorities acknowledged that compliance with the year’s plan of 30,000 new units is under threat. Maintaining this pace would mean eliminating the housing deficit in more than 28 years.

A rundown house stands next to a newly remodeled home on a street in the municipality of Playa, Havana. A third of Cuba’s 3.9 million homes are considered to be in fair and poor condition. CREDIT: Jorge Luis Baños / IPS

No immediate solution

The lack of housing and the deterioration of existing homes continue without a viable solution in the short or medium term.

On many occasions, people of different generations are forced to live together in small homes, many of which are in a state of disrepair, putting a significant number of families at risk.

Access to housing has also been identified as a factor in the low birth and fertility rates that Cuba has been experiencing for decades.

There is also a problem after tropical cyclones and heavy rains, when centuries-old buildings that have never been remodeled or repaired collapse, or those vulnerable to strong winds are left roofless.

The private practice of professions such as architecture is also not allowed, and although since September 2021 the government has authorized the incorporation of micro, small and medium-sized companies, some of which specialize in the construction and repair of real estate, they still encounter obstacles to their practice.

“There could be many solutions, but in my opinion an essential one is that building materials must be available and at affordable prices; or that houses can be sold to workers so they can pay for them on credit. Otherwise, families will continue to be overcrowded, roofs and walls will collapse on us, or we will grow old without a place of our own,” Orlando, a prep school teacher living in Havana, told IPS.

Zimbabwean cities like Bulawayo are facing urban sprawl as regional African governments commit to decent and affordable houses. Credit: Ignatius Banda

By Ignatius Banda
Bulawayo, ZIMBABWE , Aug 11 2021 (IPS)

Ndaba Dube, a Bulawayo resident, says he built himself a home on a small piece of land after the authorities kept him on the housing waiting list for more than two decades. The land he chose is in an old township established before Zimbabwe’s independence in 1980.
“People are building their homes all over the place, and when you ask them, they will tell you council approved it, but I know from my own experience I couldn’t wait any longer,” Dube told IPS.

In the capital city Harare, authorities have recently responded to the practice of residents illegally occupying and building on council land by demolishing the buildings, even in some cases, imposing residential homes. This triggered a national outcry and fear that other municipalities across the country might follow suit.

With the demand for decent and affordable housing increasing in Zimbabwe’s second city, the municipality previously turned to what it called ‘in-fill’ stands, pieces of land that existed as gaps left in old townships, as a solution.

While the city says it has not issued building permits for the past five years, construction of such in-fill stands continues.

The proliferation of building of illegal housing comes at a time UN-Habitat says African governments need to make tough calls to realise the housing-for-all dream.

African finance and housing ministers met in Yaoundé, Cameroon, from June 21 to 24, 2021, where they noted that most African countries are currently facing housing crises driven by high population growth.

Added to that were increased urbanisation, poor urban planning, dysfunctional land markets, rising construction costs, the proliferation of informal settlements, and underdeveloped financial systems, the ministers said

Bulawayo’s urban sprawl has only exposed the extent of the city’s housing crisis, with city officials turning to private landowners and surrounding districts for more land.

While the municipality says it has made efforts to avert congesting urban areas by not issuing permits for in-fill stands, this has not stopped residents such as Dube from constructing their homes in a country where owning a house remains a pipe dream.

“Council recognises that land is inelastic and by all means, urban sprawl needs to be avoided,” said Nesisa Mpofu, Bulawayo municipality spokesperson, in an interview with IPS.

“We do not process individual in-fill stands. It should be noted that no in-fill stands have been processed in the past five years.”

Yet buildings on in-fill stands are sprouting across the city, with some homes being built on wetlands and rocky ground – a practice condemned by city planners.

“If local authorities claim that they are not aware of housing constructions, it may mean they are parallel structures within their system,” said Abigail Siziba. She represents the Bulawayo Progressive Residents Association (BPRA), which lobbies the municipality on residents’ issues.

“A thorough land audit where red flags are attended to is necessary to ensure those involved in illicit land deals face the law so that residents regain trust in the housing system,” she told IPS.

Zimbabwe is one of several countries that signed the Yaoundé Declaration in June, which seeks affordable housing for all. The leaders recognised that to reach the Sustainable Development Goals (SDGs) and the African Union’s Agenda 2063, there was a need to accelerate the building of decent, affordable housing.

Zimbabwe’s long-running economic crisis characterised by mass retrenchments and eroded incomes have seen banks suspending housing loans as lenders routinely faced foreclosure and lost their homes.

But the illegal housing constructions have also come at a cost for residents.

Burst sewers have become the order of the day as existing infrastructure has not been upgraded to accommodate the additional houses.

“To be honest, we do not know who approves these homes because ever since these houses were added to our neighbourhood, we are experiencing clogged toilets. Even you report to the municipality nothing happens,” said Mariam Bhebhe, a resident in one of the city’s old townships.

“What we were previously told was that council was not issuing stands, and people were buying the stands from private developers, but it is clear now … this is not a private developer building these houses,” Bhebhe told IPS.

Mpofu insists that the local municipality does not approve of the new buildings.

“Some of these areas would have been left undeveloped when the various suburbs were initially developed, as they were considered difficult areas to develop,” Mpofu told IPS. She added this included rocky terrain, areas that required additional stormwater drains, and that needed deep or special foundations.

Effie Ncube, a community organiser in the city, said the municipality needs to make land allocations transparent if ordinary residents are to benefit from any housing projects.

“There has been a lot of corruption surrounding housing in the city where we have seen multiple allocations of land to individuals simply because they have financial clout,” Ncube told IPS.

“This has led to the exclusion of poor people who cannot raise capital to build their homes. That’s why there are a lot of suspicious housing developments across the city, but no one is being held accountable.”

Early July, the municipality announced its plans to take over part of the land belonging to the country’s largest psychiatric hospital located in the city, citing demand for residential housing, again highlighting the extent of shortage of land in the country’s second-largest metropolis.

The UN-Habitat’s New Urban Agenda for Africa, working with the UN Economic Commission for Africa (UNECA) and United Cities and Local Government of Africa (UCLGA), says it seeks to support local authorities and government to generate not only the best policy but also to generate data to inform the implementation of SDG 11.

SDG 11 seeks to “make cities and human settlements inclusive, safe and sustainable.”

According to Oumar Sylla, Africa Regional Director for UN-Habitat, between 800 and 900 million people in Africa currently live in the cities.

UN-Habitat estimates that by 2050, more than half of sub-Sahara Africa’s population will reside in the cities.

The UN agency seeks to reduce what it calls “spatial inequalities” and is “working with cities and municipalities to develop strategies on national urban policy, on housing policy and also, how to embed urbanisation into national development plans.”

Under President Emmerson Mnangagwa, Zimbabwe has established a National Development Strategy for housing that will explore other options for mass housing such as high-rise buildings on the realisation that land is “inelastic,” Mpofu says.

But the country’s economic performance could derail those ambitions.

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Between 2000 and 2012, rents in the U.S. rose by 12 percent while the average renters’ income fell 13 percent. Credit: Bill Lapp/CC-BY-2.0

By Samuel Oakford
NEW YORK, Jun 9 2014 (IPS)

Six years after the financial crisis, Wall Street’s housing alchemy engine is revving up again – only this time it’s coming for your rental.

Right as housing prices bottomed out around January 2012, large institutional investors began buying distressed properties in regions hit hard by the foreclosure crisis; they’ve purchased at least 200,000 to date.

In only a year, private equity giant Blackstone Group went from owning no single-family rental properties (SFRs) to being the U.S.’ single largest landlord.

Now, several companies, including Blackstone, are packaging their SFRs into bonds similar to the mortgage backed securities that fueled the financial crisis.

Like those securities, SFR bonds are backed by homes; but this time rental payments, rather than mortgage payments, pay the interest. Securitisation frees up money, allowing big buyers to purchase more properties with less capital by increasing their leverage – and risk.

“Previously you had individual ‘mom and pop’ landlords, but now you have companies that have large portfolios that span multiple states – [will] the systems that they are putting in place [...] be able to keep up?” -- Sarah Edelman, policy analyst at the Center for American Progress

Issuances thus far are small – less than three billion dollars. But wary housing advocates are pushing regulators to increase supervision. Wall Street’s role as a proprietor is unprecedented, and no one knows what to expect, least of all the families renting the homes.

Last year, two senior Federal Reserve economists warned institutions could “have difficulties managing such large stocks of rental properties or fail to adequately maintain their homes.”

Indeed, this May, a couple in Sun Valley, California filed suit against Blackstone subsidiary Invitation Homes for allowing their home to descend into a slum, where they allege toxic mould caused “nose bleeds, headaches, fatigue, memory loss, inability to concentrate, chronic runny nose, respiratory issues and other chronic flu-like symptoms.”

In January, California Congressman Mark Takano called for hearings on the issue, but they have yet to take place.

“Securitisation allows for bad practices to flourish exponentially,” Kevin Stein, associate director of California Reinvestment Coalition, told IPS. “We don’t know what kind of property manager is available, and we don’t know if there will be pressure to raise rents.”

Last October, Deutsche Bank marketed the first ever bond backed by SFRs – 479.1 million dollars in expected rental payments on 3,207 units owned by Invitation Homes.

The deal was only a drop in the bucket of 44,000 homes Blackstone owns nationwide. This summer, they aim to package a billion dollars’ worth of units.

Collectively over the past three years, large investors have spent an estimated 20 billion dollars on homes. The thought of capturing more of the three-trillion-dollar single-family market has Wall Street frothing at the mouth.

Their entrance into the housing market comes amid historic inequality in the U.S., where extracting wealth from the poorest has become normalised.

The financialisation of everyday life means that something as commonplace as the landlord banging on your door for rent now involves thousands of investors, thousands of miles away, all urging that landlord to extract greater profits.

“Single family rental is not new,” Sarah Edelman, policy analyst at the Center for American Progress, told IPS. “Previously you had individual ‘mom and pop’ landlords, but now you have companies that have large portfolios that span multiple states – [will] the systems that they are putting in place work – will they be able to keep up?”

Because institutional investors can pay more than the asking price – in cash – for multiple properties, they’ve edged out local would-be homeowners and driven up prices in several hot markets. The percent of all-cash buyers has doubled in only a year, to over 40 percent of all home sales.

Tight credit for personal mortgages – from the same lenders that liberally dished out dangerous subprime loans before 2008 – has only worsened the picture for renters looking to move into a home of their own.

That has resulted in homeownership rates at two-decade lows and rising rents in practically every region.  Income, however, is moving in the opposite direction. Between 2000 and 2012, rents rose 12 percent in real dollars; over that same period, the median income of renters fell 13 percent.

SFR-backed securities do theoretically open up funding for an expansion of the rental market. Though there is an immediate need for affordable housing, seeing Wall Street renting out homes that its own malfeasance forced owners to abandon makes for a bitter image.

“Millions of families lost their homes during the foreclosure crisis and now as a result we have millions of families that are looking for homes to rent,” said Edelman. “We do need an increased supply of rental housing, but we also need to make sure those are stable.”

But as SFRs, like seemingly every financial instrument, become increasingly inevitable, housing advocates don’t want regulators to be playing catch up.

“The industry doesn’t have much of a track record – it’s important that the industry establishes best practices and that state and local policy makers revisit their landlord-tenant policies,” said Edelman.

Issuances are picking up. In April, Colony American homes sold bonds totaling 513 billion dollars. The next month, American Homes 4 Rent, the largest publicly traded single-family landlord, sold 481 million dollars’ worth.

More than half of the properties in the American Homes 4 Rent deal were located in Atlanta, Dallas, Las Vegas, Tampa and Phoenix – some of the cities hit hardest when the housing bubble collapsed.

“Securitisation just provides a mechanism to increase the volume of this activity,” Stein told IPS. “It’s not surprising people have found out a way to make money out of this.”

(END)