By Wendy Cole, Managing Editor, REALTOR® Magazine
I just returned from ten days in Cuba. It was a personal trip that offered a fascinating glimpse into one of the country’s great conundrums: how to balance people’s desire for greater economic freedom without compromising the country’s deeply-held socialist principles. My visit, as part of a group, was enabled by the “people-to-people” license program restarted last fall by the Obama Administration. (Such visits to the island-nation are designed to foster meaningful cultural exchange between U.S. citizens and Cubans. They were initiated during the Clinton years and suspended while Bush was in the White House.)
I was particularly intrigued to see how Cuba’s new property law that allows citizens and permanent residents to buy and sell real estate was playing out. Ushered in with much fanfare in November, this market-oriented reform is a major shift from a half-century of socialist, state-run housing policies.
What’s evident wherever you go in the country (and we traveled to five cities): The housing stock is aging and badly decaying. The 50-year trade embargo with the United States and the loss of the Soviet safety net in 1991 mean Cubans must make do with what they have or can make, notwithstanding the contributions from the few countries they maintain economic ties with. (Plywood and light bulbs are sorely needed, for example.) Still, the beauty of the neo-gothic, colonial architecture still comes through in many places, along with the peeling paint and crumbling walls.
Our personable and knowledgeable guide, Mirelys Gonzalez, is a typical Cuban home owner. She lives with her husband and five-year-old daughter in a two-bedroom flat, constructed on top of the Havana home she grew up in. The extreme housing shortage means that multi-generational living arrangements are quite common. It also means that divorcing couples are more apt to erect a wall within the home they have shared and continue to occupy the same property long after the marriage has ended. The reason for all this togetherness is that no one can be assured of finding a new affordable place to live.
Gonzalez’s decision to “build up” is a common solution for growing families. She personally supervised the contractors she hired. She made them redo the stairs three times because they were either too long or too short, in her estimation. But she freely admits she’s no remodeling expert. When asked about any government permitting procedures, she wrinkled her nose in confusion. The government, she explained, has always left people alone to figure out their own home expansion projects. Safety concerns are left up to the people involved. Interesting to hear what the state deems its business and what it doesn’t.
Cubans taking advantage of their new right to sell or buy a home must pay cash. The concept of mortgages has not yet arrived, which surely limits the supply of buyers at the moment. Homes cost anywhere from $10,000 to $50,000, sums that are out of reach for most families. However, loans for repairs or expansion are becoming available from banks for the first time, which should yield some noticeable improvements in the housing stock.
This house in a well-to-do Havana neighborhood is not on the market, but the owner now has the right to sell it if he wants to.
I didn’t come across anything resembling a real estate brokerage during our travels, but there were a number of signs posted on houses noting that they were available “for sale or exchange.” The most common way to find out who might be selling in a neighborhood is word of mouth. Gonzalez explained that some people in any given community were essentially designated as “brokers” of a sort to help put buyers and sellers together. Any fees collected for that service were between them.
While I don’t expect to see a Century 21 sign or RE/MAX balloon in Havana anytime soon, the journey offered a window into a nascent housing market about 100 miles from Miami. Now that Cuban-Americans are allowed unlimited travel to visit relatives and can freely send cash remittances, these developments will surely be a boon to a real estate industry that, at present, has no where to go but up.