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Julio lives in Quito, Ecuador. He is an economist who has just turned 30 and although he has been a formal civil servant for almost a decade, he believes it is impossible for him to one day realize the postponed dream of owning his own home. “Don’t even think about it. I prefer to rent and pray that at some point the prices of the apartments will drop,” he says.
Jonathan is 35 years old, hails from Lima, Peru and unlike Julio had no access to higher education, he works as a doorman in a building in Miraflores, an upper-class neighborhood of Lima, and lives in a rented mini-apartment 20 kilometers from his Home away from home work with his wife and children. Jonathan reacts without enthusiasm to the idea of buying a house in the near future: “It’s super difficult for me. The most I aspire to is to buy a piece of land and gradually build a house.”
The two are children of a continent that has grown exponentially over the past 50 years in such a disorderly and unplanned way that it seems to have robbed its young people of the dream of access to decent home ownership.
Jonathan is resting in his rented mini apartment in Lima. Leandro Britto
For Francisco Sabatini, a Chilean sociologist, doctor of urban planning at the University of California and professor at the University of Bío-Bío, the industrialization of the world economy and the application of free market politics in Latin America have taken on great importance over the past 30 years an unprecedented urban explosion that has led to disorderly growth and unsustainable urban planning, has created deep social gaps and a serious problem, both in the population’s difficulty in accessing housing and in the prevalence of precarious settlements and the illegal or informal occupation of land.
“Unfortunately, global neoliberal economic policies, in addition to the financial crises of the last few decades, have meant that housing is no longer just a material good, but has also become the financial asset that earns the most today. And this has caused land and house prices to skyrocket, denying millions the opportunity to access their own homes,” explains Sabatini, adding that in Latin America, unlike in Europe or the United States, States have no tradition of a strong rental market, and yes, on the other hand, access to home ownership, whether illegal or legal.According to the expert, this is happening because our countries have historically had inflationary, unstable economies that have left families, particularly the poorest, financially insecure. “For Latin Americans, housing is much more than a home, a commodity or a financial asset. It is a life insurance policy and at the same time a pension and what you will leave to your children,” he comments.
Urban explosion and informal occupation
According to a study by the United Nations Human Settlements Program (UN) entitled State of the Cities of Latin America and the Caribbean in 2012, the region’s overwhelming growth over the past 50 years meant that only between 1970 and 2000 the population in Latin American cities will increase by 240%. According to projections by the United Nations Economic Commission for Latin America and the Caribbean (ECLAC), one in five people in Latin America and the Caribbean lives in informal settlements. In contrast, the 2017 Economic and Development Report by the CAF-Development Bank of Latin America shows that it would take Latin American households more than 30 years of savings to buy a 60-square-foot house at the average price, assuming they allocate 30% of their income to the consumption of housing services.
For Álvaro Espinoza, economist and associated researcher in the Urbanization and Sustainable Cities work group of the Development Analysis Group (Grade), the transformation of the dynamics of access to housing is closely related to the increasing impossibility of finding available land in the urban centers of the most important cities of the Region. “Three decades ago, young people came, invaded and built informally in areas near urban centers where labor, study and services are concentrated. It was the only way for low-income families to gain access to their own homes. Today the panorama is different: without available land near the cities, the solution to the invasion loses its attractiveness due to the costs associated with transport and time,” says Espinoza, who thus explains the increase in real estate rents and the popularization of the model incremental houses, the are gradually being built, house the extended family and create an ever-growing informal rental market.
Jonathan walks in a park near his home in Lima’s Villa El Salvador neighborhood on October 1, 2022. Leandro Brito
Similarly, the middle class has grown exponentially in the region over the past 30 years, albeit from different sources. Espinoza reiterates that the informality and precariousness of formal work has meant young people have less access to finance. “In the 1980s, hyperinflation across Latin America caused mortgage lending to disappear, abruptly ending massive housing production. Almost forty years later we see the consequences,” explains the economist.
Peruvian sociologist Julio Calderón Cockburn explains that the new urban policies in Latin America in the 1990s abandoned the model of the building state, which acquired land, developed businesses and instituted financial mechanisms for demand. This has been replaced by demand-based housing subsidies in countries like Chile, Mexico and Peru, or by a fee-benefit (in the form of value-added) system like in Colombia, which allows the state to receive funds for new projects.
“The problem with the demand subsidy is that the price of formal land is rising and real estate companies, in order to maintain profitability and not lose the subsidy bonus, are building low-income housing far from urban centers. So we see how in Mexico there is talk of five million public housing units that have been allocated but not occupied. Because people don’t want to live 20 kilometers from the city and prefer to move to the centers to live there in rented apartments or to build a new apartment in their parents’ house,” says Calderón, who believes that this policy is not enough to address the housing deficit approach.
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Rental apartments: emergency solution?
Francisco Sabatini believes that, faced with the impossibility of access to one’s own home, a trend that could continue to accelerate, the path to be taken is clear: promoting the housing rental or rental market in the area, a conclusion to which he also belongs The Recent the Chilean Chamber of Construction and the World Bank arrived. However, the expert warns that a massive apartment rental policy could be compared to the flexibility of the workforce. “On the one hand, this stimulates the economy, but on the other hand it leads to a significant impairment of the quality of life of many people,” he emphasizes. “I believe in renting, but not as an alternative to owning.”
For Aldo Facho, urban architect and co-founder of the Latin American Network of Urbanists, better rental policies could not only largely solve the problem of access to housing, but also respond to new social dynamics of livability. “Here in Argentina, middle-class youth see the opportunity to have access to a home they bought so far away that they are more focused on consumption, travel, renting and moving. And that’s because there are more and more incentives for mobility,” says Facho. He also believes that this model is better adapted to new family structures. “The model of getting married, buying a house, having four children and living in the same property for a lifetime is a thing of the past,” explains the urban planner. “Now people get together, separate, travel, remarry and have fewer children. And that more freedom and diversity in the way we inhabit cities and the world means there are also fewer incentives to buy a property,” he comments, without hiding his concern for future generations and the few opportunities , they will have to make the dream come true, everyone further away from home.