Cuba Real Estate, It’s Complicated.

Cuba is known for rum, cigars and socialism. I’m unknown for my dislike of rum, smoking and fondness for capitalism. Did I mention the people and bicycling? We’ll get to that.

This past March I spent 10 days bicycling in and around Havana, Cuba continuing on to the villages of San Antonio, Soroa, Miradow de San Diego and Vinales. Many have asked what the trip was like to which I reply, “Cuba, it’s complicated. It is a third-world country with first-rate people.”

This adventure highlighted the importance of property rights. We are free to own property in America. The rights and laws that protect ownership allow for the orderly transfer of property. If you own property and maintain and improve your property, you may benefit from ownership because of the benefits of property rights. Our market approach encourages people to own, invest, maintain and improve real estate which then benefits other sections of our economy.

Cuba is a Socialist economy that shuns private ownership and private property rights (but is gradually giving way to some private ownership). Cuba has four economies by my count – Pesos, CUC, Government and Black Market. A four-tiered economy absent property rights is a recipe for stunted economic growth.

The housing in the photo in the New York Times link below is very representative of the housing stock I saw in Havana. I walked a two block section of Havana on the Malecon and estimated over 100 million dollars of development in that two block stretch.

http://www.nytimes.com/2011/11/04/world/americas/cubans-can-buy-and-sell-property-government-says.html

Cuba’s problems are many but three housing issues come to mind: A housing shortage, a housing stock in very poor condition, and a lack of materials for maintaining the existing housing units and constructing new ones. On day three of my trip I passed a home roughly 950 square feet. The building was a slab on grade (meaning no basement) and was built of concrete. The shell was intact and window openings set with no roof in place.

I asked a local if the home had been abandoned and he said no, that the construction process has taken one year so far and that it would take another two to three years to secure the materials to complete the home.

Cuba is moving slowly towards a modest form of home ownership property rights and some private enterprise. In Vinales I had the good fortune to rent a room from a family because the family had a license (from the government) to rent the room. Vinales has over 500 such rooms.

This room was clean and well maintained. The owners were Vladymir and Gladys, a couple in their late thirties. Vladymir worked for the government and earned the equivalent of $23 per month. My tip for the two day stay represented ½ of his monthly salary, money that was then spent for goods and services in the village. Behold the power of property rights and a free market economy.

On the human front, Cuba has a literacy rate of 99.8%, an infant death rate lower than some developed countries and an average life expectancy of almost 78 years according to the United Nations Millennium Development Goals Report. The country is beautiful with little crime other than petty theft.

The bicycling was extraordinary. I have undertaken three bicycle trips in the mountains of Colorado and bicycled portions of the Midwest and nothing compared with the sun, vegetation, food and people I encountered on my Cuban trip. I would encourage those with the ability to bicycle Cuba to do so.

It will be interesting to see Cuba develop in the coming decades. Cuba doesn’t have to become America – maybe Norway or Sweden – but they can’t remain Cuba, as the country and the people have too much to offer. Private property rights will be a good starting point.

If you have real estate related questions, know of someone interested in securing their own property rights (buying a home) or have questions about the Cuba trip, feel free to contact me by phone or e-mail.

Thanks for reading.