When housing was no longer a commodity: the Soviet disaster

"Dwelling is not a commodity" is a phrase very often repeated among activists in defense of popular housing.

I understand here 'housing' as housing units, mainly houses and apartments. Already 'commodity' is something produced to be sold in the market, intended for trade, and that is not use of the producer.

The vast majority of homes today can be considered commodities, since they are produced and sold by developers and real estate agents who do not live in the buildings they produce. Thus, the proposal behind the activists who repeat this phrase is to make the housing cease to be produced and sold by the real estate market, being planned and distributed by the public power. The goal would be to make it more affordable given the current housing shortage, which is one of the causes of high real estate prices.

But this proposal is not new. Housing has ceased to be a commodity during a very peculiar moment of our history, and in a well-documented way, in the Soviet Union (USSR), covering several cities of Central and Eastern Europe during most of the last century.

Today, it is possible to understand what were the main consequences of this policy.

Several cities of the former USSR abolished the price system and implemented a planned economy over a period of 45-75 years. In this spirit, the real estate market was also abolished. Consequently, what determined the allocation of densities and residential, commercial and industrial uses were not the demands of the residents as real estate consumers, but bureaucratic decisions made with the purpose of minimizing the resources invested in real estate in order to provide " universal housing ".

It is difficult to understand this system, so different it was than we are currently used to. From being a commodity, real estate and land had no prices. Planning began with technical studies that determined the amount of land needed to build apartments and factories. Once land was allocated for a particular use, it could no longer be sold or rented to a third party, only returned to government if nothing was built.

This principle had a major impact on industries undergoing technological change: factories expanded but could not relocate because they would have a cost of land change that could not be offset by a sale of the original factory. After all, factories could not be treated as commodities either.

Even when technological and operational problems obliged administrators to change places, the lands of this industrial ring were not recycled, but kept industrial, only with fewer jobs and industrial activity. The industrial policy of the Soviet Union led to an extreme concentration of industries within the urbanized region.

For example, in Moscow, 32.5% of the built city is used for industrial purposes (although part is currently abandoned because the city has not yet been able to regenerate). In Paris, Seoul and Hong Kong are only 5%.

The same process was done in determining commercial use. It is important to remember that, in fact, we should not call this "trade" activity, but simply "services", since commerce (at least in formal ways, since the so-called "black market" functioned comprehensively) does not exist when the concept of merchandise is abolished. Thus, many services like banks, real estate brokers, insurance companies etc. simply did not exist in these cities. In addition, many education, health, and food distribution services were made within industrial facilities and did not require a specific allocation of land use in the city.

The allocation of housing also followed the same logic, but with a small detail: the amount of land allocated for residential use was changing throughout the Soviet period according to the development of technologies that allowed better use of land: the verticalization. Prefabricated building systems, which became universal for housing construction in Central and Eastern European countries from the 1960s onwards, allowed for taller apartment blocks, reducing the need for land from the planners' point of view and generating each densities.

Soviet planners only quantitatively assessed the population's housing needs, regardless of the location of the buildings in the city. At the same time, large terrains on which no buildings were yet to be found were more easily found on the outskirts. This made the newer residential areas - and farther from the center - normally have higher densities because of the higher heights of buildings that have been made available over time.

The final urban result in cities in which this had the greatest impact is the opposite path to that of the European city which has a higher density near the historic center - with a greater demand for housing and services - and gradually decreasing as it distances itself. Matosco, where this policy had the greatest impact, although it still has a historical center that concentrates jobs and services is one of the only cities in the world that has denser peripheries than the central areas. Urban inefficiency One of the urban consequences of this type of planning has been the increase in the distances of displacement, since the inhabitants of the peripheries are forced to move to the central area where services are concentrated. If we compare Moscow to Paris, which had a spontaneous allocation of housing and services during most of its urban development, the first one owns 75% of the area of the second, but with a displacement distance of 5% larger residents. Brasília, which also had a totally centralized planning, performs even worse on this indicator: the distance of displacement of its residents is similar to that of New York, but the Brazilian capital has a constructed area 10 times smaller. maintaining abandoned or underutilized land in central areas of the city - mainly industrial, in the case of Moscow - is also very significant, contributing to the shortage of land for housing. Citing economist Emily Washington, "It makes no sense to use industrial land where people are willing to pay a premium for housing." The work of urban planner Alain Bertaud shows that in 1991, when the real estate market was gradually being reintroduced into Russia after the end of the Soviet Union, housing prices near the center have been increasing, showing a clear lack of supply of housing in these places. Shortage, bureaucracy and black market The lack of a pricing system - which is crucial to transmit information on supply and demand - also led to a great shortage of housing, especially during the first half of the Soviet period. During the Stalin era, between 1927 and 1955, the USSR did not increase the extremely low per capita built-up area rates that existed in 1917, 4m2. Cohabitation was frequent and necessary, with about 35% of the population living in shared apartments until the end of the USSR. The queues of waiting to obtain housing took around 10 years. It was so much bureaucracy involved in the process that the Russian government identified 56 different types of housing that could be achieved by 120 different procedures. Since the purchase, sale and exchange of housing was prohibited (as we recall, they ceased to be a commodity) a black sublease market, which some authors estimate to have covered 10% of all units in the city. It was also frequently the illegal transfer of address, since it was also necessary to wait a few years in the registration queues to formalize the exchange. Although there are no official statistics on homeless people, secret reports from the USSR report numbers of around 500,000 people. Even so, major cities such as Moscow were symbols for the rest of the country and the rest of the world, receiving a disproportionately larger investment in housing compared to other Soviet cities. The quantity and quality of housing produced, for example, in rural and industrial areas in Siberia were much lower than in urban centers. However, to make matters worse, the quantitative control of housing and the constant shortage in the cities due to the rapid industrialization created the policy of propiska, a kind of internal migratory passport, that prohibited the inhabitants of rural areas from migrating to the urban centers. The end of architecture One of the proposals of the housing policy of the USSR was to promote collective housing and equal housing for all. In this sense, there was a model of a housing block to be followed during each epoch, which did not take into account the preferences and particularities of the citizens. This resulted in the modernist pasteurization of the Soviet city, the repetition of aseptic projects aiming at the numerical reduction of the housing deficit - which, nevertheless, was not solved. In the Soviet context, it can be said that this decreed the end of residential architecture, given that a single solution was chosen to solve everyone's need. Many may criticize the "concrete jungles" of cities such as São Paulo or New York, where there is a radical variation in the size, shape and style of each architectural project. But the fact is that its variability of buildings - even if within the established legislations - allows that every citizen can choose the architecture of his preference. The real estate market, in this scenario, aims to meet the diverse preferences of its consumers, who also They also change dynamically along with the habits and technologies existing at each time. A strong indication of this is that, with the end of the will to live away from the central regions - a trend that has spurred urban sprawl until the 1980s - , today there is a strong tendency among developers to produce smaller, well-located apartments with a more connected relationship between the building and the city. Mortality is a commodity The housing report in the Soviet Union empirically shows some of the negative consequences of having the housing ceased to be treated as a commodity. It is important to point out that the problems observed were not the result of technical failures in planning or of an erroneous concept of housing adopted, but rather of the elimination of the decentralized system of prices, which, when it functions freely, generates constant feedbacks between supply and demand Through the pricing system, each citizen, by voluntarily renting, buying, developing (or not) a particular property in a particular location, and making it the one that best suits him, is providing the market with crucial information about his preference. And by doing so, it sends other individuals and companies instant information about the state of this market. Trying to abolish the real estate market again in order to plan the city differently - and to the liking of planners and bureaucrats - of the Soviet real estate model, since such an arbitrary measure does not respond dynamically to the demands of the population. Empty or underutilized housing will continue to exist, although scattered throughout the city instead of being concentrated in a completely zoned area. The housing deficit and the high housing values, targets of the struggle for popular housing, should be attacked at its root, without altering the characteristic price dynamics. What, after all, makes our properties so expensive? A study conducted in 2005 by economists Edward Glaeser and Joseph Gyourko entitled "The Impact of Zoning on Housing Affordability" points to a strong correlation between land use regulation and housing accessibility, which may result in a 50% increase in the real estate value of a There are a number of reasons that contribute to raising housing prices, from artificial supply constraints (density limits, height of buildings, gardening retreats, zoning laws) to changes in projects (such as mandatory garage and laws that encourage the underutilization of land), passing through costs in the incorporation activity (legal costs of passing through the approval of public agencies; cost of legal risk of legislation that does not make clear what can and can not be done in a certain terrain ; opportunity cost of time between the purchase of land and waiting for a given project to be effective and approved by the Municipality, taxes and labor charges). All this contributes to a significant increase in the price of real estate in highly demanded urban centers. The result of Glaeser's study concludes that North American cities that had less land use restrictions had their prices closer to their construction costs, given the market balance between supply and demand for housing. In an urban center inserted in a market economy it is contradictory to fight against a large real estate offer and, at the same time, in favor of affordable prices. Anyway, in order to have an efficient, diverse, dynamic and at the same time accessible, we must make the dwelling cease to be a commodity, but rather that it be a commodity accessible to all.