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Nicolas Maduro - El American

Socialism: Buying a House on a Venezuelan Salary Would Take 4,000 Years

University professor Carmen Hurtado earns less than a dollar a month for her work in this socialist economy.

[Leer en español]

In Caracas, Venezuela, Carmen Hurtado gets excited every time someone approaches her improvised stand selling dolls because, with each transaction, she is closer to her dream of owning her own home, a goal that is almost impossible to achieve in Venezuela, where it would take 4,000 years for a person earning the minimum wage to be able to afford a home of their own.

The 45-year-old university professor lives in a relative’s house in the depressed Caracas neighborhood of San José, better known for a history of violence and revenge sung by a local rap group than anything else.

“Less than a dollar,” she says with a smile that hides embarrassment when asked about her income as a teacher. Then she hesitates and does mental calculations that nevertheless return the same amount. “Yes, less than a dollar as a teacher.”

In the Sustainable Development Goals (SDGs), the UN explains that extreme poverty is measured by a daily income of less than US$1.25.

Hurtado is nowhere near this income – she admits – as she lives below the extreme poverty line despite her job as a university teacher.

This Caracas native needs more than 4,000 years of continuous savings to buy an old and modest apartment of about US$50,000 in Caracas, a city that does not escape the crisis of public services that Venezuela is suffering.

It is, exactly, 4,166 years of savings for an apartment in which there will be no running water most of the time, and in which the gas supply will be irregular.

That is why this university professor is looking for “alternatives”, such as the sale of cloth dolls that she makes herself, which she hopes will allow her to supplement her monthly income.

However, she has been able to save little in the last couple of months, when she started selling dolls and giving workshops to teach low-income children how to make their own toys.

“The time will come when I will be able to do it – buy my own house – of course it will,” she says filled with hope.

Venezuela - El American
Carmen Hurtado (EFE)
$35 a month for the lucky few

As a pharmacy assistant, Venezuelan Liz Orta earns about $35 a month, an income that allows her to feel, in some cases, “lucky”.

Lucky because every month she has money that allows her to bring food to her in-laws’ house, where she lives with her husband and two of her three children. Lucky, too, because she is not out of work like many of her neighbors and relatives.

Like Hurtado, this 39-year-old woman dreams of a home of her own where she can live with her family. A roof to call her own. “I’m in an association for housing, but I’ve been there for 20 years and they still haven’t given me an answer about my housing,” Orta says.

Her income is barely enough to eat, but when she dares to dream, Orta sees herself and her family in an apartment in a central area of Guarenas – a satellite city near Caracas – known as El Torreon.

“I have no idea (how much an apartment there costs) because I know that my income won’t be enough (to buy it) and I don’t even bother. What’s the point if I can’t afford it,?” she says.

Neighborhood in Caracas (EFE)

A real estate agent who prefers anonymity tells EFE that apartments between 20 and 30 years old sell for $25,000 in this area.

Orta would have to pool all his monthly income for more than 55 years (and without spending a single penny) to buy the home he so desires for his family, and that’s not counting inflation.

Compared to Hurtado’s impossible undertaking, Orta is a lucky one.

A country without credit

A decade ago, the government of then-President Hugo Chávez (1999-2013) used to proudly display data of the several tens of millions of dollars that public and private banks lent to citizens to buy houses, vehicles or start small businesses.

The government established a mandatory portfolio which, on occasions, led the banks to be the ones to offer citizens loans for consumption, home remodeling or even to buy houses. However, credit in Venezuela disappeared more than five years ago due to socialist policies when the crisis took shape and inflation rose exponentially.

That is why neither Hurtado nor Orta resort to banking to buy real estate, as workers do in any country in the world. Hurtado laughs when asked about the possibility of applying for a loan, not only because her income could lead the banks to consider her a risky client, but also because she knows that the tool does not exist in Venezuela.

With her credit card, which she never carries with her because it does not allow her to buy anything, she does not even pay for a coffee. Orta, meanwhile, has never thought of applying for credit.

Hyperinflation

Economist Angel Alvarado assures that high inflation is the greatest of the Caribbean country’s economic ills.

“There is no credit because of hyperinflation,” Alvarado said in a telephone conversation with EFE. “When hyperinflation exists who saves? Nobody. Then who can borrow? Nobody,” he adds after explaining that credit is a mechanism through which banking puts savers and borrowers in contact. “Hyperinflation is very harmful because it kills wages, consumption and also credit.”

With this scenario, he points out, the most vulnerable have no options to change their individual realities in the short or medium term. That is why some, like Professor Hurtado, would need to work for 4,000 years to buy their own home.

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