This is how Latin America tries to turn its youth into young homeowners
Three government projects from Costa Rica, Colombia and Bolivia that have helped thousands of young people to finance and acquire their own home.
Will young people ever own their own homes?
Originally published on Global Voices
Illustration by Distintas Latitudes. Used with permission.
This article was written by Distintas Latitudes and published on February 20, 2024 as part of the regional investigation “Where are we going to live?,” carried out by the 7th generation of the LATAM Network of Young Journalists, on access to housing in America Latin and the Caribbean. An edited version is republished on Global Voices under a media partnership.
Young Latin Americans leave their parents’ homes, on average, at age 28. Faced with the reality of adult life, the concerns of the new generations are accumulating: lack of jobs, precarious salaries, phenomena associated with climate change, mental health, violence, migration. And on top of all that, a common question prevails: Will we be able to have our own home one day?
According to the Economic Commission for Latin America and the Caribbean (CEPAL), in 2023 82 percent of the Latin American population lived in urban areas. This make the region one of the most urbanized in the world. However, it is also one of the most challenging to access housing, especially for young people.
For Carla Escoffié, housing researcher and author of the book Country without a roof, “housing is a basic right for the exercise of other rights.” Having a safe space, she says, is essential for sexual and reproductive rights, the right to identity and rest. In some cases, it is even a determining factor in aspiring to a job.
For decades, governments and organizations in the region have implemented mechanisms, projects and laws to solve the housing deficit. The problem is that most of these projects focus on the acquisition of new housing and provide support only to people with a permanent job.
It is common for these projects to forget the 27 million young Latin Americans who work in the informal sector, and also those demographic groups overrepresented in informalwork, such as women, migrants, indigenous, Afro-Latin and LGBTQ+ populations. This has forced governments, specialized housing agencies and communities themselves to look for new solutions adapted to the needs of young people.
Here are three government projects from Costa Rica, Colombia and Bolivia that, with their rights and wrongs, have helped thousands of young people to finance and acquire their own home.
Costa Rica: A housing project that benefits thousands of young people
The Comprehensive Financing Program for Middle Income Families in Costa Rica was not aimed at benefiting young people. However, that is just what the program did.
This project emerged in 2019 as part of an agreement between the Ministry of Housing and Human Settlements, the Housing Mortgage Bank (Banhvi) and various entities of the National Financial System for Housing. Basically, it grants bank loans for the purchase and construction of land and real estate, as well as family housing bonds.
According to the Costa Rican media CRHoy, in 2020 the program financed up to CRC 65 million (about USD 126,000), although on average its loans were around CRC 30 million (approximately USD 59,000), with an interest rate of 6.5 percent.
By June 2023, 70 percent of the beneficiaries were people between 18 and 35 years old, according to data provided by the Directorate of the National Housing Fund of Costa Rica. We are talking about 3,100 young people, of which 507 are under 25 years old.
Without a doubt this is a reference for future Latin American programs. However, according to Franklin Solano, a specialist in the Costa Rican housing sector, 40 percent of the country's households are unable to access this program because they do not have the necessary minimum income. Another 20 percent barely meet the requested amounts, while also carrying other debts.
Colombia: How a country based on rent tries to get young people to buy their first home
In Colombia people rent more than anywhere else in Latin America. By 2011, four out of every ten Colombians were tenants in the house where they lived, a figure that has been increasing since the 1980s. There are those who pay more than 45 percent of their salary in rent alone.
The Colombian state implemented the Young Homeowners program, launched in response to the protests of 2021. It is a program of the State and the National Savings Fund that seeks to facilitate the purchase of a home for young people between 18 and 28 years old, providing them with adequate financing options to their needs.
The credit amount depends on the person's payment capacity and the cost of the property. However, it usually covers up to 80–90 percent of the value of the property. The program's interest rate can reach up to 12.3 percent in some cases, although it is usually 6.8 percent, less than half of what private banks offer. By August 2022, one year after its launch, the initiative had already approved 17,078 credits.
Bolivia: Thousands of abandoned houses in a country in need of housing
Bolivia is the second country in Latin America with the lowest population of young homeowners, behind only Colombia. According to the National Institute of Statistics of this country, three out of every ten people do not have their own home. People who do have one, in many cases face overcrowded conditions, lack of access to resources such as drinking water and sewage, or live in vulnerable areas.
That is why in 2019 the state created the Youth Housing Plan. This project is led by the Bolivian State Housing Agency (AEvivienda), which since 2011 has been in charge of designing and executing housing programs for vulnerable populations such as people with low income or disabilities, older adults and single mothers.
The intention of the Youth Housing Plan is to provide mortgage loans to people between 18 and 29 years old who want to buy a house, even if they earn the minimum wage of BOB 2,300 (approximately USD 330). To achieve this, the program subsidizes up to 30 percent of the cost of housing to those young people who access credit.
On paper, this seems like a good project. In 2022, three years after it began, the Housing Plan reported having benefited 1,746 young people. However, these results could have had a more notable impact among young people in vulnerable conditions: although the plan claims to offer credits for people with minimum wages, in practice it does not seem that they are its priority.
In 2022, a commission of deputies from the Bolivian Congress denounced irregularities in the projects started since 2016, which resulted in thousands of empty houses. These deputies also discovered that there were funded projects that had not even been built or completed.
They also found that the state awarded the construction of six urban housing projects to different construction companies for more than USD 83 million and that 91 percent of the houses in those projects are uninhabited.