March 17th, 2015

The Network and Relationships


By: Victor Normand
Published: March 2015

Manager, Krystal Brule, accepting Award on behalf of Acton Real Estate in Las Vegas

Manager, Krystal Brule, accepting Award on behalf of Acton Real Estate in Las Vegas

Press Release:
International Real Estate Conference Draws 2,000 Attendees
Local Firm among Top Award Winners – and that would be Acton Real Estate.

We all work in a networked economy. Businesses routinely tout their connections to vast networks, some that circle the globe, to illustrate how their customers benefit from doing business with them. Some networks are based on numerous company offices, some by industry. The truth is any network is only useful when there is interaction among those who belong to the network.

Acton Real Estate belongs to a global network of independent real estate companies, called the Leading Real Estate Companies of the World® (LeadingRE). The criterion for membership is rigid and requires that members refer relocation business to one another regularly. In doing so, it’s a routine business for us to ensure that our clients will be referred to a company that we know will serve them exceedingly well. At the annual LeadingRE conference held in Las Vegas in February, 2,000 participants from over 500 of the best independent real estate companies from across the country and around the world gathered to learn new things, exchange ideas and recognize the achievements of member companies.

Acton Real Estate came away with top honors for outgoing referral production and placed among the top 5 in 4 other categories. The company’s accomplishments made it rank 3rd overall among 130 partner companies of similar size.

Success in the networked economy requires that companies both compete and cooperate. Two authors on the subject of business management, Adam Brandenburger and Barry Nalebuff from Harvard and Yale respectively, coined the term co-opetition to describe the place where competition and cooperation merge to respond to a changing business dynamic. They published their work in 1996 just as this new paradigm was evolving; where “information, connectivity and time” began to define how business was conducted.

Consumers began to discover, and now take for granted that barriers to entry into the world of commerce were falling. They have come to expect that all buyers and all sellers have gathered to form the once only theoretical “perfect marketplace.” But membership in the interconnected world adds value to business transactions only when there is active participation. Joining is not co-opetition; relationships must be used to have value.

The active participation of Acton Real Estate in LeadingRE truly adds value to the service we provide to clients. In addition, the ongoing interaction with the best independent real estate companies around the globe continually strengthens those relationships. Being top of mind with real estate companies in Boston, Chicago or London is good for business and good for our clients and it’s what they should expect.

The Resident Expertsm are off to a great start in 2015, using their networking skills in every way to make sure the clients we serve are active players in the global marketplace.

February 18th, 2015

Who’s Looking Out for Me?


By: Victor Normand
Published: February 2015

Before 1990, the real estate agent who drove around with you looking at homes for sale, answered all your questions, supplied information about the house, wrote an offer, helped settle on a sale price, interpreted the home inspection and otherwise stayed with the transaction to closing was actually acting as the legal representative of the Seller, and not you, the Buyer. In fact all real estate brokers and agents in the Commonwealth of Massachusetts were duty bound to act in the best interest of their clients, the Home Seller. You would have been merely their customer.

Licensing law in Massachusetts required those brokers and agents representing the Sellers to adhere to the duties colloquially referred to as “OLD CAR”

o Obedience – Agent must carry out all lawful instructions of client.
o Loyalty – Agent must act in best interest of client.
o Disclosure – Agent must disclose all information relevant to client.
o Confidentiality – Duty to keep confidential client’s information or discussion.
o Accountability – Agent must protect and account for all money, documents, or other personal property given to her by the client.
o Reasonable Care & Due Diligence

Given the requirements of this agency relationship with the Seller client, you might be tempted to ask, “Who’s looking out for the Buyer?” And you would not have been alone on that point. The idea of Buyer Agents took hold in Massachusetts in the early 1990’s when licensing law was changed to allow for Buyer Agents. Some brokerages became exclusive Buyer Agents, serving only Buyer clients and some remained “traditional” brokerages representing Sellers as they had previously. But most real estate companies, including Acton Real Estate, became full service agencies.

So, how does the real estate consumer know who is representing them? Both the federal and state governments require brokers and their real estate agents to disclose the nature of the relationship with prospective clients up front, as soon as the first face to face meeting where a specific property is discussed in any detail, including inquiring about the list price.

To satisfy this disclosure requirement and to inform consumers, the Great Boston Real Estate Board created the Massachusetts Mandatory Licensee-Consumer Relationship Disclosure form and Certificate. The form defines each of the six types of relationships that may exist and requires the real estate agent to explain the difference and disclose which type is being offered.

Those different types are:

Seller’s Agent
Buyer’s Agent
(Non-Agent) Facilitator
Designated Seller’s and Buyer’s Agent
Dual Agent

Confused? You are not alone – in fact, unfortunately, many real estate agents do not handle this disclosure process correctly. Like most real estate companies these days, Acton Real Estate represents both Buyers and Sellers. This full service model is called Designated Agency where the ‘Old Car” relationship is established at the start between the client, whether Buyer or Seller and the Agent.

It can get complicated when the Buyer Agent and the Seller Agent involved in a transaction both work for the same real estate company. So, your best advice, as always, is to work with a Resident Expertsm who knows the law and has your back.

January 14th, 2015

Dealing with Stuff


By: Victor Normand
Published: January 2015

Sometimes the spring market for homes sales begins in February. If there is no snow on the ground and the sun is out, so are the buyers. Even if spring waits for the calendar, it’s not too soon for sellers to start getting ready. Preparing a home for market involves everything from dealing with deferred maintenance items, updating mechanical systems, remodeling in minor or major ways and considering the use of staging. All in all it can be a daunting but necessary undertaking. The first step however, which is often the least expensive but arguably the hardest to do, is getting rid of stuff.

Houses are bigger today by more than a factor of two since the middle of the last century and we have all taken advantage of that added space to accumulate stuff. Today the weight of household items for a typical four bedroom home is about 11,000 pounds compared to 2,500 pounds in 1950. Someday, someone will eventually deal with all of our stuff if we don’t take care of it. Moving to a new house, even if the new house is the same size as the old house is a good time to shed a few pounds.

Consider this; the cost to move one pound of stuff from Acton to Raleigh, N.C., a distance of about 600 miles, is about 75 cents. Getting rid of 10 percent of our stuff could save over $800 in shipping costs. And who doesn’t believe that we couldn’t lose that 10 percent without missing any of it and actually feel GOOD about living with a bit less clutter? Some experts say that most of us actually use only about 20% of all the stuff that we own. The de-cluttering concept is sound but the execution is difficult.

Here are a few ideas to get you over the hump and on your way toward minimalism:

• Get in the right frame of mind. Imagine your surviving family members going through your stuff and wondering why Grandpa would keep something like this? You don’t want to embarrass yourself posthumously; get angry and get going.
• Start at the end. Clean out the basement by just moving everything into the garage. See how great the basement looks? Now you are motivated.
• Get a sponsor. If it works for AA, it can work for de-cluttering. Find a friend to work beside you who is not connected emotionally to that old rocking chair with the broken seat. You don’t have to face this alone.
• Go with your inner self. If you are hyper-sensitive about parting with your belongings, focus on re-cycling if you can’t bear the thought of your stuff ending up in a dumpster. Hire a clean out company who promises to re-cycle “most” of the items they take away, and there’s always eBay, and the Virtual Garage Sale on Facebook where your “friends” get first dibs on your stuff.
(See the list below for some other options for re-purposing things)

Advanced Electronics Recycling
43 Broad St.
Hudson, MA 01749
Phone: 978-568-3444
Takes: Old computers, miscellaneous electronics, CRT monitors and TV’s.

145 Great Rd.
Acton, MA 01720
Phone: 978-263-6150
Takes: Desktops and all in one computers, laptops, tablets, ereaders, monitors, printers, copiers, scanners, faxes, shredders, UPS/battery backup devices, mice, keyboards, modems, routers, computer speakers, mobile phones, MP3 players/iPods, calculators, GPS devices, digital camera, camcorders, cordless phones, digital projectors, CD/DVD/Blu-ray players, gaming devices, A/V receivers, video streaming devices, cable/satellite receivers, external hard drives and small servers, rechargeable batteries (11 pounds or less)
Will NOT take: TV’s, floor model copiers and printers, appliances, large servers, large speakers or speaker systems, alkaline or lithium batteries, lamp and bulbs.

530 Main St
Acton, MA 01720
Phone: 978-635-1710
Donation Hours: Tues, Thurs & Sat: 9am-Noon
Takes: Metal bed frames, mattresses & box springs, dressers & bureaus, nightstands, kitchen and dining room tables & chairs, sofas &loveseats, sofa beds & recliners, coffee & end tables, dishes, glassware, pots & pans, flatware, cooking utensils, baking pans & casserole dishes, toasters & toaster ovens, coffee makers, mixers, blenders, countertop microwaves, sheet sets, blankets, comforters & towels, new or like new bed pillows, area rugs, framed prints, mirrors, fans, space heaters, vacuum cleaners, TV’s (10 yrs or newer, radios, irons & ironing boards, shower curtain liners, brooms & dustpans, small trash cans.
Will NOT take: Clothing or food

The Salvation Army
Phone: 1-800-728-7825
Takes: Appliances, automobiles, men’s, women’s & children’s clothing, furniture, household goods, miscellaneous items
The Salvation Army provides receipts for tax deductions

Phone: 877-545-4113
Takes: Old or second refrigerator & freezers. Must be between 10 and 30 cubic feet using inside measurements, cannot be your primary refrigerator or freezer, clean, empty and in good working order, accessible with a clear path for removal. You MUST be an NStar customer. Offers Rebate.

Mass Save
Phone: 877-545-4113
Takes: Old or second refrigerator & freezers. Must be between 10 and 30 cubic feet using inside measurements, cannot be your primary refrigerator or freezer, clean, empty and in good working order, accessible with a clear path for removal. Offers Rebate.

Kars 4 Kids
Phone: 1-877-527-7454
Takes: Cars, boats and water craft, motorcycles and dirt bikes, RV’s, campers, and trailers

Boston Building Resources
100 Terrace St
Boston, MA 02120
Phone: 617-442-2262
Takes: Cabinets, countertops, sinks & faucets, appliances (showroom condition, less than 5 yrs old), vanities, tubs & enclosures, low-flow toilets, ceramic tiles, accessories (towel racks, etc.), lead paint free windows (vinyl & wood replacement, insulated double hung units, awning & hopper), lead paint free doors (interior minimum width 30”, exterior, storm doors with frame & hardware, locks, knobs , hinges), dimensional lumber (6’ min. length, no scraps), moldings, plywood (half sheets or larger), drywall (half sheets or larger), exterior house shutters (wood, no lead paint), carpeting & carpet tiles, ceramic & vinyl tile, sheet vinyl, wood flooring, residential surface-mounted light fixtures, paddle fans, latex paint (full containers, cans must be clean and paint in good condition)
Call for items they will NOT take

Books: Can be donated to the library, Salvation Army, HGRM, or any of the book drop off boxes that are located throughout town.

For many, the task may appear difficult at the beginning, but as they progress, the process of tossing out stuff can feel exhilarating. I feared the roller coaster as a kid, but I kept getting on and soon began to crave the thrill of being momentarily weightless.

And then there is the joy that comes with starting over. I knew a man who was only able to save a few family albums when his house burned to the ground. Afterwards when a reporter asked him what it was like to lose everything he thought for a moment and simply said “liberating, in a way.”

So, consult with a Resident Expertsm on everything you need to do to prepare your house for the spring market, even if it’s the spring market next year. Start off by not purchasing anything new, even if it is on sale, and then digging in to that collection of stuff. You will feel so good when it’s done!

December 18th, 2014

Holiday Reflection


By: Victor NormandGhost with Scrooge
Published: December 2014

At the end of A Christmas Carol, Charles Dickens describes the change in his main character: “Scrooge was better than his word. He did it all, and infinitely more; and to Tiny Tim, who did not die, he was a second father. He became as good a friend, as good a master, and as good a man, as the good old city knew, or any other good old city, town, or borough, in the good old world.”

Scrooge had his epiphany because of a piece of undigested beef (or it might have been too much to drink) that caused ghosts to show him what he should have known of his poorly led life and what he needed to do to turn things around. It feels good to be reminded that we all have choices and opportunities to embrace the true spirit of the holidays.

In real estate we live in a very material world. Our work is in the main, defined by land and buildings and everything affixed thereto. But as anyone who toils in these fields knows, attachments with real people are formed every day. We strive to know our clients and their most important physical needs. We build relationships with service providers and vendors and we rely on the efforts and experience of our associates in the office.

We would all like to be known as good people throughout our lives, both now and after we have gone to that last and final “Open House.” When you think about it, it does not take all that much to be known as a good and honest person, so long as we are true to ourselves. In our hearts and minds we always know the right thing to do, keeping faith with the right thing to do is sometimes a challenge.

Scrooge and his business partner ran a nineteenth century financial institution, then called a Counting House, which today we might call a private bank, and money lending is what they did. The image of Scrooge, if not the name itself may have come to the minds of first time home buyers or sub-prime borrowers these past several years. And it is hard to imagine anyone having the serenity of Bob Cratchit who could count his blessings amid poverty and personal hardship.

But by the end of the story, things had gotten better. Scrooge changed his business model, his debtors got relief, Bob Cratchit got a raise and a fat goose to boot, and Tiny Tim’s future was much brighter. Redemption for Ebenezer Scrooge was at hand and Dickens hoped his little story would find its way into all our hearts.


November 17th, 2014

Disclosure of Death, Crimes and Ghosts


By: Victor Normand
Published: November 2014

112 Ocean Avenue, Amityville, New York

In all states, home sellers and their real estate agents are obligated to disclose known material defects like a leaking roof or an inoperable heating system in a property for sale. Material defects are defined as those conditions that could affect the value of a home. In Massachusetts, the Consumer Protection Act, Chapter 93A, requires such disclosure even if a potential buyer does not ask. Failure to disclose material defects could subject the agent to treble damages, plus legal fees. But the question is, can matters of an intangible nature be considered material?

Can the fact that crimes, like murder or the presence of a ghost or other paranormal event, psychologically stigmatize a property as to materially affect its value? The fact is that one in four Americans is superstitious and there are several examples of severely depressed values on stigmatized properties. The former home of Nicole Brown Simpson where she and a friend, Ronald Goldman were murdered, sat on the market for two years and eventually sold for $200,000 less than the asking price. State laws on disclosure vary widely.

In Tennessee there is no duty to disclose, and a real estate agent who does disclose such stigmatizing information without permission can be held liable for breaking the fiduciary relationship between the seller and the agent. In California the law does require disclosure for deaths at the property, but only if the death occurred within the last three years, and was not AIDS related. In Massachusetts, there is clarity on the subject.

While Chapter 93A would seem to require full disclosure, the legislature created an exception by passing the “Stigmatized Property Law.” The law states that whether a property is “psychologically impacted” is not a material fact that requires disclosure. However, if asked by a potential buyer about a crime or death of an occupant, the real estate agent must respond accurately as to what is known. There is no duty to volunteer any information, but if asked, the agent must disclose. There is no obligation on the part of the agent to investigate and the potential buyer’s questions should be referred to the local police department.

By extension, paranormal events that may stigmatize a property; think The Amityville Horror, need not be disclosed voluntarily, but should be addressed if asked. In New England where homes are much older than other parts of the country, there may be no knowledge on the part of the current owners of what may have happened in the house 50, or 100 or more years ago. And then there is the issue of what situation might exist in the neighborhood.

Courts have suggested in certain cases that there may be no need to disclose non-physical “transient social conditions” in a neighborhood. The matter of sex offenders living nearby presents both a legal and ethical/moral challenge for real estate agents. While sex offenders are not of themselves a protected class like minorities, children, or the handicapped, the best advice for a real estate agent is to disclose.

Real estate agents representing Buyers and Sellers need to know the laws and act accordingly in all matters relating to disclosure. Private sellers on the other hand are not required to disclose anything, other than the presence of lead paint. They have no duty to disclose things like the condition of the roof or the presence of ghosts, which makes using the services of a Resident Expertsm always the right thing to do.

October 16th, 2014

Adding Real Value to Your Home


By: Victor Normand
Published: October 2014

Last month I encouraged home sellers to think outside of the box and list their properties in the fall instead of waiting until the spring. I charted statistics that showed higher final sale prices and fewer days on market in certain towns for homes sold last year in the fall in contrast to home that sold in the spring. Some of you took my advice; some did not or could not because their homes were not prepared for listing which is a common condition.

If your home doesn’t look like new inside and out, which is probably the case since the median age of a home sold in New England is 40 years, there are things to be done that will help you sell at the best price in the shortest amount of time. The typical list includes kitchens with granite counter tops, stainless appliances, updated baths, re-finished hardwood floors and a fresh coat of paint inside and out. You might want to do more, but not every “improvement” will add value to your home.

Even if it will be years before you will be selling your house, be aware that not all home improvements are created equal in the eyes of the buyer. If you have always wanted a swimming pool, have one built for your own enjoyment knowing that today’s homebuyers in this part of the country don’t always want the care and maintenance of one particularly with such a short season. Some neighborhood developments have a pool membership included or perhaps you get to know your neighbor who welcomes people over on hot days.

Wallpaper is another improvement with almost universal negative appeal because of its very personal nature. Another mostly problematic improvement are solar panels. While good for the earth and generally viewed positively, their appeal to home buyers is limited, particularly so for solar panels that are leased and not owned outright. According to the National Association of Realtors® (NAR) 2013 Profile of Home Buyers and Sellers, 90% of those surveyed said that solar panels installed on a home were not important enough to encourage a sale.

october blogNational Association of Realtors® 2013 Profile of Home Buyers and Sellers

Home buyers identified exhaust fans in bathrooms and exterior lighting as either essential, must have or desirable by 90% of respondents in a report prepared by the National Association of Home Builders in May of last year. Another low cost improvement that home buyers now have in their homes and expect in the next home purchase are programmable thermostats.

Outdoor living is big so money spent on improving or adding decks and patios tends to payoff well. On the other hand, unconventional features like wine cellars, hot tubs, and media centers can actually take away value from a home because they may not be wanted and removing will be at a cost. Even adding land to your parcel may not be desirable but rather seen as just more property to be taxed and more land to care for. The middle of the road is where you want to be when contemplating upgrades and enhancements to your property.

So, if home improvements with the intent to appeal to home buyers in the near future are under consideration, moderation is good advice. Upgrading a kitchen with high end appliances and finishes may make the rest of your house look not so nice. Keeping home improvements consistent with the character of the home is advised. It is possible to over upgrade a property. You do not want to be the owner of a $350,000 home in a $250,000 neighborhood.

It is good to plan ahead and take the advice of a Resident Expertsm in this changing housing market.

September 17th, 2014

Contrary Thinking


By: Victor Normand
Published: September 2014

It is said that the best time of the year to sell a house is in the spring and that’s when the buyers are out. So says conventional wisdom and conventional wisdom is both wise and self-fulfilling, usually. But, is going along with what everyone else seems to be doing always what one should do?

There is an investment school of thought called contrary investing which challenges conventional wisdom. It’s a version of “buy low, sell high” where they actually try to do just that. Contrarians begin every day by questioning conventional wisdom.They live in a world that believes that there is always a point in time when conventional wisdom reverses itself and they want to anticipate that moment and make money because they got there first.

This sound like a good investment strategy but like most things that sound too good to be true, contrary investing really involves staring into a crystal ball and understanding what you are looking at. You have to know the signs and have confidence in them before you polish up the ball for gazing.

Timing a real estate move can also benefit from a little contrarianism. We took a look at the real estate market in the Acton area for the year 2013 to see how well conventional wisdom holds up when it comes to the best time of the year to act. We used as our measure, days on market and the ratio between the original list price and the actual sale price. And we looked at sales that would have gone to contract (P&S) in either June or September and closed two months later. What we found was that for three of the towns, Acton, Harvard and Boxborough, sales originating in the spring had spent fewer days on market and had a higher sale price to original list price ratio. But for Concord, Littleton, Maynard and Stow the reverse was true (see the chart below).

blog chart
The point here is that while it is important to be aware of what everyone else is doing, having the discipline of a contrary thinker makes sense as well. A true contrarian starts out questioning everything and trying out an opposing view. You might want to keep your contrary views to yourself until you have done some homework. After all, conventional wisdom is not to be ignored but if you think you are on to something, you might want to make your move. Often those who have done very well with a real estate deal acted ahead of the crowd, whether they meant to do that or not.

The more information you have and the more critical tools you have to process that information, the better your chances of making the right real estate decision. An open mind is required, as is the willingness to consider opposing points of view. As always, having a Resident Expertsm to help you think things through is a great idea.

August 19th, 2014

The Extended Family is Coming Back


By: Victor Normand
Published: August 2013

Not much has changed in the past year.  Today 2,549 single family homes are on the market in Middlesex County, 154 have less than three bedrooms and only 37 were built after 1980.

What do McMansions, boomerang kids, and the Great Recession have in common?  Think multigenerational housing and the days before WWII when it was common for several generations to live together under one roof.   Today over 50 million Americans, or 16.3% of the population live in households with more than two generations according to the U.S. Census Bureau, and the trend is increasing every year, though far below the 25% of the population living as extended families in 1940.

The housing boom after WWII saw large tracts of land developed for housing in all parts of the country, and little of it was built for the extended family, just housing for parents and their 2.3 kids.  By 1980, the number of extended family households had shrunk to half of what is was, just 40 years previous.

Since 1950 the size of the average home has grown by 240% while the average family size has decreased by 30%.  According to the National Association of Home Builders, the average size of an American home has increased from 983 square feet in 1950 to 2,349 SF in 2002 with the Northeast leading the way with an average of 2601 SF.

The housing plan envisioned by many Baby Boomers who bought all those big houses, involved selling that big house when the kids left the nest and downsizing to smaller quarters.  The flaw in that scenario is twofold.  Though the kids did leave the nest, often, very often, they came back, and flaw number two: where to find the smaller house to down size to?

Presently, there are 2,748 single family homes on the market in Middlesex County; of those only 203 have fewer than three bedrooms, and of those, only 37 were built after 1980.  The alternative is newer, age restricted developments that often do not provide all of the economic relief hoped for by retiring Boomers.

As for the Great Recession, it seems to have imposed a reexamination of the social benefits of the extended family.  Single and married children living with parents clearly has powerful economic benefits,  as does providing housing for elderly parents who can free themselves of their larger homes.  So, the problem of what to do with the big house may have its solution in accommodating some major social and economic changes.

Indeed a niche has developed among home builders who are designing homes to provide for the extended family.  Also, home owners are re-designing existing McMansions to provide interior living spaces for the comfort of the extended family members.  Now the challenge is zoning which often makes it difficult for homeowners and builders to create in-law apartments or accessory buildings.  Only California has a law which allows such housing by right.  But there are options in the marketplace and then, of course, there is a Resident Expertsm who can help with your multigenerational needs.



July 16th, 2014

The Real Estate Market in Cuba


By Victor Normand
Published: July 2014

It would literally take an act of Congress before Americans could legally buy property in Cuba, but Cubans are now able to buy and sell their homes on the open market, for market value. For more than 50 years that was not allowed, but now, it’s legal and happening every day. If you think it is a challenge to sell your home or buy a new one here, the process is that much more complicated for the average Cuban.

Jackie and I visited Cuba recently (yes there are proper ways to get a visa to the largest of the Caribbean islands and the only fully communist country in the western hemisphere) and among the many things we experienced, we could not help being curious about Cuban real estate.

You might be surprised to know that between 80% and 90% of Cubans own their own homes. That wasn’t always true, in fact only a small percentage of Cubans owned their own homes before the revolution in 1959, but within days of the communist takeover, all private ownership of housing was abolished, rents were cut in half and evictions outlawed. From that time on, rents were paid to the government and the tenants were given title to their homes in exchange for rent payments that never lasted longer than ten years. Still, until 2011, there was only one place where Cubans could actually buy a piece of real estate, in cemeteries:

cuba 1Colon Cemetery, Havana, Cuba

Among the many social problems that exposed the former Cuban government to overthrow, the cost of housing was right up there along with organized crime and government corruption. The change brought about by the revolution was successful in making almost all Cubans “owners” of where they lived. However, government policy dictated that homes were for “living in” not “living off of”. The problem was that while Cubans owned their homes, they could not sell them. Passing the home to your heirs was allowed and swapping or permutas was tolerated until 2003 when even permutas was outlawed.

If you travel to Cuba, as we did in April, you will be struck by the deplorable condition of most residential properties. It seems that while the government gave apartments to their occupants, no one owned or was responsible for the buildings within which those apartments were located. Every day in Havana, where one in five Cubans live, whole buildings or parts thereof collapse into the streets.

cuba 2Residential Neighborhood, Havana, Cuba

In addition to what happens with 50 years of neglect, no private mechanism exists to deal with a severe housing shortage. Recognizing the seriousness of the problem, the Cuban Government under Raul Castro instituted reform in 2011 which allowed homeowners to sell their property at market prices. The real estate brokers, called corredores, or runners, who had previously arranged the permutas, were back in business.

Because there is no organized system for marketing real estate in Cuba with little help from the tightly controlled, censored, and expensive internet, the buying and selling of homes mostly happens at places like the Paseo del Prado in downtown Havana on Saturdays. Buyers and sellers stand around the square holding signs with the particulars of property for sale or sought after.

paseo-de-marti-o-paseo-del-prado_515148Paseo del Prado, Havana, Cuba

Since there are no mortgages in Cuba, all real estate transactions are in cash. Cuba has a dual currency system; the Peso, used for local purchases is worth about 4 cents, and the Cuban Convertible Peso (CUC) which can be purchased for one dollar less a 10% tax to the government. Rent and transaction taxes are paid in pesos, the purchase price in CUC’s.

The average monthly wage for a Cuban worker is about $20. So how does the average worker buy an apartment for 40,000 CUC’s in Havana, or a free standing house for 120,000 CUC’s? Two ways: either sell a larger, higher priced home and buy a less costly property, keeping the difference as a nest egg; or use cash earned by exiled Cubans who have repatriated or have provided remittances to relatives on the island . The bad news is both buyer and seller pay a 4% tax on the sale, the good news is, the sale price is determined by an assessed value mostly based on the original, post revolution value determined by the government and paid in pesos not CUC’s.

Cubans are only allowed to own one primary residence and one vacation home. So, while real estate activity has increased every year since the reform on 2011, the lack of private capital has meant that the housing shortage has not been helped by all this new housing market activity. Younger Cubans often live with their parents or other relatives, waiting for a housing opportunity to open up.

Other economic reforms have taken place recently allowing certain businesses to operate privately with government permission. The corredores joined the list of occupations allowed to work on a private basis in September of 2013. Because nearly every Cuban has a stake in real estate, expect more changes to come. There are no licensing laws or continuing education requirements, but you can be sure there will be a Cuban version of Resident Experts (SM) just the same.

June 17th, 2014

Housing and Recession


By Victor Normand
Published: June 2014

Everyone knows the economy runs in cycles. No one knows exactly when those cycles begin or end until they do, but one thing is for sure, these cycles will continue. Despite having a basic knowledge of economics, most of us continue to buy high and sell low. And that is probably what turns normal economic adjustments in the economy into panics…….. and panics into recessions.

Although reliable economic data does not exist for periods before the mid 1800’s, it is likely that since 1790 there may have been as many as 40 periods of economic contraction.  Lower and middle class individuals and families tend to suffer the greatest economic hardship when the economy turns bad, with the value of housing declining as a direct or indirect consequence of the economic downturn.

The first major American depression is recognized as the panic of 1819. During the rest of the nineteenth century it was follow by the Panics of 1837, 1857, 1873, and 1883. They were all triggered by combinations of crop failures, or big drops in commodity prices, reckless railroad and land speculation, bank failures, and major declines in stock prices. The “Panics” were followed by periods of tight credit, the decline of property values and the rise in unemployment. Despite the similarities in these economic calamities, they kept happening. The economic crises of the next century occurred with similar regularity and a bit more variety.

Here’s a summary of what the twentieth century gave us for bad times in the economy:

The Knickerbocker Trust Panic of 1907

The president of the Knickerbocker Trust decided to try to corner the market in copper. His plan came undone when millions of dollars of copper was dumped on the market in a bid to prevent a hostile takeover of an unrelated business. As the extent of the copper market manipulation became known, other banks refused to accept checks from Knickerbocker which led to a run on the Knickerbocker bank and fueled big losses in the stock market.

The Great Depression of 1929

This one is familiar. The bull market that lasted for more than six years began to come undone when talk of a tariff war with Europe began a rout in stocks that eventually brought stock prices down 90% from their pre-crash highs. Other economic excesses and the onset of the “Dustbowl” added to the misery. The hard times lasted off and on for most of the next ten years until the war time economy got everybody back to work.

The OPEC Oil Crisis 1973

The quadrupling of oil prices and an embargo on oil shipments to the US by Arab oil producers sent the economy into a recession. Consumer prices rose sharply but wages did not, creating “stagflation”. Rising interest rates along with the high price of gasoline badly shook the economy which took a decade to recover lost value.

The Savings and Loan Crisis 1986

Lax regulation in the Savings and Loan (S&L) banking sector led to many S&Ls into making long-term loans at fixed interest using short-term money. When the interest rates increased, the S&Ls could not attract sufficient capital and became insolvent. Nearly one third of the 3,200 S&L’s failed.

The Dotcom Bubble 2000

The failure of many internet technology based companies precipitated the end of the longest period of economic growth in US history during the 1990’s and might not have turned into recession except for the September 11th 2001 attack on the World Trade Center.

The Great Recession 2007-2009

The Sub-Prime mortgage crisis led to the collapse in the US housing bubble causing the decline in housing backed assets, helping to set off a global economic crisis. Many of the largest financial institutions in the country including Bear Stearns, Fannie Mae, Freddie Mac, Lehman Brothers, Citi Bank and AIG, failed.


Housing is more than a commodity. During the years when we remain in residence, the market value of a home may vary, but it always remains where we anchor our lives. This intrinsic value of a home has never been in decline despite the condition of the economy. We always try to make the best economic decisions when we are in the market for housing, but even if we do happen to buy high and sell low, our homes are our castles.