NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Thursday, July 31, 2014

SÃO PAULO, Brazil — I live in Mandaqui, a district six miles from downtown. The nearest subway station is roughly two miles away, or about 30 minutes by bus, since they’re slow and scarce. It’s not the best place to live if you don’t have a car. Even so, the average price per square foot here recently soared to $250. Real estate in prime areas of the city can now cost as much as $465 per square foot.

In the last six years, housing prices in São Paulo have increased by 208 percent, and the cost of rent has increased 97.5 percent in the metro area. According to the website Numbeo, which compiles user-generated data, a 970-square-foot apartment here costs the equivalent of 16 years of an average family’s total income. By comparison, this cost-to-income ratio is eight in New York, 6.9 in Berlin and only three in Chicago. Someone making the minimum wage in Brazil ($325 a month) can afford to rent only a three-room shack in the crime-ridden Favela Paraisópolis ($280), leaving him practically nothing left over to live on.

Brazil is experiencing a severe housing shortage. According to the Inter-American Development Bank, one in three families lives in inadequate housing. The country has an estimated shortage of 5.8 million units, of which 90 percent is concentrated on lower-income families. According to research by the João Pinheiro Foundation, 442,710 households in São Paulo spend 30 percent or more of their income on rent. These families are in danger of joining 44,699 other households living in precarious conditions and 83,011 in which more than three family members are squeezed into the same bedroom — an overcrowding solution to a dead-end situation.