Why Russians think Americans don't own their homes

May 19, 2011 By Jeff Harrison
A Soviet-era apartment complex looms behind a house that probably predates the 1917 Russian Revolution. Credit: Jane Zavisca

University of Arizona sociologist Jane Zavisca says the two countries are polar opposites when it comes to mortgage financing.

When the Soviet Union disintegrated in 1991, one of the structural problems the new government and free-market economy had to deal with was . Most Russians lived in government-owned apartments that had been built beginning in the late 1950s. The question then became, who owned all of that Soviet-era housing?

In her new book, "Housing the New ," due to be published by Cornell University Press, Jane Zavisca said the new Russian government dealt with it by announcing that this huge stock of apartments was, as of 1992, privately owned.

"Wherever you were, that's what you got," said Zavisca, an assistant professor of sociology at the University of Arizona.

An example of housing built after the 1991 collapse of the Soviet Union. Since mortgages are anathema to many Russians, new housing in Russia is generally built for the well-to-do who have cash to pay up front for construction.

It was a hugely popular move because it instantly created wealth. But it also created problems, she said. If you shared an apartment with six other people, you owned one-seventh of it. And if you wanted a nicer place with more room, a better view, or to be closer to work and shopping, unless you had ready cash, you would need a mortgage.

The new government tried to create a by replicating the American housing system, essentially using the Federal National Mortgage Association, or Fannie Mae, as a template to encourage Russians to take out mortgage loans.

"This was all designed by USAID, one of their biggest foreign aid programs ever," Zavisca said. "It was an American model of what a housing market is: home ownership and securitized mortgages."

Supposedly all of that privatized housing and wealth would spur the natural development of a housing market. Those who felt they had more housing than they needed would look to trade down and use the leftover money for other things. The private sector would emerge to produce housing for those who had been left out.

"That didn't really happen," Zavisca said.

Housing construction declined by 70 percent from 1992 to 2002, the first decade after the Soviet era. The construction industry in Russia has evolved to cater to wealthy and well-to-do middle class clients who could pay with cash, but there is a lack of trust by both contractors and consumers. No one wants to pay up front and wait, or deal with credit.

Unlike Americans who for decades have willingly taken on 30-year mortgages to buy housing, Russians have largely balked at the notion. Even when young families were offered a $10,000 credit, roughly a year's wages and the equivalent of $60,000 in the U.S., toward the down payment for a house, Zavisca said there was little interest.

"Few Russians are willing to take out mortgages because the risk of foreclosure is unacceptable, and because they view interest payments – which they call overpayments – as unfair. As one Russian put it: ‘To enter into a mortgage is to become a slave for 30 years, with the bank as your master.'"

That hasn't stopped Russians from going into debt, though. They may be averse to mortgages but they love credit cards, small consumer loans and point-of-purchase store credit.

"In my interviews, people there often compared credit card debt favorably to mortgages, the inverse of here in the U.S., where mortgages are viewed as virtuous and responsible.

"Russia is completely the opposite. It may be a legacy of Soviet entitlement to housing, where housing is viewed as a right to them. Even thought the Soviet government owned the housing, people thought of it as their own and had the right to pass it down to their children, or swap with someone who wanted to trade with you.

"It was a kind of quasi-marketplace. It just wasn't financialized."

She said Russians find it odd that Americans call themselves "homeowners" from the day they close on a mortgage loan. For Russians, ownership only begins after all debts are paid off. 

Zavisca said she is planning a follow-up study on mortgages in the U.S. to learn how Americans equate owing with owning, and how "home ownership" has become Americans' metaphor for a mortgage.

Explore further: Most mortgage meltdowns not caused by subprimes

Related Stories

Most mortgage meltdowns not caused by subprimes

October 22, 2010

Subprime mortgages were not the main reason behind the housing crisis that started in 2009 and continues to bedevil the faltering U.S. economy, according to a University of Michigan study.

Credit crunch hits cash-strapped homeowners

December 11, 2008

Homeowners have drawn on their biggest asset, the roof over their heads, not to fund 'champagne moments' but to get through hard times; that's the finding of a preliminary study by Durham University.

Foreclosure Is Not Inevitable, Advises Consumer Finance Expert

September 20, 2007

If homeowners facing mortgage problems follow the advice of a University of Arkansas consumer and family finance expert, they can greatly increase their chances of keeping their homes. Time is of the essence, and reliable, ...

Study explores real factors behind declining housing prices

September 4, 2007

Housing prices are likely to fall further, but not for the reasons usually cited, according to an "Economic Commentary" published by the Federal Reserve Bank of Cleveland and co-authored by University of Wisconsin-Madison ...

Recommended for you

New paper answers causation conundrum

November 17, 2017

In a new paper published in a special issue of the Philosophical Transactions of the Royal Society A, SFI Professor Jessica Flack offers a practical answer to one of the most significant, and most confused questions in evolutionary ...

Chance discovery of forgotten 1960s 'preprint' experiment

November 16, 2017

For years, scientists have complained that it can take months or even years for a scientific discovery to be published, because of the slowness of peer review. To cut through this problem, researchers in physics and mathematics ...


Adjust slider to filter visible comments by rank

Display comments: newest first

4 / 5 (16) May 19, 2011
As one Russian put it: To enter into a mortgage is to become a slave for 30 years, with the bank as your master.'

And he's exactly right.

During the colonial period in the U.S. and during the land rush periods in the central plains, people got land for free, and built homes from the timber on the site. Housing in the U.S. in those times was "communized" because people helped one another build their homes for free on free land, and often from available free materials. About the only thing that cost anything were tools and food. Land ownership and home ownership was a basic right for anyone who wanted to stake a claim.

Allegedly, our country's founding documents says all people have a right to life, LIBERTY, and pursuit of happiness. However, in today's capitalistic market, "Liberty" actually is not possible for 70% to 80% of people, because "ownership" of real assets is a "priviledge" reserved mostly for the upper middle class and the filthy rich.
3.5 / 5 (13) May 19, 2011
The rich ruleth over the poor, and the borrower is servant to the lender. Proverbs 22,7.

Capitalism is, at it's very foundation, based on abuse of this principle to enslave normal people to the wealthy.
3.3 / 5 (6) May 19, 2011
I did not need to read this article because reading the title i knew exactly why. Read a few sentences and i was right.
I always say this: "if you don't have the money to buy it then don't".
2.8 / 5 (12) May 19, 2011
While I like your sentiments, it can be unreasonable to build a good home out of your savings.

Our homes are also much nicer than average russian homes. But this does expose a flaw in our culture that helped cause the mortgage mess. We consider possession to be ownership, rather than the fact that we won't own it for 30 years.

Without capitalism, we would still have feudalism, communism, socialism, etc. capitalism really is the basis of our economy and way of life - but like any good thing, there can be too much, and it comes full circle. We just need to have a reasonablism.
2.7 / 5 (9) May 19, 2011
Why it's better to have a central state organ own your home than a bank is a little perplexing to me.

I guess we can all agree that it's better for people to actually own their homes without a mortgage or be in "public" housing. At least with a mortgage there's a possibility of paying it off and a path to actual ownership...
4.1 / 5 (8) May 19, 2011
If you want to own a home, you can either spend 30 years living in a rental property (or 20 years living in a box) while you save your money, or you can get a loan that you will pay off over 30 years while you live in the home. Either way, samey-same.

Or you can choose to not own a home.

Whats the big deal?
2.9 / 5 (9) May 19, 2011
Why is building houses expensive?
There are pre-made houses available and they are pretty cheap.
And if you still can not afford that, what is the big deal of living in a cheap apartment while you spend all your time earning the money to buy your dream house?
Or live with relatives temporarily?
Getting a loan/mortage for your house... paying your house 3 times over.. really? Why not just spent that time temporarily somewhere and save your money.

I dont understand why so many must have a big house in first place, its just a place to sleep...
3.2 / 5 (13) May 19, 2011
We just need to have a reasonablism.

Which is what socialism should be.
I rather trust a government owned organization to "hold" my house until i payed it off than a bank who's first motive is to maximize profit.
4.3 / 5 (6) May 19, 2011
We equate owing with owning because we have the belief we will pay off those payments. We consider the banks money ours as soon as they give it to us. The bank would not give you the money if they thought you would not pay it off, hence why we own the homes. Apparently in Russia the banks don't have adequate credit firms or proper analysis of that credit which causes the distrust spoken of in the article. In the US many banks stopped looking at credit or accepted bad credit which caused the recent crisis. You can't allow those banks to be part of the money market. The people purcahsing the ultimately securities need to do better research or receive better information, as it should be their loss if anyone defaults.
4.7 / 5 (6) May 19, 2011
In the US, after WWII, there were real and reasonable housing and mortgage markets. Down payments were required and loans were typically 15-20 years. Those who wished to bought a home and stayed in it for most of their lives. Burning the mortgage after 20 years was a great reason for a party.
Those who didn't want to buy simply rented. There was no stigma to this.
The problems have come about in the way home ownership has been sold to the US citizen. Instead of a being sold a home to live in, Americans began to be sold a home as an investment... a way to make money. And, of course, as soon as that became the accepted view of homes, the housing market became just another tool of the financial manipulators who can and do produce booms and busts in other fields of investment such as stocks, bonds and commodities.

And that is the final failure of the capitalist system. Unmitigated greed by those in power.

There is more to this story, but this bit suffices for this thread.
1 / 5 (3) May 19, 2011
"She said Russians find it odd that Americans call themselves "homeowners" from the day they close on a mortgage loan. For Russians, ownership only begins after all debts are paid off." - Article

Russians is Smart.
Americans is SmarDt.
4 / 5 (1) May 19, 2011
I totally agree w/ the Russian appraisal. However I don't own a house and cant afford one. too bad wealth isn't more universal but if it was, it wouldn't be wealth.
3.8 / 5 (5) May 20, 2011
You may own a home, but property taxes ensure you will never stop paying for it.
not rated yet May 20, 2011
yep has got it right..after clearing your debt with the bank you now own the city,or whatever,a monthly payment and failure to pay leads to a seizure of your property.you would almost think someone planned it that way....
5 / 5 (1) May 20, 2011
It's only been 20 years since the collapse. Most russians still own their free soviet-era apartments. There is a huge distrust of banks in general because in the early 90's after the collapse there were a lot of "fake" and criminal institutions posing as banks that simply took everyone's money and disappeared overnight. That's in addition to the Soviet-era "Sberbank" (savings bank) that flopped with the union and everyone's money that was in it. So yeah, nothing surprizing here. I should probably add that there's plenty of housing for everyone due to the fact that the russian population has been steadily declining since the collapse.
3 / 5 (2) May 20, 2011
There's one disadvantage to house ownership nobody mentioned, so it's my duty: It's tying you to one place (except when you are very wealthy); it's reducing your freedom to move, your possibilities to live free.
For nomads like me (2/4/15/40 continents, countries, towns, villages, "permanent" residences) this disadvantage is inacceptable.
not rated yet May 20, 2011
frajo, some people are nomads, others live all their life on one place. And owning a house is hardly a problem - if you own a house and want to move, you can always sell it or rent it. I think for most people from Eastern Europe and Russia, owning a house is actually a secure investment. You buy it, you know it's yours and you can leave it to your children. It's simply a different culture.
4.7 / 5 (3) May 20, 2011
They are spot on.
You don't OWN anything until the last payment is made.
As far as the other issues commentors bring up:
If we didn't have the FED devaluaing the dollar every generation, families could build wealth, pass it on and offspring could inherit and build. Instead we are taxed to death and after, the dollar devalued, and the ranks of the poor ever increasing. There was a reason you had to be a property owner to VOTE, you had a stake in the outcome. instead we have voters voting for redistribution, until there is no more wealth. while the FED redistributes the last of the US equity to foreign central banks doing the same thing to their countries. The solution is simple, end the fed and confiscate its assets, impart a gold standard, end income taxes and replace with SALES tax, require citizenship and a stake in the country to VOTE.
not rated yet May 20, 2011
And if you still can not afford that, what is the big deal of living in a cheap apartment while you spend all your time earning the money to buy your dream house?

It's not like it takes a small amount of time to save enough money to live in a house. You're talking about living in a cheap apartment or with relative for probably 15-20 years of your adult life to save enough to buy a house. People can get a mortgage and live in their dream home now so they do.

Also, if you're saving what your mortgage payment would be every month for the house you want to buy and you're paying rent at the same time... well that's pretty expensive and you'd still be doing it for 10-15 years. Most people just opt to pay the mortgage.

Of course, if your house becomes worthless, you still need to pay the mortgage so there's obviously risk there, but most people take the risk anyways. Worst case you'll end up living in the conditions you're suggesting anyways (relatives/cheap apt).
5 / 5 (1) May 22, 2011
It may be a legacy of Soviet entitlement to housing, where housing is viewed as a right to them.

Imagine that, those folks thinking that they have a right to housing! So I guess in the US our legacy is the right to homelessness?
not rated yet May 22, 2011
I always looked at my house as "rent to own". You have to live somewhere. My mortgage is considerable, sure, but after not even ten years, its either the same cost as an apartment or cheaper. Sure, there are other costs incured, but, after its payed down or payed off, I have something of value. With an apartment, all you have is 'til the end of the month. IMHO, a house is superior for raising children or just living without someone over or under you. Nobody bangs on my wall and yells "Keep it down!"
1 / 5 (4) May 22, 2011
Socialistic ideals have failed in the past and they will always fail.

There were many "experiments" in the US in the 60's and 70's that wanted to show that socialistic ideals worked; they all failed. The only ones who liked it, were those in power. When the population reached ~2,000 the system fell apart.

What does socialism sell? "the government will provide"

What did the American founders sell? "the individual must provide for themselves"

I choose freedom, responsibility... a chance at a new life is hella better than no chance.
5 / 5 (1) May 22, 2011

The only one who like it now are the wealthy, who own their own homes, well mansions really, free and clear. They are the same people who own the finance companies an banks that have the majority of US homeowners enslaved via mortgage.
not rated yet May 22, 2011
You can never truly own property in the US. Read your title deed. The government gives you the right to use the property. they can tell you what where and how, sometimes even when, you can build.
They steal from you in the form of property taxes which, when not paid, causes a sheriff to forcefully evict you from "your property" and sell it to the highest bidder.
That is not ownership no matter how one may want to use mind games to believe it is.
Pay rent, at least you then have a contract that if the other party breaks it you have some recourse.
not rated yet May 22, 2011
Where I live in the US, a mortgage plus all property taxes and insurances is still almost exactly what rent would cost me. ($1,000/mo)

When I finish paying off the mortgage, my taxes/insurance will be about $300/mo, so by the time I retire my bills will be reduced.

If I want to move I can rent out my home to pay the mortgage. I don't really see a downside unless you overestimate the real value of the house and pay too much.
not rated yet May 23, 2011
@Wha wha...
Yes, this is true. And now may be a good time to do this (I hope so!). The problem many have is that they got caught up the a feeding frenzy of housing and now are stuck. We need to prevent housing from becoming another 'stock market' or 'commodities market'.
People need to realize that gambling is best done with extra cash.. and done in casinos.
not rated yet May 23, 2011
Even after you've paid off the mortgage, you don't really own the home. Fail to pay your property tax and the government takes away your home.
1 / 5 (2) May 23, 2011
even when facing failure, still the devoute hold on...

Socalistic ideas have and will always fail. If America chooses Obama again, the country will fall into a socalistic pool... and the "American Experiment" will cease. Some time after, the world economy will crumble.
not rated yet May 23, 2011
hey Iliad, Isn't socialist China taking over the world? At least that's what I hear the local fear mongers saying.

In any case this article seemed to be more about a cutural difference. Russians are talking about a "family" house. One that get passed down to children. Now that may actualy happen in America today, but as far as I can tell American houses are bought and sold like a commoditie. How many people would actualy rent till their parents died so they could get the family house? It's an American cutural view of grow up, get a job and move out.
not rated yet May 24, 2011
As a Russian I should say that there is not much about cultural differences. Anyone who lives in America could easily feel that if were able to imagine what to expect if mortgage interest in US will rise up to 17% - 20% like we have now in Russia. If this had happened there wouldn't be many people who is bothered by cultural differences ))).
not rated yet Jun 02, 2011
Interesting article. I'm new here and had to join after reading the many intelligent comments. My first thought after scrolling to the bottom of the page was "Wait, this doesn't happen on the internet. Relevant and well thought out points about highly opinionated topics?." All kidding aside, I'd like to add my 5 cents (inflation and rambling accounted for.)

"I rather trust a government owned organization to "hold" my house until i payed it off than a bank who's first motive is to maximize profit."

I found this comment of interest because I learned something about myself while reading it. I tend to be comfortable with private corporations for the exact same reason that some others are skeptical. Private motives are clear. Ka-Ching! When in doubt, follow the money. Dealing with private corporations, you know exactly where their interests lie. All deer must trek to water and all bankers must go home with a check. Although this exclusive group may not have my best interest
not rated yet Jun 02, 2011
(Cont.) in mind, their values are apparent and much easier to keep an eagles eye over. Whats the old saying, "keep your friends close, and your enemies so close that you're practically kissing" or something like that. When dealing with the state your involving yourself in politics and other activities in relation to executive power. I'm just not clever enough to keep up with state interests. I'm always behind, reading what happened. Give me something with a predictable motive like... profit. Heck, with a motive that straight forward a cunning person may have a fair chance at predicting a small percentage future events. However, the art of the state is similar to the art of war. Deception is a preferred vessel.

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.