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. Last Updated: 07/27/2016

In Search Of: 4 Walls, a Roof, Low Mortgage

MTAt the rate he is moving up the housing list, Krasnykh, 82, will spend 15 more years in the shelter before moving into a new apartment — if he lives until 97.
Editor's note: This is the second of four stories.

SHCHYOLKOVO, Moscow Region -- Once upon a time, Vladimir Krasnykh was a Soviet infantryman defending his nation against fascist invaders. Today, Krasnykh, 82, lies in bed all day long enveloped by cobwebs and the reek of human waste. Fuzzy transmissions from the radio propped on his belly circle through his room.

His mind is turning dark and bitter. He has fragmented recollections of the war, his marriage, the dissolution of his family. He sounds like a man who has been wandering for many years. He is confused and sad. He has but the vaguest notion of what country he lives in or why he is here.

"What did he fight for?" asked Galina Novikova, glancing at her father. "He served his country, and they let him live like a dog."

Krasnykh has been waiting six years for an apartment that will almost certainly never come. When he signed up for a government home in September 2000, he was No. 585 on a priority-housing list for veterans. Today, he stands at 417.

At this rate, it will be almost 15 years before Krasnykh gets an apartment. But at the rate he is declining, the likelihood that he makes it to 97, or has much time to enjoy a new apartment, is very slim. "I think they are just waiting for him to die," Novikova said.

By now, there were supposed to be fewer and fewer people like Krasnykh in Russia, flush with oil cash and guided by the strong hand of President Vladimir Putin, who made housing one of his national projects in his 2005 state-of-the-nation address.

But the reality is about 61 percent of Russian families lack adequate housing, according to government estimates, and only 12 percent can afford to buy an apartment.

Everyone, from veterans and pensioners to young families, has been caught in a housing market that looks increasingly bifurcated -- showcasing new skyscrapers and high-end dachas for the nation's nascent haute bourgeoisie while offering few options to the bulk of society. The situation is most striking in Moscow, where prices have skyrocketed to levels comparable to those in New York and London.

Not the Perfect Father

Krasnykh was not the perfect father. His daughter is the first to admit that.

For no obvious reason, he abandoned his family in 1972. He moved to a house in a forest outside the town of Shchyolkovo, a little northeast of Moscow. There, he tended to the forest and a handful of cows. As far as his daughter knows, he lived alone, detached from the world around him, through the rest of the Brezhnev era and glasnost, perestroika and the Soviet collapse.

The winter of 1997, Novikova said, was particularly harsh, and the small house couldn't provide adequate shelter. Krasnykh decided to leave for a month or so to see friends. When he returned, she said, his house had been bulldozed and the land seized by city officials. To this day, Novikova said, it's not clear who or what was behind the seizure.

Without a home, without money to buy or rent a new place to live in, without much of a family to seek refuge with, Krasnykh was forced onto the streets, his daughter said.

Michael Eckels / MT
The shelter where Krasnykh lives offers cockroaches, filth and hopelessness.
He lived on sidewalks and inside train stations. Eventually, Novikova said, Krasnykh wound up in a hospital, and sometime later, somehow Novikova, who sells trinkets at the Izmailovo market, found her father. Novikova's mother and sister aren't speaking to him. Indeed, they refuse to do little more than acknowledge he exists.

Novikova said she had her father transferred to the government-run shelter, a pink, two-story building that dates to 1928. The hallways are infested with screaming children and slow-moving drunks who are supposedly drying up. Everywhere is filthy, peeling, dripping, leaking or otherwise falling apart. Hopelessness and cockroaches permeate the high-ceilinged rooms.

"Every week, I come get him and bring him to my home to wash him up," said Novikova, who lives in a five-story Khrushchev-era building with her husband and two daughters, aged 15 and 26. Walking down the tiny hallway requires turning sideways. All four sleep in the apartment's single bedroom.

Referring to the weekly washing sessions, Novikova said, "Even that is a tight fit. There's just no room."

An administrator at the shelter, who refused to give her name, was less sympathetic to Krasnykh and Novikova.

"I'm not saying the administration here is perfect -- there are problems -- but this man has a daughter," said the administrator, bundled up in a winter coat even as she insisted the shelter had heating. "Why doesn't she take care of him?"


Michael Eckels / MT
Hygiene and heating are in short supply at the shelter. Everything in the 78-year-old building appears to be falling apart.
In fact, the government has made taking care of people just like Krasnykh a priority.

For fiscal year 2006, it allocated $8.1 billion for the project, with $4.7 billion for housing construction, and $3.4 billion for guaranteeing loans, according to figures provided by the office of First Deputy Prime Minister Dmitry Medvedev, who oversees the national projects.

The four priorities of the housing project are developing a mortgage market that enables banks to finance long-term loans and encourages lower lending rates; expanding the stock of available housing; targeting young families, which includes families with children and no one over 30; and achieving its earlier objectives of housing veterans, invalids, those who cleaned up Chernobyl and others. Krasnykh falls into this last category.

In early 2005, there were more than 700,000 families, including Krasnykh, who had been earlier targeted by authorities for improved housing. Given that he constitutes a one-person family, Krasnykh has long been slated to receive a free, 33-square-meter apartment. With the new national project mandate, the government set aside $122 million for housing for this group in 2006, and $190.1 million in 2007.

But public awareness of the project remains low. Novikova, for one, has never heard of it. "I'm sure it's just empty talk," she said. A recent Public Opinion Foundation poll found that 29 percent of respondents were aware of the housing project.

And public officials readily admit that housing, of all the four national projects, remains the most elusive.

Georgy Poltavchenko, presidential envoy to the Central Federal District, recently told Interfax that in the Ivanovo region, just 50 percent of the housing space that the state had hoped would be built in 2006 had actually been built; in the Bryansk region, the figure was 70 percent.

"In some regions, we are seeing a failure to meet planned levels of implementation of the plan along with an obvious decline in the pace of housing construction compared to last year," Poltavchenko said. Some of the worst regions were Voronezh, Kostroma and Tula, he said.

Still, most government officials insist everything is on track. They note that the mortgage rate offered by banks has dipped to 11.5 percent from 14 percent last year.

"It is like the final privatization," Oleg Alexeyev said. Alexeyev is the chairman of a panel of private individuals advising the government on housing and the head of government relations at Renova, an asset-management firm that has investments in TNK-BP and CJSC Integrated Energy Systems, according to the firm's web site.

Alexeyev sees the housing project not only as a construction program, but as a nationwide lesson in economics. It is time, he said, that people realize the days of Soviet-era, state-allocated housing are over.

But Russia is still a long way from even laying the groundwork for a modern, post-Soviet housing market.

Indeed, the mortgage market remains largely undeveloped, encompassing just 1 percent of the gross domestic product compared with 60 percent in the United States and 40 percent, on average, in Europe, said Andrei Milyutin, head of the mortgage market-development project at the International Finance Corporation.

Milyutin added that encouraging loans in a country with no culture of borrowing is particularly tough. Over-borrowing and bankruptcy remain widespread risks, he said.

On top of this, Milyutin said, are Russia's notorious black markets and semi-legal gray markets, in which perfectly legal goods such as ballpoint pens and cigarettes are sold illegally.

Securing a loan for someone who makes $20,000 annually but reports just $1,000 of that will be next to impossible, he said.

All of which makes the pool of possible housing lenders very small. "A couple hundred banks claim to offer mortgages, but of those, there are only two or three dozen that are actively offering them," Milyutin said.

Still, there appears to be some increase in the number of mortgages. Denis Maslov, an analyst with the Eurasia Group, said mortgages were more available than they had been just two years ago. But, he added, the new money available for housing, coupled with a lack of available apartments and houses, has created a new set of problems. "Prices are going through the roof," Maslov said.

State Duma Deputy Alexander Lebedev, who has been pushing his own housing plan for years, agreed. The government, he said, "hasn't done anything except provide the conditions for a very serious price hike."

Natalia Mokrovsova, who heads the construction oversight committee in the Shchyolkovo city administration, said bureaucracy remained a critical hurdle, adding that nothing had changed since Putin announced the housing plan in September 2005.

While the housing project envisions eliminating numerous permits and other administrative barriers -- with an eye toward building 21.3 million square meters of housing, a 40 percent increase, by 2010 -- red tape still appears to be a problem.

"It's always been difficult to get the right to develop property," Mokrovsova said. "You need a whole host of documents, from technical and environmental reviews to the reasons you are using the property. They're all very important."

Lebedev estimated that building on a property requires 260 or so permits and that corruption is rife. "It would not take less than three years to get that," he said. "And, of course, some extra money would also be needed."

The current system, he said, is kept in place by a corrupt marriage of state officials and connected real-estate developers. In Moscow, he said, Mayor Yury Luzhkov and his wife, developer Yelena Baturina, run the show. The same system exists in every major market in the country, Lebedev said. "There's a monopoly when it comes to everything from cement to bricks to land permits," he said. "And there's a total monopoly on construction."

That Vladimir Yakovlev has been put in charge of the Regional Development Ministry, which administers the project, is a "strategic joke," Eurasia's Maslov said. Yakovlev, formerly St. Petersburg governor, was yanked from his post in 2003, in part for failing to address a housing crunch and misusing state funds.

Even under better leadership, Maslov said, the project would be problematic. Trying to expand the housing supply at a government ministry -- instead of simply creating the conditions for market-oriented reform -- will likely spell more corruption and more inefficiency, he said.

Yelena Markova, another Shchyolkovo official whose job it is to oversee the list of those waiting for homes in the city, including Krasnykh, largely agreed with Mokrovsova and other critics. "The national project is just a continuation of the measures we already had," Markova said. "Only the name has changed."

Everything Is Changing?

Renova's Alexeyev countered that, in fact, everything is changing.

While he couldn't list any concrete achievements, Alexeyev insisted that the government's recognition that there is a problem marked a major step forward.

"Housing is one of the most serious problems today," Alexeyev said. "The government's decision to solve it is a very serious step."

That's hardly any help to Novikova or her father, whose right elbow remains bandaged in makeshift dressing to prevent an infected growth from spreading.

"I forget," said Novikova, pointing to his arm. "Have you been in pain for two years, or three?"

Krasnykh, surrounded by unwashed clothing, old pots, soiled sheets and a toilet-chair his daughter installed to make it easier for him to go the bathroom, could barely answer. Looking confused, he said simply: "What has happened to me?"