Manhattan on the Moskva

Every New Yorker eventually gets fed up with New York. Not just fed up, but major league fed up. A few us even become so major league fed up that we do crazy things, like go teach English in Taiwan or Russia. We get fed up for about 1,001 reasons, but at or close to the top of the list is always the unofficial sport of the city. No, not stoop sitting. Not jaywalking.

I'm talking about the competitive, blood sport that is New York real estate.

One thing I hoped would happen when I left New York was that I would find a spot on the globe where real estate is not the all-consuming passion it is east of New Jersey and west of Nassau County. I did not stay in Taiwan long enough to know what the Taiwanese attitude to real estate is. If I had any notion that Muscovites would differ from Manhattanites in their obsession with square feet and brokers' fees, that expectation has been cruelly dashed. Nonetheless, some aspects of the real estate game in Moscow differ significantly from the game in Manhattan--though I gather that one encounters just as much drama, heartache, and even outright duplicity trying to acquire property in Moscow as in Murray Hill.

Twice or thrice now, I have had to give lessons about house types. It's an unfortunate fact of the EFL world that textbooks insist on students' learning about terraced houses (the high-falutin' British word for a row house), detached houses, and semidetached houses, even if these terms have limited relevance to the cultures of students. I have yet to see anything resembling any of these types of buildings in Moscow; detached houses no doubt exist in the countryside, as people's dachas, but not even in the parts of Moscow commonly thought of as "the suburbs." Teaching this kind of language may involve a lot of cultural explanation of how people live in the affluent West.

Then there is the difference in how real estate is described in Moscow. Because Communist-era apartments were rarely built with an identifable living room, Muscovites do not describe house sizes in terms of bedrooms, as in America, but simply in terms of rooms, period. A fairly typical Moscow apartment has two rooms, a kitchen, a bathroom, and a toilet--though separate living rooms are becoming more common in new constructions or renovations of older buildings. The two rooms serve many different functions, depending on the time of day. Lack of spaces forces Muscovites to forgo traditional beds in favor of convertible sofas. Shelves are organized in ways that would provoke the envy of any West Village studio dweller.

The drama of buying or renting real estate, from what I gather, is quite intense. Like Manhattanites, Muscovites rely on brokers to find housing in a tight market. Unlike Manhattanites, however, they do not pay as much as 15% of a year's rent for a broker's service. I gather that 5% is more common, though I have no hard and fast statistics.

Educated Russians are aware that they often lack choices available in the Democratic West. One of the few areas where a lack of choices actually helps them, however, is in mortgages. According to Gulia, the banker of whom I spoke in my last post, Muscovites do not have the exotic options in mortgages that have fueled the credit crisis in America. There are no adjustable-rate mortgages, no balloon loans, no no-docs, no hybrids. The system is very much not geared toward gambling. Essentially, there are only two kinds of loans available: one for apartments in new constructions and one for apartments in existing buildings. For an existing building, a 5% down payment is generally required by banks. But to obtain a mortage in a new development, a Muscovite must pay a 30% down payment--a requirement caused, no doubt, by the high number of fraudulent building developers in recent years who have managed to swindle people out of money for apartments never built.

One requirement for buying property in Moscow, however, truly baffles me. According to Gulia, you cannot obtain a mortgage in Russia without going to a doctor for a physical. The purpose of this? To get life insurance that will pay your mortgage in the event of your death. Additionally, banks tend to favor younger buyers who are less likely to die before paying off their mortgage. I have heard of any such requirements in America and explained that in America, life insurance policies pay the family of the deceased, not his or her banker.

Gulia seems quite interested in understanding the American system, and I have promised to tell her more about in on Monday--by which time, I hope to have figured out more about it myself.