A
New
House
For
US$530?
Not
In
Costa
Rica,
But
So
in
Ecuador
In
the
age
of
US$10
cameras,
US$40
stereos
and
US$300
computers,
how
much
should
people
expect
to
pay
for
a
basic
house?
In
Guayaquil,
a
city
of 2
million
people
on
Ecuador’s
Pacific
coast,
the
answer
is
US$530.
That
is
the
price
that
Hogar
de
Cristo,
a
Catholic
social
services
organization,
charges
for
a
single-room
house
with
bamboo
walls
and
a
zinc
roof
(delivery
and
assembly
cost
a
little
more).
If
you
don’t
have
US$530,
Hogar
the
Cristo
will
finance
the
house
interest-free
over
three
years,
for
around
US$14
per
month.
Buyers
(left)
listen
to a
sales
associate
after
inspecting
an
Hogar
de
Cristo
house
(right).
Not
surprisingly,
in a
city
where
40
percent
of
the
population
lives
below
the
poverty
line,
these
houses
are
wildly
popular.
Hogar
de
Cristo
sells
an
average
of
50
of
them
per
day,
and
demand
still
outstrips
supply.
Entire
hillsides
in
the
slums
that
surround
Guayaquil
are
covered
with
identical
Hogar
de
Cristo
homes.
So
far
more
than
130,000
units
have
been
sold
in
Guayaquil
and
nearby
towns.
The
business
model
behind
this
phenomenon
would
be
familiar
to
students
of
Asia’s
famous
manufacturers
of
consumer
electronics.
Hogar
de
Cristo’s
managers
are
obsessed
with
cutting
costs
and
increasing
production
while
preserving
quality.
They
drive
hard
bargains
with
suppliers
and
constantly
experiment
with
new
tools
and
methods
to
speed
assembly
times.
They
make
intensive
use
of
computers
to
manage
inventory,
process
customer
records
and
reduce
overhead.
In
short,
they
do
what
every
modern
business
must
do
to
succeed
in a
highly
competitive
market.
Rosa
Tubay,
a
seamstress,
has
turned
the
lower
level
of
her
Hogar
de
Cristo
house
into
a
bricked-in
workshop.
But
Hogar
de
Cristo
has
no
competitors.
Its
self-defined
market—people
who
live
on
less
than
one
dollar
a
day—is
of
little
interest
to
Guayaquil’s
for-profit
homebuilders.
“Our
goal
is
the
development
of
the
whole
person,
the
family
and
the
community,”
says
Father
Robert
Costa,
S.J.,
the
organization’s
director.
“We
start
by
putting
a
roof
over
people’s
heads,
but
our
ultimate
purpose
is
to
strengthen
families
by
helping
to
meet
their
material,
physical,
educational
and
spiritual
needs.”
Houses
are
only
the
most
visible
of
Hogar
de
Cristo’s
“products.”
Once
they
buy
one,
customers
tend
to
sign
up
for
other
services
including
health
care,
microcredit,
education
and
business
assistance.
(Around
40
percent
of
Hogar
de
Cristo’s
customers
are
women
head
of
households.)
These
services
are
provided
for
free
or
for
modest
fees
that
offset
most
but
not
all
of
their
costs.
The
full
production
cost
of
the
US$530
Hogar
de
Cristo
houses,
for
example,
is
around
US$700.
And
if
Hogar
de
Cristo
determines
that
a
family
can’t
afford
the
US$14
monthly
payment,
it
will
adjust
the
price
down
even
further,
to
as
little
as
zero
if
necessary.
The
lost
revenue
is
made
up
with
donations
from
local
and
international
sources.
The
US$530
price
isn’t
arbitrary:
it
is
based
on
Hogar
de
Cristo’s
estimate
of
how
much
the
poorest
of
the
poor
can
afford
to
spend
on
housing.
“Our
goal
is
to
never
turn
a
client
away
for
financial
reasons,”
explains
Father
Costa.
“So
we
have
to
keep
costs
to a
minimum.”
Soft-hearted
charity
and
hard-nosed
business
acumen
do
not
easily
coexist
within
the
same
organization.
But
this
combination
has
enabled
Hogar
de
Cristo
to
expand
the
definition
of
low-income
housing
in a
way
that
offers
valuable
lessons
for
governments,
nonprofits,
and
businesses
focused
on
people
at
the
base
of
the
socioeconomic
pyramid.
Fast
assembly…
Ready
for
delivery…
A
popular
choice…
Humble
origins.
Like
many
Catholic
organizations,
Hogar
de
Cristo
was
the
brainchild
of
an
individual
priest.
The
late
Father
Alberto
Hurtado,
S.J.,
founded
the
original
Hogar
de
Cristo
in
Chile
in
1944
with
an
initial
focus
on
providing
affordable
housing
to
the
poor.
Other
Jesuits
set
out
to
replicate
this
ministry
in
Guayaquil
in
the
early
1970s.
Instead
of
imposing
a
particular
house
style,
the
leaders
of
the
new
organization
decided
to
adapt
and
improve
the
basic
bamboo-walled
structure
traditionally
built
by
poor
people
in
Ecuador’s
swampy
coastal
regions
(see
photos
on
the
right).
According
to
Father
Costa,
this
decision
was
both
functional
and
philosophical.
Bamboo
is a
durable,
versatile
and
fast-growing
material
that
grows
locally
and
requires
few
inputs.
Bamboo
is
also
the
cheapest
building
material
in
Ecuador’s
coastal
region,
and
thus
crucial
to
Hogar
de
Cristo’s
fundamental
goal
of
affordability.
As
they
began
to
buy
materials
in
bulk
and
to
experiment
with
the
basic
house
design,
Hogar
de
Cristo’s
managers
looked
for
ways
to
standardize
the
production
process
and
lower
costs.
After
years
of
buying
lumber
and
bamboo
in
irregular
lengths
and
thicknesses,
for
example,
they
began
to
work
exclusively
with
suppliers
who
were
willing
to
deliver
materials
pre-cut
to
standard
lengths.
The
result
was
less
waste
and
more
productivity
among
the
workers.
“Six
years
ago
we
were
wasting
around
20
percent
of
our
material,”
recalls
Miguel
Viteri,
Hogar
de
Cristo’s
chief
of
production.
“Today
we
waste
less
than
4
percent.”
Noticing
that
workers
spent
too
much
time
bent
over
hammering
nails,
the
managers
devised
a
system
of
assembly
platforms
equipped
with
compressed-air
nail
guns.
To
speed
up
the
process
of
nailing
bamboo
to
wooden
frames,
they
built
metal
templates
that
quickly
align
the
various
pieces
of
wood
and
bamboo.
Today,
Hogar
de
Cristo’s
assembly
plant
is a
marvel
of
just-in-time
manufacturing.
Trucks
piled
high
with
planks,
wooden
posts,
zync
sheets
and
flattened
bamboo
rumble
into
one
end
of
the
facility
a
few
times
per
day.
The
warehouse
area
is
relatively
small,
because
materials
are
quickly
moved
to a
large
covered
workshop
where
wall
panels
and
other
components
are
assembled
with
astonishing
speed.
Every
15
minutes
or
so a
mid-size
truck
pulls
up
and
forklift
drivers
quickly
load
it
with
bundles
containing
all
the
pieces
of a
semi-assembled
house.
The
entire
operation
employs
only
60
workers.
Members
of
the
family
that
has
purchased
each
house
watch
as
the
truck
is
loaded,
and
then
ride
in
the
front,
in
order
to
direct
the
driver
to
their
lot.
During
a
recent
visit
by a
reporter,
a
young
woman
who
declined
to
give
her
name
watched
with
palpable
excitement
as
her
future
house
was
hoisted
onto
a
truck.
“My
husband
and
I
will
no
longer
have
to
live
in
the
same
room
with
my
mother-in-law!”
she
said.
Micro-mortgage
bank.
The
financial
side
of
Hogar
de
Cristo’s
housing
program
also
looks
like
an
assembly
line.
Every
morning
several
hundred
applicants
gather
in a
large
waiting
area
next
to a
full-sized
model
of
the
Hogar
de
Cristo
house.
As
some
applicants
inspect
the
model,
others
read
brochures
or
watch
video
presentations
about
the
purchase
process.
Still
others
make
their
way
trough
a
series
of
small
booths
where
loan
officers
conduct
interviews
and
type
customer
data
into
computers.
Denisse
Avilés,
sales
director,
explains
that
applicants
must
have
identity
documents
for
all
family
members
and
a
“Certificate
of
Possession”
(the
first
step
in
obtaining
full
legal
title)
for
the
lot
on
which
the
house
will
be
located.
In
most
cases
they
must
also
have
a
co-signer
or
guarantor
for
the
loan.
Applicants
are
interviewed
by
loan
officers
to
determine
the
age,
health,
schooling,
and
employment
situation
of
each
member
of
the
family.
The
information
is
processed
using
software
that
helps
loan
officers
calculate
how
much
of a
subsidy
a
particular
family
should
receive.
Officers
also
conduct
home
studies
and
field
visits
to
verify
information
about
each
applicant.
Avilés
said
that
around
45
percent
of
all
applicants
pay
the
standard
US$530
price
for
the
house,
and
the
rest
receive
larger
subsidies.
Because
of
Hogar
de
Cristo’s
commitment
to
serving
only
the
lowest-income
customers,
sales
agents
turn
away
poor
families
with
even
moderately
better
means.
“If
we
determine
that
several
members
of a
family
are
earning
more
than
US$3
per
day,
we
refer
them
to
municipal
housing
programs
that
have
higher
income
requirements,”
Avilés
said.
Housing
metamorphosis.
Despite
its
popularity
with
customers,
Hogar
de
Cristo
has
been
criticized
for
selling
what
many
Ecuadorians
considering
undignified
houses.
With
their
rough
plank
floors
and
lack
of
glass
windows,
electricity
or
plumbing,
the
single-room
houses
are
indeed
Spartan.
And
for
many
Ecuadorans,
the
bamboo
walls
of
an
Hogar
de
Cristo
house
are
a
reminder
of a
life
they
hope
to
escape.
“Bamboo
is a
symbol
of
poverty
in
this
area,”
says
Father
Costa.
“And
in
fact,
I’m
not
proud
of
these
houses.
People
shouldn’t
have
to
live
in
these
conditions.
But
we
say,
‘Better
a
wood-and-bamboo
house
today
than
a
brick
house
five
years
from
now.’
Our
view
is
that
people
who
don’t
have
a
roof
over
their
heads
can’t
wait.
Some
of
our
applicants
are
literally
living
under
pieces
of
cardboard.
So
our
goal
is
to
help
them
take
that
first
step
toward
improving
their
living
situation.”
Moreover,
Costa
points
to a
consistent
pattern
followed
by
families
that
buy
an
Hogar
de
Cristo
house.
First
they
tend
to
make
modest
cosmetic
improvements
such
as
painting
or
planting
flowers
and
shrubs.
Then
they
buy
bamboo
panels
to
wall-in
the
posts
holding
up
the
house.
Since
these
are
purposefully
cut
to
be
ceiling-high,
this
instantly
doubles
the
house’s
living
area.
Eventually,
as
they
are
able
to
save
up
and
buy
materials,
owners
replace
the
bamboo
with
masonry,
pour
a
concrete
floor
on
the
ground
level,
obtain
electricity
hookups,
and
add
plumbing.
Within
five
to
seven
years,
many
Hogar
de
Cristo
houses
are
no
longer
recognizable
as
such.
As
they
improve
their
homes,
owners
also
exert
pressure
on
the
municipal
government
to
pave
roads
and
extend
electricity,
water
and
sanitation
services.
Father
Costa
points
with
pride
to
Guasmo,
a
neighborhood
on
the
outskirts
of
Guayaquil
that
was
little
more
than
a
shanty-town
20
years
ago.
Hogar
de
Cristo
sold
hundreds
of
houses
in
Guasmo,
and
today,
nearly
all
have
been
turned
into
solid
concrete
block
and
brick
structures
that
are
worth
many
times
what
their
owners
paid
for
them.
The
streets
are
paved,
and
the
municipality
has
installed
basic
services.
In
this
respect,
Hogar
de
Cristo
confirms
what
economists
and
development
specialists
have
argued
for
years:
that
facilitating
home
ownership
is
one
of
the
surest
and
fastest
ways
to
help
people
out
of
poverty.
New
directions.
Today
Hogar
de
Cristo
is
once
again
redesigning
its
business
model
to
reflect
changes
in
the
marketplace.
In
recent
years
the
price
of
raw
materials—lumber
in
particular—has
increased
sharply
as
Ecuador’s
coastal
forests
have
been
depleted.
As a
result,
Hogar
de
Cristo
is
experimenting
with
the
use
of
other
inexpensive
materials.
Two
years
ago
it
began
to
test
the
use
of
simple
steel
frames
as
an
alternative
to
wood.
Although
they
are
considerably
more
expensive,
steel
frames
provide
a
much
more
solid
and
durable
basis
for
the
gradual
construction
of a
permanent
home.
As
with
the
wood
models,
the
new
steel
frame
houses
are
initially
sold
with
bamboo
walls.
But
instead
of
being
built
on
posts,
the
steel
houses
are
assembled
on a
poured-concrete
foundation.
They
include
two
doors
and
three
windows,
and
they
have
a
larger
floor
area
than
the
wood
model
(36
m2
as
compared
to
24
m2).
The
result
is a
“starter
house”
that
is
much
closer
to
the
ideal
that
most
families
have
in
mind.
By
applying
the
same
rigorous
cost-reduction
methods,
Hogar
de
Cristo
is
able
to
produce
the
steel
frame
house
for
around
US$1400,
as
compared
to
US$700
for
the
traditional
one.
The
organization’s
managers
believe
only
around
10
percent
of
their
potential
customers
can
afford
such
a
house
at
this
point,
so
they
are
partnering
with
other
organizations
to
develop
creative
financing
options.
To
date,
Hogar
de
Cristo
has
sold
a
total
167
metal
frame
houses.
Hogar
de
Cristo’s
designers
are
also
experimenting
with
an
all-bamboo
model
that
uses
concrete
footings
and
cement-filled
bamboo
posts.
The
approach
is
similar
to
earthquate-resistant
bamboo
houses
pioneered
in
Colombia
(see
link
to
related
article,
“An
improbable
city”).
Rising
prices
for
materials
are
also
widening
the
gap
between
Hogar
de
Cristo’s
costs
and
its
revenues.
Part
of
that
gap
stems
from
the
fact
that
around
20
percent
of
Hogar
de
Cristo’s
house
loans
are
in
arrears.
Though
funds
received
from
donors
cover
most
of
that
shortfall,
Hogar
de
Cristo’s
managers
acknowledge
that
better
repayment
levels
on
its
housing
loans
are
not
only
attainable
but
essential,
if
the
organization
is
to
continue
growing
in a
self-sufficient
manner.
Last
year,
Hogar
de
Cristo
received
a
US$500,000
loan
from
the
IDB’s
Social
Entrepreneurship
Program
that
will
be
used
to
simultaneously
expand
its
steel
frame
house
and
microcredit
product
lines
while
strengthening
its
financial
management
systems
to
reduce
bad
loans.
“Hogar
de
Cristo
is a
real
innovator
when
it
comes
to
producing
affordable
houses
in
large
volumes
for
low-income
families,”
said
Gabriela
Torres,
the
SDS
specialist
who
designed
the
project.
“We
want
to
help
them
sustain
this
extraordinary
track
record
and
achieve
the
financial
self-sufficiency
that
will
enable
them
to
grow
and
meet
future
demand.”
Based
on
her
conversations
with
Hogar
de
Cristo’s
managers,
Torres
believes
that
the
organization
can
improve
its
repayment
levels
by
strengthening
loan
management
and
debt
collection
activities.
She
and
other
IDB
specialists
are
currently
working
with
Hogar
de
Cristo
to
implement
several
of
these
changes.
As
evidence
for
Hogar
de
Cristo’s
customers'
willingness
and
ability
to
repay
loans,
Torres
points
to
the
organization’s
thriving
microcredit
program,
which
was
launched
four
years
ago.
“They’ve
lent
almost
US$7
milllion
to
some
8,000
women
since
2002,”
Torres
said.
“Their
repayment
rate
is
around
97
percent,
all
thanks
to
excellent
management.”
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