Real Estate Policy in Brazil and Some Comparisons with the United States

Empirical observation suggests that economic development does not stem from historical determinism. Forces that operate in a market reflect institutional factors, and especially public policies. In 2009, the Brazilian government announced an ambitious program of housing development, “Programa Minha Casa, Minha Vida” (PMCMV), with social goals. The growth of the housing market in recent years and its slowdown since 2014 has generated discussion about a possible bubble scenario. This paper seeks to present to the North American public a systematic description of the Brazilian real estate market, its institutional agents, and their housing market roles, impacts and constraints. I examine Brazil’s government real estate programs developed since the establishment of the “Sistema Financeiro de Habitação” (System of Housing Finance, SHF), in 1964 through to the current PMCMV. I also detail the Brazilian real estate credit system. I point out the priorities of each program and the pertinent regulations. Then I discuss two comparisons between the U.S. and Brazilian financial systems that justify my conclusion about the inexistence of the bubble in Brazil: i) the different housing credit policies; and ii) the centralized regulation in Brazil versus the decentralized model in U.S. I emphasize that the main intention of this article is to analyze the Brazilian market, not to offer an original or deeper analysis of the U.S. market.