AKIM AGINSKY FOR THE PULITZER CENTER
View a slideshow of images from Latvia, with photographs by Akim Aginsky and captions by Kristina Rizga.
Despite his 33 years, Valdis Novikovs still radiates teenage energy and a hunger for adventure. Latvia is a small country (population: 2.2 million), and like a lot of young people who felt suffocated and needed to get out, Novikovs left for England in 2005. He worked as a sous-chef at the Hard Rock Cafe in Birmingham and shared a studio apartment with a Polish roommate. When he went back to Latvia two years later, he barely recognized his own country. The moderately ticking postcommunist economy he’d left behind had turned into a booming engine, propelling rapid changes almost everywhere he looked.
“I come back and everyone around me is buying and selling properties,” Novikovs says. “People have two luxury cars. They are traveling all over the world. I’m laboring overtime like a fool in England, but I can’t do any of that.” Sitting in his apartment in Riga, Novikovs speaks animatedly: “I felt like something gigantic was happening in Latvia, and the train was leaving without me!”
In fact, “something gigantic” was happening in Latvia: sweeping across the country was the biggest real estate (and luxury car) bubble in Europe. Less than a year after Latvia joined the European Union in 2004, its growth rate topped all of Europe. As global stock markets overheated and competition for investment opportunities intensified, Scandinavian banks showered Latvia with cheap credit. Eighteen years ago, when Latvia was under Soviet rule, the vast majority of the population had no experience with banking, investments or credit; no one owned property. But by 2005 Latvians could buy everything they ever dreamed of on credit–from teakettles to Bentleys to luxury apartments. As hundreds of office and apartment towers reached skyward, some construction workers started earning more than doctors. Novikovs, who had no experience in construction, got a job as a “plumber’s assistant,” in addition to managing a Jamaican-inspired restaurant, Coco Loco, at night. He was making more than $2,800 a month in construction alone, twice what he made in England.
Increased earnings and easy credit fueled a hunger for owning property. Oskars Kurdeko felt anxious that by 2007 he still didn’t own a home. “All of my friends had already bought their apartments,” Kurdeko explains. A percussionist for two local pop-rock bands, Putnu Balle and Tumsa, Kurdeko saw his income shoot up 70 percent that year, fueled by corporate gigs. He took out a $272,000 mortgage on a two-bedroom apartment in Riga with no down payment.
But as the global financial storm swept across Europe, the dreams of Latvians like Novikovs and Kurdeko were blown apart. By the end of 2008 Novikovs had lost both his jobs. Kurdeko’s monthly mortgage payment now exceeds his pay, and his apartment is worth a fraction of what he owes on it. He’s not alone: almost a third of all Latvian households have mortgages for homes or apartments that have dropped 50 percent in value since last year–the deepest plunge in the world, according to the Global Property Guide.