The aroma of possibility often hangs heavy in Mexico City’s air, a vibrant tapestry of culture and commerce. Yet, for many of its residents, the dream of owning a home is slowly dissipating, replaced by the stark reality of an increasingly unaffordable market. Apartments in once-accessible neighborhoods like Portales, Santa María la Ribera, or Obrera now command prices between 2 and 4 million pesos, or even more, depending on size and novelty. This escalating cost presents a perplexing paradox: if homes are so expensive, who is buying them?
The Invisible Hand of Investment
This very question captivated Dr. Francisco Javier Luna Moreno, a researcher at the National Autonomous University of Mexico’s (UNAM) University Program of Urban Studies (PUEC). Before academia, Dr. Luna spent a decade advising real estate developers, gaining firsthand insight into the planning of new housing projects. His experience led him to a crucial doctoral inquiry: if construction companies build homes assuming a ready market, who exactly can afford them?
“Developers didn’t grasp the mismatch in their products, viewing housing purely as a commodity,” Dr. Luna recounts. “Even I, with perhaps triple the income, couldn’t afford these homes, and they weren’t even luxurious.”
His estimates revealed that only the top 10% of the population, with sufficiently high incomes, could realistically afford these prices for the purpose of living in them. However, this segment alone doesn’t fully explain the market’s behavior. A significant portion of sales, he explains, comes from individuals who purchase properties as investments, believing them to offer better returns or lower risks than traditional banking or cryptocurrencies. Additionally, institutional buyers-companies adding real estate to their investment portfolios-contribute, albeit to a lesser extent.
In high-value corridors like Roma or Nuevo Polanco, it’s estimated that up to half of all sales are linked to investors seeking profitable ventures. These profiles collectively sustain a substantial part of the demand.
“That’s why they keep selling,” Dr. Luna asserts. “When housing becomes a business, you’re not trying to solve a social problem; you’re pursuing a business objective. The prevalence of this type of housing, or its dominance for many years, has marginalized those without sufficient income from the formal market.”
High Prices, Insufficient Credit: A Double Bind
Access to housing isn’t just about price; financing plays an equally critical role. In Mexico, primary options include credits from public institutions like Infonavit and Fovissste for formally employed workers, and mortgage loans from banks. Dr. Luna notes that while these mechanisms serve a significant portion of the population, they exclude millions working in the informal sector. Even those eligible for credit often find the amount insufficient or are forced into very long-term debts.
The National Survey of Household Income and Expenditure (ENIGH) 2024 by INEGI revealed that Mexico City has the second-highest average monthly household income, at $36,895, trailing only Nuevo León. Dr. Luna points out that this figure often represents the combined income of two individuals. If they were to allocate 30% of this to housing payments, their purchasing power would barely reach a property worth one million pesos.
“You ask, ‘where can you find a one-million-peso home when the average is four million?’ Yes, they exist, but in Zumpango, Tizayuca [Estado de México and Hidalgo], not in popular city neighborhoods like Doctores or Guerrero, where such prices are unheard of,” he reiterates.
Promises Unfulfilled: The Peril of Alternative Financing
In 2024, Lupita decided to transition from renting to buying an apartment in the city. When banks couldn’t offer her enough, she turned to an economic financial institution. They assured her that if she made monthly contributions and even extraordinary deposits for a year, she would secure a one-million-peso credit, calculated based on her payment capacity. Convinced, she followed the plan, accumulating $180,000.
However, when the agreed-upon period arrived, the process diverged significantly from what was promised. First, she was instructed to find a home that wasn’t old or a bank foreclosure, a challenging condition in the current market. “That discouraged me,” the 34-year-old recalls. “I thought, ‘I can’t find anything, let alone under a million.’ Everything was 1.2 or 1.3 million; things started going wrong.”
Another hurdle emerged: many sellers wouldn’t accept this type of financing. Yet, after an arduous search, she finally found a used, modest 40-square-meter apartment. That’s when everything changed. Her advisor began to delay the “acquisition” for the property, prompting her to call the central office.
There, an executive-whose rude demeanor she vividly remembers-explained that the process didn’t work as she understood. Client funds were organized into groups, and credits were first granted to those making the largest contributions, a scheme Lupita likened to a “pyramid.” As a single woman with limited contributions, she was warned that her “acquisition” could be delayed by four to six years.
A Lost Illusion
Faced with this grim reality, Lupita decided to cancel her contract and, with legal assistance, initiated the process to recover her money. After numerous procedures, clarifications, and obstacles, the financial institution returned only $70,000 six months later, claiming the rest covered interest and insurance.
“They play a lot with your feelings and your desire to own a home, especially if you’re excited and hopeful,” she reflects. Lupita’s experience underscores the challenge: when traditional mechanisms fall short, some resort to alternative schemes that may not offer viable solutions.
“If you need a home, the way to get it is to buy. And the problem is this: if you can’t afford it, there’s hardly any other mechanism to solve that need. Thinking about how people can live in these areas speaks to public interventions. There’s not much else to consider,” Dr. Luna Moreno emphasizes.
A Brief Respite: The Pandemic’s Impact
The relentless rise in Mexico City’s housing prices briefly paused during the COVID-19 pandemic. Dr. Luna Moreno’s estimates show that the average cost surged from around 1.2 million pesos in the early 2000s to between 4 and 5 million by 2018 and 2019. However, a slight slowdown in prices was observed between 2020 and 2022, fueled by economic uncertainty. “There was a contraction in the buying market. In some cases, people lost their jobs or saw their incomes decrease. So, the decision to buy was postponed, even if there was a real need.”
*The average age to acquire a home in Mexico is 39 years, according to real estate consultant 4S Real Estate.*
This is the first of two reports on the obstacles to accessing dignified housing in Mexico City.
Source: https://www.chilango.com/noticias/la-cdmx-se-llena-de-viviendas-que-no-todos-pueden-comprar/amp
