The Growing Housing Affordability Crisis in Mexico
Achieving the dream of buying a home has become increasingly distant for millions of Mexicans, as the housing market’s rapid price increases outpace wage growth and the informal economy restricts access to home loans.
Current Housing Market Statistics
- Average Home Price: According to the Sociedad Hipotecaria Federal (SHF), the average price of a home in Mexico is approximately 1.8 million pesos.
- Income Requirement for a Mortgage: To qualify for a mortgage that would enable purchasing a property of this value, an individual would need to earn around 64,000 pesos per month, as stated by Karim Antonio Oviedo Ramírez, the national president of the Asociación Mexicana de Profesionales Inmobiliarios (AMPI).
However, Oviedo Ramírez highlighted that over half of the population (52%) resides in the informal economy, earning only about 17,000 pesos monthly—equivalent to two minimum wages.
“To afford an average-priced home, three people would need to combine their incomes,” Oviedo Ramírez warned.
Housing Prices Outpacing Wages
The escalation in housing costs is not a recent phenomenon. Enrique Margain, the director of Crédito Hipotecario at Mifel, explained that over the past decade, property prices have increased by an average of 8.4% annually, surpassing wage growth and inflation.
“There is a gap because housing prices rise faster than wages. This means people will take much longer to buy a home. The number of families with sufficient income to purchase is quite limited,” Margain stated in an interview.
According to the banker, this trend has altered buying patterns and independence. More young adults are delaying moving out of their parents’ homes or resorting to shared rentals. Even those who manage to buy a property often opt for smaller homes due to diminishing purchasing power.
Economic Risks from Housing Affordability
The impact of rising housing costs extends beyond homeownership, potentially causing broader economic consequences. Oviedo reminded that according to the World Bank, two-thirds of global systemic crises originate in the real estate sector.
“We must recognize that if we continue on this path, we could face a crisis originating from the real estate sector: bubbles form, instability ensues. We may not realize that we’re heading in this direction and could face complications within five years,” Oviedo warned.
Challenges in Home Financing
Price difficulties are compounded by challenges in accessing credit. Margain explained that a significant portion of the housing market caters to salaried workers, meaning those who can verify income through pay stubs.
However, the unaffiliated segment—comprising independent or informal workers—accounts for only 30% of home financing.
“It’s crucial to more accurately predict the payment capacity of this population segment and provide them with credit according to their needs. Encourage financial inclusion, create savings schemes that enable down payments, leveraging current technologies,” Margain explained.
Oviedo Ramírez concluded that expanding credit access to the unaffiliated would help bridge the housing gap, adding that government housing programs alone cannot solve the issue.
“Government housing programs are insufficient to afford the average-priced home in our country. We must understand the problem and consider those not eligible for Infonavit, Fovissste, or Conavi’s criteria,” Oviedo Ramírez emphasized.
