9 reasons why housing prices have gone up wolrdwide

The rising cost of housing worldwide is influenced by several interconnected economic, social, and policy factors that have grown over the last few decades. Here’s a breakdown of why housing prices in countries like Mexico are increasingly in sync with those in the United States and globally:

1. Globalization of Real Estate Markets

• In recent decades, real estate has become a global investment asset. International investors now view housing not just as shelter but as an investment with potential for high returns.
• Foreign capital flows into real estate markets worldwide, especially in countries with growing economies and urbanization like Mexico. This demand raises prices as investors buy properties, sometimes with little regard for local affordability levels.

2. Financialization of Housing

• Housing has transformed from a basic need to a financial asset. Large funds and corporations now buy residential properties in bulk, sometimes even whole neighborhoods, turning them into rental units or holding them as investments.
• This practice limits the housing supply available for individual buyers, driving up prices in places like Mexico where urbanization is rapid but affordable housing is scarce.

3. Population Growth and Urbanization

• Urban populations have surged, creating demand in cities for more housing. Mexico and other countries have seen significant migration to urban centers for better jobs and education, increasing the need for housing and driving prices up.

4. Limited Land and Construction Costs

• Limited land availability in urban areas and increasing construction costs due to inflation, supply chain issues, and regulatory requirements add to the housing price surge.
• In Mexico, construction materials and labor costs are affected by global inflation trends and supply constraints, often tied to factors like oil prices, shipping disruptions, and even the availability of skilled labor.

5. Low-Interest Rates and Easy Credit

• Over the past few decades, many countries have had low-interest rates, encouraging people to borrow more for mortgages. With easy access to credit, more people enter the housing market, pushing up prices.
• In Mexico, access to credit and mortgage products has expanded, with more people able to borrow to buy homes, which drives demand and prices in high-demand areas.

6. Shortage of Affordable Housing

• A shortage of affordable housing options is a global issue. Governments and developers often prioritize high-end properties for profitability, leaving fewer affordable options.
• In Mexico, new housing developments are often aimed at the middle or upper class, which limits the availability of affordable options for the average worker.

7. Policy and Regulation Influence

• Zoning laws, property taxes, and regulatory changes affect housing prices. In many countries, policies have sometimes favored developers and investors over creating affordable housing.
• In Mexico, some areas have looser regulations and tax incentives for development, which can spur speculative investment rather than affordable housing construction.

8. Economic Trends and Inflation

• Global inflation impacts housing costs by increasing the prices of construction materials, labor, and land.
• In Mexico, local inflation combined with global economic trends often makes housing more expensive over time, as income levels don’t always rise at the same pace as housing costs.

9. Remote Work and Demand for Property

• Since the COVID-19 pandemic, remote work has allowed people to live further from major cities, expanding demand to previously less expensive areas. This trend has impacted both local and international markets.
• In Mexico, places like beach towns and smaller cities have become popular with both local and foreign buyers, driving up prices as demand increases.

In Summary

The interconnectedness of global economies, capital flow into real estate, and demographic trends contribute to housing price increases in countries worldwide. In Mexico, foreign investment, urbanization, and inflation, among other factors, link housing prices with trends in the U.S. and other countries, creating a synchronized global housing market that’s often out of reach for local income levels.