Why buying a house in Mexico has become more expensive than the U. S.?

We have done it again.  The same predatory practices that have driven housing prices up in the United States and caused an affordable housing crisis, have now been transferred to other countries and are wreaking havoc for its citizens of countries where they’re currency is not as powerful as in the states.

One great example in the cost of owning a home in Mexico, sometimes with prices that exceed those in the United States, and this is due to a combination of domestic and international factors driven mainly by investors and financial speculators.

Here are 8 factors causing the price hike:

1. 1. Increased Demand from Foreign Buyers: Many foreigners, particularly from the United States and Canada, are purchasing properties in popular areas like Mexico City, coastal regions, and expat-friendly towns (e.g., San Miguel de Allende). Their higher purchasing power drives up prices.
   2. Real Estate Investment Trends: Mexico has become a hotspot for real estate investors, both local and international, who view property as a stable investment. This increases demand, especially in high-growth or tourist areas.
   3. Tourism and Short-Term Rentals: The rise of platforms like Airbnb has encouraged investors to buy properties to rent them out to tourists. This reduces availability for local buyers and raises prices in desirable areas.
   4. Urbanization and Limited Supply: Urban centers like Mexico City, Monterrey, and Guadalajara have a growing population, leading to higher demand for housing. However, the supply of affordable housing has not kept up.
   5. Inflation and Construction Costs: Rising inflation and higher costs for building materials (e.g., cement, steel, labor) have driven up the cost of new construction, impacting housing prices.
   6. Weakening Peso Against the Dollar: For international buyers, a weaker peso makes Mexican properties relatively more affordable, but for locals earning in pesos, it makes homes less accessible.
   7. Speculative Practices: Speculation in the housing market by developers or investors can artificially inflate property prices, particularly in areas considered trendy or high-value.
   8. Economic Inequality: In Mexico, economic disparity means a significant portion of the population struggles to afford homes, while wealthier individuals and investors dominate the housing market.

This situation creates a paradox: while local wages remain lower (in Mexico, the minimum wage is $200 USD per month), the average price of a house in Mexico City is $250,000 USD and, to rent in a good neighborhood is $1,500 USD per month for a one-bedroom apartment. Property prices in certain regions are comparable to those in the United States, leaving many Mexicans unable to afford homes.

How Globalization of Real Estate Markets afects prices: 

• 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.

Financialization of Housing has left people at a disadvantage

• 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.

Read more:  https://mexusnews.com/9-reasons-why-housing-prices-have-gone-up-wolrdwide/