Housing tenure and mortgages
House ownership is the most common form of housing tenure in many Latin American countries. In Mexico, for instance, more than two-thirds of households own their home, while only 15 percent rent it. Thus, a great portion of all consumer real estate investments in the North American country is aimed at buying new and old houses. In response to the always high housing demand, credit options provided by the public or the private sector represent the main source of home financing in Mexico, accounting for nearly 75 percent of the funding, as compared to household investments or subsidies, which do not surpass 25 percent.
Impact of COVID-19
Like the global economy, there has not been a corner of the Mexican economy that has been left untouched by the impact of COVID-19. The real estate market has faced important challenges, especially on the demand side. The lack of financial security given by an unanticipated recession has led to a sudden drop in housing sales in Mexico City, from a height of 6,048 at the end of 2019 to 3,463 in the middle of 2020. All segments are expected to suffer. However, households that are now able to apply for a mortgage loan are expected to suffer the most, given their more vulnerable financial position, with an estimated demand reduction of 14.1 percent. Thus, without its wealth of demand, Mexico’s housing market will inevitably be forced to overcome an unforeseen deficit until the end of the pandemic and beyond.
