The industry is optimistic, but says it is waiting to see what the government intends to do to build 1 million homes

Housing developers in Mexico are optimistic about the housing plan of Claudia Sheinbaum's government, which aims to build 1 million homes over the next six years; however, they are waiting for the definition of the program's mechanisms to know how to collaborate and, possibly, expand the goal to more than 2 million new homes in that period.

For the actors in the construction of homes in the country, it is crucial that the mechanisms defined for the State to build 1 million homes during the current six-year term include collaboration between the federal, state and municipal governments with the private sector. Otherwise, risks such as informal housing and invasions would increase.

"We are optimistic and happy about the plan. Six years went by with the previous president (Andrés Manuel López Obrador), where housing was neither well nor badly regarded, the issue was simply not touched... Now, we need to know how (the plan) will be implemented," said Luis Alberto Moreno Gómez Monroy, president of the National Chamber of the Housing Development and Promotion Industry (Canadevi).

For Jesús Sandoval Armenta, general manager of the developer Ruba, the need for housing in the country is so great that there is room for the State to develop low-cost homes, which is currently not done by the private sector due to various factors, such as the rising cost of land, the lack of infrastructure, the paperwork, as well as the high cost of bridging loan rates for construction for the low-income segment.

"The gap is so great that what is needed is supply in the low segment. If the government gets involved, it will produce the housing that we do not do in the private sector, we cannot compete there. The market is so large in social interest housing that (government participation) does not represent a risk, but rather is a complement," said Sandoval Armenta.

Diagnosis and causes

Recently, the federal government presented the guidelines for the housing plan for the current administration, in which it committed to building 1 million homes, of which 500,000 would be built by the National Workers' Housing Fund Institute (Infonavit) and the rest, for the unaffiliated population, by the National Housing Commission (Conavi).

This is because 8.9 million homes are in a situation of housing shortage and, in addition, for next year, a demand of 2.8 million new homes is estimated, a figure that by 2030 will increase to 6.6 million.

Housing developers have acknowledged the difficulties that have arisen in recent years in building low-cost homes, that is, homes that cost up to 600,000 pesos, due to a series of circumstances that have raised the value of houses to the point that they cannot be purchased even with a loan.

"The increase in the cost of materials, the lack of efficiency of the municipalities, which take a long time to resolve permits for construction, has increased the cost of houses and, in addition to all this, the credit that is granted is not proportional to the value of the homes," said the president of Canadevi.

The director of Ruba pointed out that currently, one of the biggest challenges for the development of social housing is the acquisition of land, as he pointed out that there is a kind of speculation, where owners prefer to keep it and "set prohibitive prices in some places."

"The government should fulfill its role in providing non-speculative land. This will allow for the construction of housing at a price that does not exist now, because under current conditions, it is almost impossible to produce housing for 500,000 pesos," said Sandoval Armenta.

For the president of Canadevi, the real challenge of the government program is to offer housing solutions to people who earn between 12,000 and 17,000 pesos per month, who are currently not served because there is very little supply available for them.

"The federal government must contribute a portion, the state government another portion, and municipal governments must at least contribute regulatory efficiency and zero paperwork costs for this housing and zero taxes for the registration of assets, otherwise it is very difficult for people who have 480,000 pesos to be able to afford a home worth 600,000 or 700,000 pesos, it is simply very complicated for them. So, a lot of effort is needed to be able to make sure that people have a home," said Gómez Monroy.

Risks would increase

According to a Canadevi diagnosis, currently in Mexico about 1 million new homes are built each year; however, about 750,000 units are built informally, that is, in high-risk areas, without service and without mechanisms for their legal certainty.

For Canadevi, these figures should make the private sector work hand in hand with public agencies to reverse them and ensure that most of the housing developed in Mexico is done within the formal sector.

"It is essential not to make the same mistakes that are already known. It is essential to provide targeted support to the people who need housing the most and to regions where our support is needed... In the different states, there are different ways of dealing with this problem, there are different ways of solving it, but, above all, we do need to all agree and work as a team," said Gómez Monroy.

For the director of Ruba, it is necessary to immediately address the problem of the lack of social housing in the country, because if not, the figures for informal housing would increase. "If the government does not address this segment, the other alternative is invasions and informality in irregular settlements."

In the coming weeks, it is expected that the reform initiatives will be approved so that Infonavit and the Issste Housing Fund (Fovissste) can expand their powers and enter into the construction of housing; in addition to Conavi detailing its plan to serve the population not affiliated with a social security scheme.

Once these issues are resolved, the ways in which the government, via these agencies, can develop 1 million homes will be outlined. "If we all manage to collaborate, the million homes can be achieved and not only that, but we can achieve up to 2.5 million homes in the next six years of government," said the president of Canadevi.