"Empty Houses: Did Housing Finance Create a Vacancy Crisis in Mexico?"

• In Event: Mexico’s Social Interest Housing Planning Disaster

Abstract

In the wake of the housing market crash in the United States in late 2008-09, images of abandoned homes captured the world’s attention. Yet in 2010, housing vacancy rates in Mexico were as high as or higher than those of the United States. Housing vacancy in Mexico was also connected to the housing finance system, but in contrast to the United States, the system in Mexico is primarily run by government agencies. This paper examines overall vacancy rates as well as rates in the central city and urban periphery in the 100 largest cities in Mexico, and tests four hypotheses about their determinants using data from the 2010 Census of Population and Housing. Results confirm that violence related to the drug war, international migration, and housing finance are associated with vacancy. However, more housing finance is strongly related to higher vacancy rates overall and in the central city but not in the urban periphery as expected. This suggests that the expansion of credit for new housing has abetted a hollowing out of the central city. The paper also reviews policies to address the vacancy crisis in Mexico, and proposes a framework of best practices.

Author

• Paavo Monkkonen, UCLA