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A NEW PLAN TO FIX MEXICO’S HOUSING CRISIS  
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Ximena González
April 11, 2025
Jacobin
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_ Mexican president Claudia Sheinbaum wants to bring social housing
back to Mexico City’s core. It may be the capital’s best shot at
making affordability more than just a slogan. _

Claudia Sheinbaum speaking in Mexico City, Mexico, on April 3, 2025.,
Gerardo Vieyra / NurPhoto

 

Lined by purple jacaranda trees and lush tepozanes, the walkable
streets of Mexico City’s Condesa neighborhood connect a dense urban
environment where contemporary apartment towers rise alongside squat
multifamily buildings designed in a mix of architectural styles.
Surrounded by bustling cafés, creameries, and art galleries, a public
park draws passersby who pause to enjoy an impromptu jazz concert.

North America’s largest metropolis is an urbanist’s dream — but
also a cautionary tale of progressive ideas turned sour.

In the early 2000s, the city’s government, under then mayor and
future president Andrés Manuel López Obrador (AMLO), embarked on an
ambitious plan
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to curb urban sprawl by densifying the four central boroughs where
employment centers concentrate
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Cuauhtémoc, Miguel Hidalgo, Benito Juárez, and Venustiano Carranza.
Meanwhile, revitalization programs were set in motion to improve
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the infrastructure of neglected neighborhoods in the city’s center,
including Condesa [[link removed]]
and Roma
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which had been losing residents since the 1985 earthquake.

The strategy succeeded in drawing real estate investment into the
city’s center. But as zoning laws were relaxed and incentives rolled
out, the resulting development boom
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drove up prices and displaced
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roughly one hundred thousand residents from the central boroughs.
Housing affordability became the plan’s most serious causality.

Build Better, Not Just More

“The city’s government has made significant efforts to improve
access to housing for lower income residents,” says Anavel
Monterrubio, a professor of urban sociology at Universidad Autónoma
Metropolitana, referring to Mexico City’s Housing Law, which was
established
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in 2017. “The law is centered on protecting the right to housing,
but a disconnect between urban planning policies and their impact on
housing limits its effectiveness.”

Displacement in the city’s central districts may not have been
AMLO’s intent
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but gentrification is often the unintended outcome
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well-meaning progressive policies carried out in a neoliberal
framework — one in which the state retreats from direct intervention
and instead relies on market mechanisms to achieve social goals.

Within that framework, AMLO’s agenda helped pave the way for Mexican
magnate Carlos Slim to transfigure
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roughly 375 acres of underused industrial land into a vibrant
mixed-use district, attracting thousands of professionals to live,
work, and play in a luxury enclave rebranded as Nuevo Polanco, in the
Miguel Hidalgo borough.

Today office and apartment towers rise from the neighborhood’s
renovated landscape, where iconic architectural landmarks encompass a
host of shopping, entertainment, and cultural venues, including
Slim’s own Museo Soumaya — a display window for the wealth of the
world’s nineteenth-richest man, concealed behind a veil of
philanthropy.

In the last decade, more than 8,000 apartments have been built
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Nuevo Polanco alone, yet housing in the city center remains out of
reach for most working-class residents. Between 2019 and 2024, rents
rose
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by 19 percent in the Miguel Hidalgo and Benito Juárez boroughs, and
by 26 percent in the Cuauhtémoc district. Even in Venustiano Carranza
— the most affordable
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of the four central districts — rents posted
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the sharpest increase in the city last year, rising 5.5 percent. Over
the same five-year period, the average home price across Mexico City
increased
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by 36 percent.

Some argue the solution is straightforward: build more housing. And,
indeed, more supply is needed. According to estimates from the
country’s building association, the Mexican Chamber of Construction
Industry (CMIC), and real estate market research firm Softec, at least
a hundred thousand new dwellings must be constructed
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in Mexico City’s central boroughs by 2030 to meet demand.

But in a city where only one in five families earn
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a living wage — enough to cover basic expenses like food, rent,
transportation, and utilities — leaving the construction of housing
to the free market is unlikely to mitigate displacement.

Subsidizing Displacement

“Unless housing is built, or highly influenced by the government, it
simply won’t be affordable,” says León Staines-Díaz, a professor
of architecture and urbanism at Tecnológico de Monterrey. “Because
land is too costly, the state has to play a role. The free market has
already been given an opportunity, and all it did was create an
unsustainable city.”

Indeed, a key limitation of AMLO’s densification strategy, known as
Bando 2, was that the government had long since stepped back
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from building housing. Since the early 1990s, the role of INFONAVIT
— a federal housing fund created
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in 1972 to pool employer contributions toward workers’ housing —
had been reduced
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to mortgage financing. Public construction fell by the wayside and
housing became a commodity.

“People thought the market would solve the problem,” Staines-Díaz
says, “government intervention was frowned upon.”

While Bando 2 was meant to encourage the construction of affordable
housing in well-connected neighborhoods with existing infrastructure
—public transit, schools, public parks, and markets — in practice,
the private sector responded differently. Although low-interest loans
from INFONAVIT were available to the city’s workers, affordable
homes continued to be built on the urban fringe. Meanwhile, luxury
towers proliferated
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in the well-served neighborhoods of the central boroughs. Financial
speculation surged and a real estate “cartel” emerged
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amid growing market concentration.

In 2019, as calls
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for action against gentrification in the city’s center intensified,
Claudia Sheinbaum, then Mexico City’s mayor, introduced an
initiative
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to nudge
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private developers to build between 7,500 and 10,000 affordable homes
in gentrifying areas by 2024.

The initiative waived development fees and taxes for projects that
committed to selling a third of the units built below market prices.
It also fast-tracked permit approvals and directed public investment
toward neighborhood infrastructure upgrades.

But the program underperformed. By the end of 2024, just 253
affordable units had been approved — across only three apartment
towers — according to information obtained by _Jacobin_ via a
freedom of information request.

Planning Beyond the Market
“Developers want more density, not incentives, because that’s
where the return on investment is,” says Monterrubio, whose research
work
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focuses on the limitations of city planning that prioritizes capital
accumulation over the right to housing. “That’s why developers
haven’t been swayed by the program.”

When land-use regulations are relaxed to allow for taller buildings,
the potential value of that land increases. This, in turn, raises land
prices and exacerbates the chasm between the neighborhoods created for
the affluent, and the shrinking number of options available to the
working classes who serve them, Monterrubio explains.

“Deregulation creates enclaves of wealth and enclaves of poverty
because it increases the value of the land, and the value of the land
impacts the cost of housing.” As a result, the right to housing —
which is enshrined
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in Mexico’s Constitution — remains largely aspirational.

“The right to housing is only guaranteed for those who can pay for
it, whether they’re rich or poor,” Monterrubio says. “From my
perspective, this won’t be addressed by private development, but by
the meaningful participation of the government.”

Reversing the impact of four decades of a market-led
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urban policy won’t be easy, especially when government intervention
in the free market is perceived
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with suspicion. But recent federal initiatives offer a glimmer of
hope.

In October, President Sheinbaum put forward an ambitious plan
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to build one million affordable homes across the country before the
end of her mandate, in 2030.

This time around, construction won’t be left at the mercy of private
real estate developers.

Thanks to a recent reform
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INFONAVIT’s regulatory framework, the federal government subsidiary
will acquire
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serviced land in well-connected areas, and build social housing for
lower-income workers for the first time in three decades.

In Mexico City, Sheinbaum’s plan is expected
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to produce 26,000 affordable homes over the next five years, and
mitigate displacement in the city’s center.

“The federal and Mexico City governments have a shared vision,”
said Mexico City’s new mayor, Clara Brugada, in a February press
conference. “We both want to protect the right to housing and fight
gentrification. These housing projects will help us do it.”

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Ximena González is a freelance writer and editor based in Calgary.
Her work has appeared in the Globe and Mail, the Tyee, and the Sprawl.

* Social Housing; Mexico City; Claudia Sheinbaum;
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