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Affordable housing in San Miguel de Allende

By: Alvero Estemado Talavera

In San Miguel de Allende where low-income neighborhoods are rapidly being gentrified and where the number of spacious, elegant residences for the wealthy appears to be slowly outnumbering the supply of affordable housing, are working-class families who do not have a million pesos or more to spend being shut out of the housing market?

With the salaries of factory workers, office workers and even young professionals ranging from 4,000 to 9,000 pesos per month, there are few opportunities to purchase a house within their income range. If, as is commonly accepted, the availability of affordable housing is considered an economic indicator of the level of well-being of a society, San Miguel has a problem to resolve.

Because of the lack of available housing and the high cost of credit, the most common solution to the problem is for adult children and their families to live with their parents-creating multigenerational families with their inherent problems.

For those who take out a 20-year mortgage, interest rates vary from 9.4 to 13.5 percent per annum for a bank loan, or around 5 percent with government public housing credit. Public housing credits are generally favored over bank loans because interest rates are protected from the effects of devaluation and families have the opportunity to make an affordable monthly payment after a low initial deposit.

Although Infonavit (Institute of the National Fund for Housing for Workers)-the first official public housing program-was started in the 1970s, some housing has been available to a limited number of workers since the 1960s.

Fovissste, a part of the ISSSTE (Institute of Social Security for State Workers), was established shortly thereafter. These programs allow Mexican workers registered with the social security department to purchase homes. Yet, for the self-employed or those outside the social security system, purchasing land in installments and constructing a home room by room is usually the only available option.

According to figures from the Urban Development Department, there are 115 subdivisions in the city. Around 30 percent (34 subdivisions) are considered low-income developments- seven are totally government-owned projects (three federal and four municipal); the rest are joint ventures with private contractors. The homes in these areas are also known as "progressive housing" because the basic construction of a one-level, one- or two-bedroom house allows the owner to continue to expand the house over time as additional money becomes available. The cost of a home in these areas, including interest payments, ranges from 250,000 to 440,000 pesos to be paid in monthly installments over a period of 15 to 20 years. The other 70 percent of residential subdivisions are private developments with houses that start at 700,000 pesos. Financing, however, must be obtained through a bank loan.

According to the Federal Institute for Housing's website, 70 percent of the available credits to finance home purchases go to the working and middle classes via Infonavit and Fovissste programs. The remaining 30 percent of home credits take the form of subsidies to the poor via the Federal Department of Social Development.

San Miguel's property boom over the past several years has seen property prices for central and fringe colonias increase exponentially, forcing lower-income workers to look for property in areas that fall outside the designated urban development plan. These unofficial colonias spring up outside the established residential zones in areas that do not offer basic services such as electricity and water and sewage systems, generating pressure on local authorities to provide services. These areas-such as San Martín near the railway station and the now 10-year-old neighborhood of San Luis Rey-tend to quickly become overcrowded because land is available at lower prices. Eventually, pressure from the large population compels the city to provide services. Another problem that arises and that authorities continually warn the public about is the potential for land fraud; some developers offer cheap land and unsubstantiated promises of new fraccionamientos (subdivisions) in areas that will never be approved for residential zoning. Caveat emptor.

According to Ramón Zavala of Zavala Real Estate, the considerable increases in property prices over the past five years have created an extremely difficult situation for working- and middle-class families. "People do not know where to live now, and they don't have many options. The government must support housing projects with fair pricing and decent houses."

Architect Patricio Rodríguez, coordinator of Subdivisions in Urban Development, confirmed that the municipal government actively supports the creation of popular housing projects for sanmiguelenses. "We are constantly looking for builders and businesses that offer low prices but also good quality in order to have subdivisions that impel local development and provide solutions to rapid city expansion."

Article Source: http://articles.tiptopweb.info

Author lives and works in San Miguel de Allende. For the complete article visit Affordable housing in San Miguel

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Affordable housing in San Miguel de Allende