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“Where Are We Supposed to Live?”

The AMLO government has enacted modest reforms to help struggling renters. But more radical solutions are needed to solve Mexico’s housing crisis. A report from Oaxaca.

A border road separating town and housing project in Reyes Mantecón, Oaxaca, Mexico. Nidia Rojas

Nearly an hour outside the city of Oaxaca, a prime tourist destination in the southern Mexican state of the same name, lies the housing project of Ciudad Yagul.

Set off on a windswept plain from the nearest town of Tlacolula, it is a desolate place. The long lines of tiny, three-room row houses stretch down treeless streets under the hot sun. There are no parks, and the one stretch of concrete designated as a public space is run-down and unused. On closer inspection, it turns out that many of the houses are abandoned, the windows broken, collection-agency notices stuffed one after another into door cracks or turned into a pulpy pap by rains.

Ciudad Yagul is just one of dozens of housing projects dotting Oaxaca’s exurbs. Constructed during the Vicente Fox and Felipe Calderón administrations (2000–2012) with the stated goal of providing housing for a working class that could not otherwise qualify for home ownership, this massive program soon became, in practice, a way to shovel money from the federal housing authority Infonavit into less-than-scrupulous private construction companies.

These enterprises, gorged on further investment from the World Bank and Wall Street, littered Mexico with substandard housing in inhospitable areas where land was cheap, dumping them on municipalities ill-equipped to handle the influx and, in many cases, abandoning the projects without paved roads, electricity, or running water. In the process, they entrapped millions of Mexicans into both shoddy homes and subprime-style mortgages whose principal continues to rise even as they struggle to meet the monthly payments. As these are deducted directly from their paychecks, scores of workers have been forced to quit their jobs or leave their houses behind — or both.

According to a report by the local newspaper El Imparcial, fully 30 percent of the units in Ciudad Yagul have been abandoned. It is routine for workers to leave for work between 5:30 and 6:00 a.m. and return home at 10:00 p.m. A round trip to and from Oaxaca, where most residents work, costs 50 pesos ($2.70 USD) in a collective taxi, gobbling up close to half of the daily minimum wage. Once the collectives stop running, a private taxi costs significantly more.

A stone’s throw away from where we’re standing is the archeological site of Yagul, the subdivision’s namesake. There, many walls are still standing after 1,200 years. Here, they’ve barely been up for fifteen. And by the looks of it, some will struggle to make it another five.

Airbnb Mexico

Twenty miles away, in the historic center of Oaxaca, real estate is ripe, and abandoned buildings are few and far between. Just like in Ciudad Yagul, however, people are being driven from their homes, though for an entirely different reason: the cannibalizing of housing stock for Airbnb and skyrocketing rents.

“I’d been in my place for ten years when the owner and her son decided to turn the apartments into Airbnbs,” Zoe tells us. “‘But we’re not kicking you out!’ she said. Sure.” In the case of Celina, they were the final holdouts in an eight-unit complex that had all gone Airbnb. After months of seeing a rolling stock of new faces and hearing suitcases rolling constantly outside their door, she and her husband were informed by their landlords that they needed to vacate their apartment temporarily, ostensibly for roof repair. Only once they had been safely removed were they notified of the change of rental method.

“Similar things have happened to like ten other friends of ours this past year,” she says.

A search for Oaxaca rentals on the Airbnb site revealed an average price of $749 pesos a night ($40 USD) — six times the daily minimum wage. Indeed, a monthly rental at that price would come in at more than $22,000 pesos ($1,200 USD), well over 500 percent of the monthly average salary in Oaxaca.

The gulf between the Airbnb rental bubble and the actual world where everyone else exists is staggering. And by reducing the availability of long-term housing while increasing owners’ expectations of what they are able to get, Airbnb has inflated prices throughout the city, aggravating what was already a stiff breach between the owner and tenant classes and pushing the latter farther and farther away from their jobs in the city center.

Elsewhere in Oaxaca, home of the first major social rebellion of the twenty-first century, tourism is booming. Hip groups of visitors quaff artisanal beer and boutique mezcal before ambling off to sample upscale versions of the area’s famed cuisine at exclusive restaurants. On the Day of the Dead in November, vans full of tourists flood local cemeteries to live out their Coco-inspired fantasies in real time. And while tourism brings money into a city where industry is virtually absent, the structure of the Oaxacan economy ensures that most of this income winds up in the hands of one class — the same one that benefits from Airbnb rentals.

Here Today, Gone Tomorrow

At other Infonavit-financed housing projects we visit, the stories are similar. At the Santo Domingo Barrio Bajo subdivision, residents Tavo and Esmeralda list a series of problems: no running water, no street lights, unpaved streets, and the all-too-familiar scenes of abandoned houses. Another resident, José Luis, explains the reasons for the subdivision’s abandonment: the construction company that built it, Premin, declared bankruptcy, while the municipality that ceded the lands in the first place has refused to incorporate them.

It is a familiar story: once the federal government began turning off the spigot of public money in 2011, the nation’s largest constructors of these developments, Homex, Casas GEO, and Urbi, all filed for bankruptcy within three years. With the whirlwind of revolving companies with different names, it becomes impossible to know who to complain to. “They just move on to other cities and do the same thing there,” José Luis says.

At another Premin construction job, the Reyes Mantecón subdivision, built in conjunction with the government workers’ housing authority FOVISSSTE, the situation went to the extreme: a feud between town and housing project that led to the latter proposing to build a wall between the two. In addition to the town being asked to shoulder the burden of the construction company’s abandonment, the clash also has to do with conflicting perceptions of rights: the communal ethos of Reyes Mantecón, a centuries-old Zapotec settlement based on a people’s assembly and community-service work known as tequios, and the imposed individualism of the subdivision, most of whose ranks come and go from the city in conditions similar to that of Ciudad Yagul’s.

“Clashes of identity can become very aggressive,” notes the former mayor Efraín Aragón Ibáñez, who for three years was forced to execute a delicate balancing act between the two sections.

The AMLO Solution Must Go Further

In its first year, the Andrés Manuel López Obrador (AMLO) government unveiled a package of reforms to help struggling renters in the Infonavit program, including an end to evictions, discounts for those over forty who have had a mortgage for at least fifteen years, and condonations of remaining debt for those who have paid 90 percent of it.

Crucially, their debts will now be calculated in straight pesos instead of minimum-wage multiples, a perverse mechanism that penalized debtors every time wages rose. While welcome, the restructuring program is not universal, and thus still leaves hundreds of thousands underwater. Moreover, the president is still left with another item on his long list of problems not of his own making: a mass of rapidly decaying housing stock in areas that never should have been built on in the first place.

In order to fulfill the Mexican constitution’s guarantee of dignified housing for all, he will have no choice but to grapple with this time bomb at some point.

In a larger sense, however, the president appears to be ignoring the overriding lesson of the Infonavit disaster: the pernicious nature of public-private partnerships. Indeed, he is roaring ahead with such partnerships for his national infrastructure program and a series of big-ticket items such as his Mayan Train in the Yucatán and the trans-isthmus corridor linking the Atlantic and Pacific oceans.

And while AMLO insists that his anti-corruption credibility will prevent contracts falling into unscrupulous hands, just this past week, his government awarded a contract to the company La Peninsular to repair some thirty miles of trans-isthmus railway track. La Peninsular belongs to Grupo Hermes, headed by the notorious multimillionaire Carlos Hank Rhon, investigated on multiple occasions for money laundering and links with drug traffickers.

However, even in the “cleanest” of circumstances, public-private partnerships are about transferring public capital into private hands, privileging the financial interests of stockholders and speculators over the common good. Just as they were not the solution to Mexico’s housing crisis, they will not be the answer to its infrastructure needs.

In Oaxaca City, meanwhile, Airbnb-fueled gentrification proceeds apace. Celina and Zoe have moved out of the downtown and commute back and forth. Though they miss living in the centro, they can still count themselves among the relatively fortunate: they don’t have to get up quite as early as the residents of Ciudad Yagul.