MEXICO CITY — About a decade ago, many Mexicans flocked from the slums on the fringes of Mexico City to new communities of colorful small, single-family homes.
Flash forward ten years and these same communities have littered streets, vandalized houses, and the sole inhabitants are criminals, drug addicts and vagrants.
These once vibrant neighborhoods are now considered Mexican ghost towns.
In the early 2000s, the Mexican government constructed more affordable homes in an attempt to solve the country’s housing shortage, boost social mobility and stimulate the economy.
More than seven million houses were built in the last decade.
The government executed a policy that backed mortgages and provided subsidies for low-income homes on cheap land. As a result, an unprecedented 4.3 million mortgages were issued between 2001 and 2011 by the National Workers’ Housing Fund Institute, or Infonavit.
Infonavit, a government-backed agency that is responsible for about 70 percent of mortgages in Mexico, has become the largest mortgage lender in Latin America. With record low prices and considerable distances from crime-ridden inner cities, the houses were occupied rather quickly by lower-middle class Mexicans.
However, there was a catch: these new homes were “distant, dispersed, and disconnected,” and lacked critical community infrastructure. In these communities, there were no basic services, such as schools and hospitals, or employment opportunities.
Residents were forced to either quit their jobs and start up local, unprofitable stores or endure long commutes to the city. For some families, transportation costs took up more of the household income than mortgage payments.
Many Mexicans were forced to leave their homes and relocate to inner-cities, causing the number of vacant homes to soar.
According to a report by Spanish Bank BBVA, out of the 35.6 million housing units in Mexico, 5 million are unused. In addition, approximately 300,000 are considered “abandoned houses” (vacated, unpaid for and in a deteriorated state) by the Urban Development Ministry.
Tamaulipas, Chihuahua and Baja California have the highest numbers of abandoned houses with a combined 180,000.
But recently, some have viewed the number of vacant neighborhoods as a business opportunity.
In 2008, Antonio Díaz led a group of investors to the abandoned homes and downtrodden communities and proposed an innovative solution. Díaz sought to purchase, refurbish and sell the houses to low-income people in search of affordable housing and a safe environment.
In 2010, Díaz launched Provive, a business model and social enterprise that renovates houses and revitalizes communities in Mexico.
Provive targets foreclosed homes, buying them for as little as 60 percent of face value, and selling them for up to 90 percent of a new home price, according to Bloomberg.
The number of repossessions has more than doubled from 2012 to 2013 at 43,853. This is because the government is promoting the development of apartments in cities, as opposed to the single-family homes in more remote towns that once damaged the housing sector. Meanwhile, Díaz is using these empty properties as an “interesting universe for doing business.”
Location is a huge factor in Díaz’s strategy.
“People seek safe neighborhoods that are close to work where kids can play freely in the streets,” said Díaz.
Communities must meet minimal requirements before Provive begins refurbishing and repopulating a “fraccionamiento,” or neighborhood. Communities must include access to employment 15-20 minutes away using public transportation, basic infrastructure such as hospitals, schools, commerce and no organized crime.
According to Díaz, most of the rehabilitated houses the company sells range from $20,000 to $25,000, with interest rates as low as four percent. In addition, the government has been supportive of Provive’s restoration model, as 98 percent of the company’s clients are Infonavit beneficiaries.
Díaz considers the partnership with the government and public housing agency as one of his “single greatest accomplishments.”
He has seen positive economic results for families, neighborhoods and communities. These results show that there is still some hope for Mexico’s ghost towns.
– Abby Bauer