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Housing demand in Mexico

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  • Fontenla, Matas
  • Gonzalez, Fidel

Abstract

This paper analyzes the components of housing demand in Mexico in the context of developing and developed nations. The case of Mexico is particularly interesting given that population and income dynamics, as well as current housing shortages, suggest that the demand for housing will significantly increase in the near future. We use micro-level data from market-based mortgages that originated during the period of 2002 to 2004 for 21 metropolitan areas in Mexico. We find the price elasticity of housing demand to be -0.3, lower than previous studies for developed countries and within the range for developing countries. Permanent income is a major component of housing demand, with an elasticity of 0.8. In contrast, temporary income has a very low elasticity of 0.04. The mortgage rate elasticity for 25-year mortgages is -0.39. We believe these results provide important information to policy makers and practitioners in Mexico and other developing nations.

Suggested Citation

  • Fontenla, Matas & Gonzalez, Fidel, 2009. "Housing demand in Mexico," Journal of Housing Economics, Elsevier, vol. 18(1), pages 1-12, March.
  • Handle: RePEc:eee:jhouse:v:18:y:2009:i:1:p:1-12
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    References listed on IDEAS

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    4. González, Leonardo, 1997. "Estimación de la demanda de vivienda: Tenencia y gasto en servicios. El mercado metropolitano de México," El Trimestre Económico, Fondo de Cultura Económica, vol. 0(256), pages 569-598, octubre-d.
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    10. Goodman, Allen C., 1988. "An econometric model of housing price, permanent income, tenure choice, and housing demand," Journal of Urban Economics, Elsevier, vol. 23(3), pages 327-353, May.
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    Cited by:

    1. Luis Galvis & Bladimir Carrillo, 2013. "Índice de precios espacial para la vivienda urbana en Colombia: una aplicación con métodos de emparejamiento," REVISTA DE ECONOMÍA DEL ROSARIO, UNIVERSIDAD DEL ROSARIO, June.
    2. Marcela Cristini & Ramiro Moya & Guillermo Bermudez, 2011. "Argentina`s Housing Market in the 2000s," Research Department Publications 4733, Inter-American Development Bank, Research Department.
    3. Marcela Cristini & Ramiro Moya & Guillermo Bermúdez, 2011. "Argentina's Housing Market in the 2000s," IDB Publications (Working Papers) 3421, Inter-American Development Bank.

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    Keywords

    Housing demand Mexico;

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