Myths and realities of gentrification

“Gentrification”—and whatever each person means by that—returned to the center of public discussion after the July 4th march and vandalism in Mexico City. Beyond xenophobia and the political exploitation of what happened, there is real grievance among a segment of the population that, due to public policy errors—not foreigners, invasions, or fabricated displacements—now faces tremendous difficulties accessing housing in the downtown area of ​​Mexico City. The problem goes beyond Roma and Condesa, which have always been relatively expensive areas, and affects the city as a whole.

Housing prices in Mexico City have climbed to unprecedented levels in recent years. Today, the average price per square meter in the capital exceeds 56,000 pesos, making it the most expensive state in the country. This has excluded a large portion of the population from the real estate market, especially young people who find their own home increasingly remote. This phenomenon is not merely anecdotal: it is due to the concentration of well-paying jobs in central areas, inflation in construction materials, and a shortage of supply.

Attributing the root of the problem to foreigners or gentrification is a mistake. The real bottleneck lies in the lack of new housing. Mexico City requires around 60,000 new units annually to meet demand, but only 3,500 homes were registered in 2023, according to industry figures and official reports. This huge gap between need and production has caused developers to focus their activity on premium housing, which is inaccessible to most residents.

The vicious cycle is reinforced: less supply, higher prices, greater exclusion. Excessive red tape, a lack of permits, and insufficient infrastructure—especially in basic services like water—further limit the private sector's ability to respond. Thus, the city becomes an increasingly hostile territory for those seeking to live close to work, forcing more people to spend hours commuting.

The answer isn't expropriations, overregulation, or new taxes, which would only inhibit investment and exacerbate the problem. The key is serious densification. This requires the government to invest in urban infrastructure—water, transportation, services—and facilitate the granting of construction permits. Changes in urban plans are required to allow for greater densities and vertical construction where inefficient horizontal models currently predominate. Only in this way can supply be increased and pressure on prices reduced.

Furthermore, it is essential to create an environment of legal and financial certainty so that developers can invest in affordable housing projects. Banks, for their part, must expand access to mortgage and construction loans, although this issue merits its own analysis. Without a comprehensive densification strategy and public-private collaboration, the housing crisis will only deepen, with increasingly visible consequences for the social fabric.

And yes, this solution has costs, at least in the eyes of some. Densification implies a profound change in social dynamics, including what some love to idealize as "neighborhood life." You can't have it both ways; either we seriously densify and transform the city, or millions of people will continue to commute for hours to work.