Making housing more affordable in Mexico

Alex Goldmark Sep 3, 2012

Making housing more affordable in Mexico

Alex Goldmark Sep 3, 2012

Sarah Gardner:  In many parts of the world, if families outgrow their homes they simply add on to them. They grow ’em, piece by piece, room by room, brick by brick, when they get some extra cash. But, turns out, that’s not very efficient. It wastes money, supplies, and lots of time.

Alex Goldmark reports from Mexico, on a new way to build affordable housing — and I mean really affordable.

Alex Goldmark: The walls in Antonio Castaneda’s living room are a crisp, clean cerulean, plastered and painted with nice wood mouldings around the door, too. But walk one room over and extension cords dangle off cinderblock. He’ll fix it up, he says, eventually.

Antonio Castaneda: I’m building this place little by little. Because when there’s some extra money, then I get to it. Little by little it goes slowly.

Casteneda’s house and the way he’s building it are pretty typical here in the town of Tehuacan, in Central Mexico. The men generally work on farms or in factories. Or both, like Castenada has. They’re practical people and for the most part, they build their own houses, brick by brick. And it can take some time.

Casteneda: The whole house? Oh, it’s been here a while. I dunno, about six, seven years.

And that’s fast for a six room house, according to construction executive Israel Moreno.

Israel Moreno: The average speed is two square meters per year.

His company, Mexvi, can build a whole home in two weeks. It makes a set of steel panels that can be assembled into a small house and then, added onto later. You can tack on an extra room or second floor when a little more money comes in. Just like when you build it yourself. But a basic Mexvi house costs about $7,000, which according to a study by a major construction company here, is about half the price of doing it piecemeal. Moreno explains why.

Moreno: A typical family, a low-income family in urban areas Mexico, they are wasting more than 40 percent, 40 percent in scrap.

Seven years of small brick and mortar shipments without a master plan means extra transportation cost, loss, theft, middlemen. Remove that waste and you have a business opportunity. And Moreno is seizing it. He’s reoriented his whole company toward the 350,000 Mexican families who build their own homes each year. One problem though, Moreno’s new clients will need to pay up front, all at once. And that usually means getting a loan. Something that’s hard to do here when you’re poor and your house isn’t worth foreclosing on. But Latin America’s long history with charitable microlending has made an opening for business.

Elizabeth Boggs Davidsen is with the Inter-American Development Bank.

Elizabeth Boggs Davidsen: If you give people the opportunity to pay over time, it’s almost certain that they will repay.

She’s so sure about it, her program, called Opportunities for the Majority, is offering loan guarantees for companies that provide more efficient, faster home building.

Boggs Davidsen: If you can help companies to be able to distribute these microcredits or to partner with a financial institution then you kind of have a win-win situation.

She expects one program shes funding to reach nearly a million families throughout Latin America and the Caribbean next year — an example of how a business can be just as effective as a charity in helping the poor.

In Tehuacan, next door to Antonio Castaneda’s self-built home, his daughter-in-law has a brand new pre-fab one bedroom place. Ophelia Sanchez can afford it through a mix of government subsidies and a four-year microloan arranged by Mexvi.

Ophelia Sanchez: The house is real comfortable. It doesn’t get too cold, or too hot. At night it stays nice and warm, and during the day, it’s stays cool.

She says it was way cheaper than a self-built, and now the neighbors are starting to ask about getting one, too.

In Tehuacan, Mexico, I’m Alex Goldmark for Marketplace.

There’s a lot happening in the world.  Through it all, Marketplace is here for you. 

You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible. 

Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.