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TREC LICENSE # 0303291
 CASCO
mAIN oFFICE
210-692-0990
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Government intervention in the housing
sector
The main political issue impacting the
real estate sector is the relationship between the very real need for
public or low-income housing and the manipulation of this need for
electoral success. Upcoming presidential elections are in July 2000.
Traditionally these elections bring the issue of public housing to the
forefront of debate. The PRI (Institutional Revolutionary Party) has
been seen by some as consistently using public housing as an vote-winner
at national elections which have kept them in power for most of the last
several decades.
Public housing is always a hot issue due
to the continual shortfall between inadequate supply of stock and rising
demand for units. The current shortfall is estimated to be around 7
million units. In addition, there has been strong state intervention in
northern Mexico, where state governments run by the opposition National
Action Party see expanding residential stock as essential to attracting
workers for industries along the US/Mexico border.
Ifonavit
is the main public housing scheme to support mortgages for low-income
families. It was set up in 1972. There has been a pattern since then of
a surge in the number of housing loans around presidential elections,
with a dramatic tapering off soon afterwards. Infonavit
is tax-like contributory scheme. Eleven million salaried workers make
payments into Infonavit's
funds via monthly paycheck deductions (5%), but since 1972, it has only
issued 1.7 million loans. One third of those loans are in default, and
the agency is even instituting a door to door collection scheme in an
attempt to improve the default situation. 1999 loans are expected to
rise to 160,000, from a 1998 total of 108,000. Infonavit
is also planning to try a new method of boosting the building capacity
of construction firms. The agency will give homebuilders a down payment
when part of a construction project is completed, with the aim of
reducing the need for the companies to take out bridging loans.
New capital is supposed to be in the
process of being freed up from the newly privatized
pension system to the government-housing
agency, but capital amounts and time frames are currently unclear. The
question of how this new capital influx relates to the 5% surcharge that
currently funds Infonavit is also unclear.
Infonavit
and a second government housing agency, Fovi,
made a 1999 commitment to provide low-income financing at subsidized
interest rates for 200,000 and 100,000 new housing startups
respectively, although the timeframe for this action is also unclear. Fovi
is a fund of the Central Bank that provides low-interest mortgage
financing to low- to moderate-income home buyers earning between three
and six times the monthly minimum wage.4
Crime and institutional corruption
Another issue that is part of the
political environment throughout Latin America generally is that of
corruption. The United States Department of State's official position is
that the Mexican Government recognizes the seriousness of the corruption
problem in Mexico and has acted to address the issue. Anti-corruption
laws with five to ten year jail terms have been passed by the Mexican
legislature, and many low- to mid-level officials have been convicted of
corruption or bribery charges. These steps indicate that the problem is
being addressed rather than eradicated. Any businessperson should be
aware of the possibility of bribery becoming an issue during the course
of a business transaction in Mexico. The US State Department also warns
against the "critical" level of criminal activity - including
kidnapping - that occurs in Mexico City and Guadalajara.5 |
COPYRIGHT© 2002 NATIONAL ASSOCIATION OF
REALTORS®
REALTOR® - A registered collective membership mark that
identifies a real estate professional who is a member of the NATIONAL
ASSOCIATION OF REALTORS® and subscribes to its strict Code of Ethics.
The National Association of REALTORS®, 430 N. Michigan
Ave., Chicago, IL 60611 Telephone: 1-800-874-6500
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