• The millennial generation’s tendency to prefer vertical, well located, accessible housing options will a very soon make a change in Mexico City
One of the most numerous generations in history, those born between 1980 and 2000, is rethinking the form of consumption in practically all industries, and the real estate industry is in no exception. This generation is remolding the economy and its unique experiences are transforming the way in which one lives, consumes, buys, and sells, which forces companies to examine how they are doing business in the upcoming decades.
Convened by Sidehouse, a consulting firm specialized in project advising and strategy for real estate businesses, experts in analysis and market trends, experts indicated that we are experiencing an era of global urbanization in which for the first time in the history of humanity, more people live in cities and urban centers than in rural environments, which implies that there is a new identity in the way in which new societies live and coexist.
Today, 50% of the global population lives in cities or suburbs. In 2050, this number will increase to 70% at the global level. “For the first time in more than a century, more people are choosing urban environments to live in and Mexico City offers an ideal polycentric structure that fosters the heterogeneity of the location of activities, therefore, residential densification offers logistic benefits in matters of mobility,” commented Camilo Mora, professor of the Engineering and Architecture Division of the Monterrey Institute of Technology and Higher Education. In response to this trend, the demand has been identified for vertical housing by the so-called millennials, who feel more comfortable living in an apartment than maintaining a conventional house, which is gaining significant momentum among them, expecting that it will grow in the upcoming years.
Nonetheless, in our country, the cities grew in a dispersed manner, highly dependent on automobile use, with access problems for public services like safety and public transportation, therefore Gonzalo Peón, Joint Director for Mexico of the Institute of Policies for Transportation and Development (ITDP), emphasized the need to coin the key concept “Urban Accessibility,” which implies encouraging people to have easy access to carry out their activities, by means of Development Oriented toward Transportation.
The expert in city management and sustainable urban development indicated that this can be achieved through compact, mixed-use, walkable neighborhoods with quality public transportation, also promoting bicycle use and walking, to in this way disincentivize car use.
Yes! It is a good time to buy your apartment
During the session, the experts agreed that given that current financing conditions are the most accessible, the real interest rate is the lowest that it has been in history, whether to live in it or have it as an investment, today is a good time to buy an apartment.
According to Pews Research Center, Millennials have reached adulthood with low levels of social confidence and experts believe that this may be one of the reasons for which the millennial generation is postponing the time to buy their first apartment. “Previously, the first house tended to be bought around 25 years, but now they are purchased after 30 years. This trend is having an impact on mortgages and loans in the banking industry,” commented Gonzalo Palafox, Joint General Director of Business Development at ION Financiera.
In Mexico, 70% of people plan on buying a house to live in it, 80% of them contemplate doing it using a credit mechanism, nonetheless, there is a high lack of knowledge on existing financial alternatives to achieve it. In this sense, Gonzalo Palafox indicated that it is important to make it known that current financing conditions are the most accessible in the last 40 years and presented financial inclusion tools for those people with payment capability and good credit behavior, they can access credit to purchase their real estate.
With regard to the price dynamic, Eduardo Torres Villanueva, CEO of ai360, analysis company that offers strategies and recommendations based on data, indicated that given that the market in Mexico City has moderated its dynamism, today, the purchase of housing is well-timed. “Currently, prices have taken a pause. While we believe that this situation will not last much longer before they rebound again, due to the fact that the pressures of demand will continue to predominate over supply, as has been the case in recent years, this dynamic will also not be modified by the result of the elections nor the orientation of whoever governs the City in the upcoming years.”
Finally, David Hoffs, Corporate Director of Strategy at Sidehouse, stated that currently the size and growth of cities have complicated mobility and have made well located housing grow a great deal in value, a global phenomenon that is also reflected in Mexico, therefore the recommendation for the kids, who sooner or later will become adults, is to make it equity as soon as possible. The current situation is ideal for that.
 United Nations Department of Economic and Social Affairs/Population Division World Urbanization Prospects: The 2018 Revision. Available at https://esa.un.org/unpd/wup/Publications/Files/WUP2018-KeyFacts.pdf
 United Nations. Department of Economic and Social Affairs / 2014 Available at http://www.un.org/es/development/desa/news/population/world-urbanization-prospects-2014.html
 Pew Research Center, (May, 2014). “Millennials in Adulthood: Detached from Institutions, Networked with Friends” Available at http://www.pewsocialtrends.org/2014/03/07/millennials-in-adulthood/