Increasing Housing Affordability in Mexico City

The Marron Institute recently signed a Memorandum of Understanding with Mexico City’s Urban Development and Housing Department (SEDUVI) for work on housing affordability.

The Marron team, led by Alain Bertaud and myself, developed a groundbreaking tool to estimate the impacts of regulation on housing affordability in Distrito Federal. The tool, based on the "Bertaud model", takes a random sample of 100 lots and estimates how many housing units can be generated based on existing zoning regulations. It also estimates which lots residential developers would actually purchase and develop, based on local pricing information. Finally, it gives policymakers an idea of which aspects of the city's zoning regulations constrain housing development. In the case of Mexico City, the primary limiting factor proved to be the density restrictions that were imposed in 2005.

Providing critical contributions to the Marron Institute's effort are three MBA students participating in NYU Stern’s Signature Projects program: David Baharestani, Craig Johnson, and Laura Fox.

Thanks to the team’s work, SEDUVI decided to eliminate density restrictions within the areas of the city covered by their Inclusionary Zoning proposal—a regulatory change that is in the process of passing through local legislation. This could have a huge impact on the production of housing, especially housing for middle and low-income residents—the groups targeted by the Inclusionary Zoning norm.

During the week we spent in Mexico City, our team visited local housing typologies in a varied range of locations, time frames and income levels. We visited typologies ranging from previously informal settlements to high-income single-family homes in the city to understand the physical diversity of housing solutions.

Most importantly, the team met with the SEDUVI team and Commissioner Simon Neumann to present our findings and share the tool for future use by city officials. Thanks to SEDUVI’s enthusiasm and commitment, the Marron team plans to continue to develop the tool to better inform policy in Mexico City. Expect additional updates on this work soon!