Guerrero and Baja California Sur, where tourism drives the housing supply and demand cycle

Since the coronavirus (Covid-19) pandemic, the housing outlook changed in some regions, mainly in the country’s tourist destinations. In this scenario, Baja California Sur and Guerrero, destinations where the predominant economic activity is tourism, are states where the law of supply and demand is fully complied with.

According to data from the National Survey of the living placeboth Guerrero and Baja California Sur, are states with the highest housing percentage required either for rent, purchase or construction; however, according to records of the price index of the Federal Mortgage Society (SHF), they are also regions where the value of properties has increased the most.

According to the Bank of Mexico, the offer is the quantity of goods and services that are put up for sale, while the demand is equal to the quantity that the interested parties wish to buy. When a product is scarce and its price rises, it is because there are many people willing to pay more, which is known as the cycle of supply and demand.

For example, in Guerrero, the percentage of required housing, regarding the total number of inhabited private houses, is 35.3%, the highest in the country; while, the value of the properties increased, in the first semester of the year, 10.1% annually, above the national average, which was 7.9 percent.

“In Guerrero, the composition is interesting, since its main placement municipality is Acapulco de Juárez… Here, there is an important dynamic because people, who before the pandemic were in an office, now that they have the opportunity to buy a living placethey do it in this region with better conditions than, for example, in Mexico City,” said Luis Sánchez, Director of Operations at Creditaria.

According to Sánchez, in Guerrero, there is a mix in the housing placementwhere the social interest is the most demanded, followed by the middle, residential and residential plus segments.

According to the house buildingGuerrero registered only the production of 659 units at the end of August of this year, placing only above entities such as Baja California Sur, Mexico City, Tabasco, Tlaxcala, Chiapas, Oaxaca and Campeche.

similar scenario

For its part, in Baja California Sur, the percentage of dwellings required for rent, purchase or construction, with respect to the total number of inhabited households, is 29.5%; however, the increase in property prices was 12.6% per year at the end of the first half of the year, that is, the second highest only below Quintana Roo, where it was 12.9 percent.

Eduardo Orozco, co-founder of the firm Alohome, explained that in this entity, although there is a significant demand for holiday homealso the dynamism of tourism, and its creation of jobs, potentiates that more people look for a home in this state, focused on the social and medium interest segments.

“In this market people arrive to work there, who need a place to live, so the living place of social interest and medium is a segment of high demand. This generates the full cycle of supply and demand, where on the one hand you have the demand higher than the supply… and you have two or three four months of inventory, which is very low because a normal metric is between 12 and 13 months, that’s a good level of inventory,” Orozco said.

Regarding the building of living place In this state, from January to August of this year, only 617 properties were registered in production.

“We have seen the issue evolve, for example, in Los Cabos, where a few years ago you could see a property in the range of 25,000 or 30,000 pesos per square meter, but today seeing properties below 70,000 pesos per square meter is a bargain. They have really been very high price increases, so demand is always what dictates that type of price increase,” explained the Alohome manager.

For both specialists, tourism will continue to set the tone for housing demand in these regions of the country, so the challenge is to create enough supply in the future.