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ABSTRACT
For more than 30 years, housing in Mexico has been undergoing a transformation that is best studied using INFONAVIT and FOVISSSTE as starting points. Both funds were established in 1972 to implement the constitutional right to decent housing for workers and state employees in Mexico. In their first few years, both funds were responsible for, among other things, granting loans and investigating ways to achieve low-cost but high-quality housing. However, in the aftermath of the debt crisis of 1981, a comprehensive reconfiguration of housing provision was pushed forward. The aim of this contribution is to characterize changes in housing policy and ask whether and in what way they can be described as financialization. We argue that financialization is a political-economic project that has developed in a particular, stepwise form. Building on the stylized distinction between destructive (roll-back) and creative (roll-out) moments of financialization, we try to understand how financialization took hold. Two projects—Cuautitlan Izcalli from the 1970s and Huehuetoca from the 2000s—symbolize this change.
Disclosure Statement
No potential conflict of interest was reported by the authors.
Notes
1. FOVI—Fondo de Operación y Financiamiento Bancario a la Vivienda.
2. In the 1960s and 1970s, many Latin American countries, in particular Mexico, Brazil, and Argentina, borrowed huge sums of money from international creditors for industrialization and infrastructure programs. When interest rates increased in the United States and in Europe in the late 1970s, debt payments also increased, making it harder for borrowing countries to pay back their debt. A collapse became inevitable when short-term loans could not be refinanced because commercial banks reduced significantly or halted new lending to Mexico and other Latin American countries.
3. FOVI was renamed SHF (Sociedad Hipotecaria Federal) in 2001 and is a trust of the Ministry of Economic Affairs and the Bank of Mexico. SHF’s task is to promote the securitization of housing mortgages and increase private funding for the housing sector (Soederberg, Citation2015, p. 490). We will return to this later because it is a central pillar of housing financialization.
4. However, right from the start, the funds, with their welfarist orientation, did not include those working in the informal economy. Those with no or few resources were not the target of state efforts to produce housing. This does not mean that there were no attempts to include the poor population in the housing programs, but these efforts have had little success, either because the poor and informal-sector workers seemed not to be reliable debtors or/and commercial banks were not willing to lend to those groups (Soederberg, Citation2015).
5. The landscape of housing organizations is very complex. It makes sense, therefore, to concentrate on the most important organizations FOVI (SHF), INFONAVIT, and FOVISSSTE (Puebla, Citation2013).
6. Banco Mexicano and Serfín were sold to Spain’s Banco Santander; Bancomer to Spain’s BBVA; Inverlat to Canada’s Scotiabank; Banamex to Citigroup, and Bital to HSBC (López-Silva et al., Citation2011, p. 21).
7. This is an abbreviation for sociedad financier de objeto limitado—a nonbank financial institution. Sofomes (Sociedad Financiera de Objeto Múltiple) came along later, in 2005, with similar tasks but less regulation (Knowledge@Wharton Citation2011).
8. Mortgage securitization is a technique that allows mortgage issuers to refinance their business and access fresh funding. In a securitization operation, a mortgage originator sells its loan portfolio to an independent special purpose company or vehicle (SPE or SPV—in Mexico, SOFOLES). The SPV’s finance comes from the sale of securities to capital market investors. The cash flow servicing the securities is generated from the interest and principal repayment of the loans (Zanforlin and Espinosa, Citation2008, p. 8).
9. To the present day, SHF backs up RMBS; see https://www.gob.mx/shf/documentos/que-es-un-credito-puente (accessed May 11, 2020).
10. BORHIS are mortgaged backed bonds from SHF, CEDEVIS from INFONAVIT and TFOVIE from FOVISSSTE.
11. In 2019, the time of writing this article, the ZMVM consists of 59 municipalities in the state of Mexico, one municipality in the state of Hidalgo, and 16 districts of the City of Mexico. The spatial and institutional development of ZMVM will be discussed below.
12. The term administrative units includes municipios and alcaldías—two types of municipalities that differ in respect to their political autonomy.
13. The number refers to 59 municipalities of the State of México and one of the state of Hidalgo. Here, the 16 alcaldías in the territory of Mexico City are excluded.
14. Jorge Jiménez Cantú governed from 1975 until 1981, and Alfredo de Mazo González held power from 1981 until 1986.
15. ODEM is an institution of the State of México whose task is to bring together public and private urban development institutions to coordinate the building and development of Cuautitlán Izcalli (Dávila, Rocío, & Quiroga Leos, Citation2004).
16. The task of Neue Heimat was to build low-cost and middle-income housing in the postwar years in West Germany. However, in the 1980s it became publicly known that the manager was lining his pockets, and the company had to file for bankruptcy. Later, the housing stock was sold to various U.S. financial investors, such as Cerberus Capital Management and Lone Star. This inglorious story contributed to the process of financialization of housing in Germany.
17. Eulich and Villagran (Citation2013) report on the soaring number of vacant homes, which increased from 2.4% of housing in 2005 to nearly 14% in 2010, according to census data. Across the country, in 2010, some 5 million homes were classified as abandoned.
18. Data from official requests to Ministry of Urban and Metropolitan Development of the State of Mexico (SEDUR—Secretaría de Desarrollo Urbano y Metropolitano del Estado de México) in 2018 about authorized housing units.
19. This is the result of a research project coordinated by Dr. Luis Alberto Salinas Arreortua and funded by Consejo Nacional de Ciencia y Tecnología (ConacyT).
20. “El suelo intraurbano, por ejemplo, es utilizado de manera poco eficiente, ya que se calcula que en las principales ciudades del país existen 85,000 hectáreas de suelo intraurbano subutilizado que podrían albergar hasta 3.3 millones de viviendas nuevas; es decir, 46.0% de las que serían necesarias entre 2017 y 2030 para atender la demanda de nuevos hogares” (Secretaría de Desarrollo Agrario, Territorial y Urbano, Citation2019, p. 22).
21. “El mercado no sustituye al Estado, al promover la participación del sector privado y social bajo un marco institucional de certeza y claridad, que lo convierta en aliado corresponsable en el desarrollo de vivienda adecuada en el país” (Secretaría de Desarrollo Agrario, Territorial y Urbano, Citation2019, p. 17).
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Notes on contributors
Susanne Heeg
Susanne Heeg is a professor of urban studies at the Institute of Human Geography of the Goethe University Frankfurt am Main. Her main research interests are the effects of neoliberal urban development in respect to the built environment in cities. This implies the analysis of privatization, marketization, and financialization of basic facilities such as infrastructure and housing. https://www.uni-frankfurt.de/45656401/01_portrait, Goethe-University.
Maria Verónica Ibarra García
Maria Verónica Ibarra García is a full-time professor in geography, open university systems, and distance learning (SUAyED) at the Faculty of Philosophy and Letters of the Universidad Nacional Autónoma de México (UNAM). She is interested in political and feminist geography, with a particular focus on power relations as well as how struggles, conflict, and tensions affect the production of space. She is member of the National System of Research of CONACyT.
Luis Alberto Salinas Arreortua
Luis Alberto Salinas Arreortua is a full-time researcher in the Social Geography Section of the Institute of Geography at UNAM. He teaches geography and urbanism and has published widely on research topics including urban segregation, gentrification, urban neoliberalism, housing policy, and urban management. He is a member of the National System of Research of CONACYT.