Infonavit and Affordable housing in San Miguel

In San Miguel de Allende where low-income neighborhoods are rapidly being gentrified and where the number of spacious, elegant residences for the wealthy appears to be slowly outnumbering the supply of affordable housing, are working-class families who do not have a million pesos or more to spend being shut out of the housing market?

With the salaries of factory workers, office workers and even young professionals ranging from 4,000 to 9,000 pesos per month, there are few opportunities to purchase a house within their income range. If, as is commonly accepted, the availability of affordable housing is considered an economic indicator of the level of well-being of a society, San Miguel has a problem to resolve.

Because of the lack of available housing and the high cost of credit, the most common solution to the problem is for adult children and their families to live with their parents-creating multigenerational families with their inherent problems.

For those who take out a 20-year mortgage, interest rates vary from 9.4 to 13.5 percent per annum for a bank loan, or around 5 percent with government public housing credit. Public housing credits are generally favored over bank loans because interest rates are protected from the effects of devaluation and families have the opportunity to make an affordable monthly payment after a low initial deposit.

Although Infonavit (Institute of the National Fund for Housing for Workers)-the first official public housing program-was started in the 1970s, some housing has been available to a limited number of workers since the 1960s.

Fovissste, a part of the ISSSTE (Institute of Social Security for State Workers), was established shortly thereafter. These programs allow Mexican workers registered with the social security department to purchase homes. Yet, for the self-employed or those outside the social security system, purchasing land in installments and constructing a home room by room is usually the only available option.

According to figures from the Urban Development Department, there are 115 subdivisions in the city. Around 30 percent (34 subdivisions) are considered low-income developments- seven are totally government-owned projects (three federal and four municipal); the rest are joint ventures with private contractors. The homes in these areas are also known as "progressive housing" because the basic construction of a one-level, one- or two-bedroom house allows the owner to continue to expand the house over time as additional money becomes available. The cost of a home in these areas, including interest payments, ranges from 250,000 to 440,000 pesos to be paid in monthly installments over a period of 15 to 20 years. The other 70 percent of residential subdivisions are private developments with houses that start at 700,000 pesos. Financing, however, must be obtained through a bank loan.

According to the Federal Institute for Housing's website, 70 percent of the available credits to finance home purchases go to the working and middle classes via Infonavit and Fovissste programs. The remaining 30 percent of home credits take the form of subsidies to the poor via the Federal Department of Social Development.

San Miguel's property boom over the past several years has seen property prices for central and fringe colonias increase exponentially, forcing lower-income workers to look for property in areas that fall outside the designated urban development plan. These unofficial colonias spring up outside the established residential zones in areas that do not offer basic services such as electricity and water and sewage systems, generating pressure on local authorities to provide services. These areas-such as San Martín near the railway station and the now 10-year-old neighborhood of San Luis Rey-tend to quickly become overcrowded because land is available at lower prices. Eventually, pressure from the large population compels the city to provide services. Another problem that arises and that authorities continually warn the public about is the potential for land fraud; some developers offer cheap land and unsubstantiated promises of new fraccionamientos (subdivisions) in areas that will never be approved for residential zoning. Caveat emptor.

According to Ramón Zavala of Zavala Real Estate, the considerable increases in property prices over the past five years have created an extremely difficult situation for working- and middle-class families. "People do not know where to live now, and they don't have many options. The government must support housing projects with fair pricing and decent houses."

Architect Patricio Rodríguez, coordinator of Subdivisions in Urban Development, confirmed that the municipal government actively supports the creation of popular housing projects for sanmiguelenses. "We are constantly looking for builders and businesses that offer low prices but also good quality in order to have subdivisions that impel local development and provide solutions to rapid city expansion."

The fourth article of the Mexican constitution states that every Mexican has the right to have a decent home. According to the Urban Development Department, the urban development plan has established clear housing zones. Most of the public housing subdivisions are located on the outskirts of the city. The first subdivision built 30 years ago-with approximately 200two-bedroom houses costing 100,000 to 200,000 pesos-was the Infonavit Allende behind the Social Security hospital. As with all government programs, properties can only be sold after they are paid for in full.

Other Infonavit subdivisions are Infonavit La Luz, located on the Salida a Querétaro opposite the county jail, and Infonavit Malanquín, opposite Hospital de la Fe. These subdivisions, which are around 15 years old, offer almost the same characteristics as the first one-between 100 and 200 houses with two bedrooms, one bathroom, a kitchen/dining/living area, a small garden and parking. All of these subdivisions have public green areas and recreation areas, which is mandated by the social policy governing all federal housing programs.

"For me, it was really hard to obtain my house. I think that for all the people who want to have a family, having a house is the main issue that they must resolve. However, this is the most difficult thing to do. I had to wait two years for Infonavit to approve my application because I have a new job and didn't meet all the requirements. Now I have my house and will pay it off over 15 years," said mechanic Javier Arredondo, who lives in Infonavit Malanquín.

Other public housing subdivisions are privately funded: Bella Vista (next to Infonavit Malanquín), El Nigromante (off the road to Dolores Hidalgo), Insurgentes (across the highway from the jail), Misión de la Estación (near Hospital de la Fe), Deportivo (next to the baseball field behind Gigante) and Jardines (next to Insurgentes). Other developments with municipal investment from the Tu Casa Program include Las Flores (in San Luis Rey), Las Capillas I and II (next to Ignacio Ramírez, behind the jail) and El Mezquite (behind the bus station).

There are currently three options for low-cost (often referred to as "popular") housing in the city. In Praderas de San Miguel, 150 houses are under construction, each with two bedrooms, a bathroom, kitchenette and a small yard, at a cost of 170,000 pesos. The subdivision is located in the Palmita de Landeta neighborhood.

The Los Santos subdivision in Colonia Insurgentes has 115 four-bedroom houses that include two bathrooms, a living room, a dining room, yard and garage. The price is around 300,000 pesos for a one-story house and 426,000 for a two-story house.

The third option is the San Javier subdivision. It is located in the Malanquín neighborhood and encompasses 116 houses similar in price and layout to those in Los Santos.

Workers registered with Social Security have money withheld from their paychecks for housing and can obtain a mortgage through federal housing institutions such as Infonavit or Fovissste or through a bank. These workers have also the right to choose a private house using their Infonavit or Fovissste credit. In either case, the monthly payment is withheld from their paycheck until the house is paid off.

In these cases, private housing businesses make credit agreements with Infonavit or Fovissste to build houses that can be paid in installments through Infonavit or Fovissste mortgage procedures. The standard procedure to obtain a house through Infonavit is to find a house with a cost of no more than 443,000 pesos, to be currently enrolled in Infonavit, to have at least 116 points (workers usually obtain 116 points after three years of work) and not to have previously received Infonavit credit.

The standard requisite to obtain a house through Fovissste is being a member of Issste for at least 18 months. The amount of credit is determined by the worker's salary. Any available house that meets the worker's budget restrictions could be purchased.

In both cases, workers must send forms to the Infonavit or Fovissste offices and wait for an answer. If they obtain credit, they pay off their homes month by month at a fixed interest rate, commonly for 20 years. Payments are withheld from the nómina (fortnightly pay check). Paulina Gutiérrez, a secretary, plans to buy a house in Los Santos. "Everything is close, the house is pretty, the subdivision is not depressing and I have the opportunity to expand my house in the future." Gutiérrez is with Infonavit and has a contract for 15 years. "I will pay 2,500 pesos a month; a little bit less than I used to pay in rent. The difference is that I'm paying for my own house now and that makes me really happy."