Colegio:

Housing is considered as a basic human need; hence, its demand is intrinsic to

population growth. In Mexico, CONAPO estimates housing potential demand’6 _{based on the}

estimated formation rate of new homes. A new home is defined as “a unit made up of one or more people united or not by kinship that inhabit the same residence and share feeding expenses” (Partida, 2008). Mexican Housing Institutions consider that each new home will require a house unit which is what from now on we will call potential demand.

CONAPO’S Housing demand projections for San Luis Potosi State up to year 2030, estimate that from years 2015-2030 house stock will grow from 674,373 units to 812,318 units, this means that around 137,945 new houses will need to be built to satisfy demand due to population growth in SLP (Ibid., p. 52).

By normativity, the minimum lot size for social housing under the current single detached unit prevalent construction scheme is of 90m2 _{(6m front, 15m depth lots); this implies that it}

will be necessary to add 12,415,050 m2 _{of housing area (without taking in to account}

6 _{Potential Demand is made up by all new homes that will be formed according to demographic trends; this} estimation does not take in to account home owners income levels, house prices nor house affordability.

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urbanization areas such as streets, walkways, parking and additional infrastructure) to satisfy demand until year 2030; therefore, vertical social housing becomes relevant as an alternative to foster a more compact urban growth. It is also estimated that the average number of inhabitants per house in SLP will decrease from 3.9 inhabitants in 2015 to 3.3 in 2030 (Ibid., p. 58).

From a demographic perspective, one of the most important trends will be the increasing number of unipersonal homes (made up of one person) which will rise 55% from 58,220 in 2015 to 90,130 in 2030. It is important to notice that the aforementioned projections were estimated for the whole of San Luis Potosi State and its 28 municipalities, whilst, the Metropolitan area of SLP-SGS7 _{concentrate around 42% of the State’s housing stock (and}

housing demand) according to INEGI (2014).

3.2.1 Housing Segmentation

From years 2011-2014 INFONVIT granted 125,185 mortgages for new house

acquisition in San Luis Potosi State; popular housing was the biggest segment with 67.5% of lent mortgages, followed by traditional housing with 18.2%, and Intermediate housing with 11.1% (Table 3.1).

Table 3.1 Housing Mortgages granted by INFONAVIT in San Luis Potosi State by housing segment, years 2011-2014

Elaborated by the author with data from INFONAVIT

As can be observed in Table 3.1, most of the mortgages granted for new built houses in San Luis Potosi in the studied period were for the popular and traditional segments, while the economic segment only acounted for 1.21%.This trend will continue since no significant changes in income levels that would improve the purchasing power of Mexican families are expected in the forthcoming years.

Table 3.2 shows the potential demand in SLP and Soledad de Graciano Sanchez (SGS) municipalities from years 2011-2015 (both municipalities conform a metropolitan area); it can

7 _{SLP-SGS stands for the metropolitan area of the San Luis Potosi and Soledad de Graciano Sanchez} municipalities

ECONOMIC POPULAR TRADITIONAL INTERMEDIATE RESIDENTIAL RESIDENTIAL PLUS TOTAL TOTAL 1,511 84,540 22,787 13,979 2,184 184 125,185 AVERAGE 378 21,135 5,697 3,495 546 39 30,466

% 1.21 67.53 18.20 11.17 1.74 0.15 100

HOUSING MORTGAGES GRANTED BY INFONAVIT IN SAN LUIS POTOSI STATE BY HOUSING SEGMENT, YEARS 2011-2014

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be observed that 47.2% of the potential demand in SLP was concentrated in the two lower income strata (2 VSM and 2.0-2.6 VSM highlighted in grey colour); while in SGS the very same income segments acounted for 68.3% of the demand. This difference in the demand tells us that: a) SGS population has a larger proportion of low income families and, b) this population segments are left out of the formal housing sector because their income level is not enogh for them to be granted with a houisng mortgage (and actually pay for it) under current local market conditions, and therefore, it is very likely that they will satisfy their housing needs on the irregular market.

Table 3.2 San Luis Potosi-Soledad de Graciano Sanchez housing demand by income range (VSM), years 2011-2014

Elaborated by the author with data from INFONAVIT

The situation is very similar all over the country; however, it is out of the scope of this research to explore further into this matter given that it can be considered as an structural problem that involves, national income levels and its distribution, as well as housing and land policies, e.g. the lack of an urban land market for low income families complemented by selfconstruction technical aid.

Focusing on San Luis Potosi City alone, and with up to date statistics from the National System of Housing Information and Indexes or SNIIV2.0 by its Spanish initials (SNIIV2.0, 2017) which became publicly available in 2017, the potential housing demand for San Luis Potosi City (municipality) for 2017 is shown in Table 3.3.

Table 3.3 Potential housing demand in San Luis Potosi city year 2017

POTENTIAL HOUSING DEMAND IN SAN LUIS POTOSI CITY YEAR 2017

YEAR UP TO 2.6 UMA 2.61-4.0 UMA 4.1-5.0 UMA 5.1-10 UMA >10 UMA TOTAL 2017 86,456 14,220 26,758 8,411 6,601 142,446

% 60.69 9.98 18.78 5.90 4.63 100.00 Elaborated with data from SNIIV2.0

It is important to know this information in order to be able to place in perspective market type and market size that will be targeted through this research, which is that of families with income levels in ranges from 2.61-3.99 VSM and 4.0-6.99 VSM (2.61-4.0 UMA & 4.1-5.0 UMA rspectiveley). This represents 40% of the housing demand in SLP and 26.8% in SGS

2 2.0-2.6 2.61-3.99 4.0-6.99 7.0-10.99 >11 TOTAL AVERAGE 19,568 7,566 13,109 9,915 3,698 3,667 57,522 % 34.0 13.2 22.8 17.2 6.4 6.4 100.0 AVERAGE 1,645 512 554 294 103 50 3,158 % 52.1 16.2 17.5 9.3 3.3 1.6 100.0 SOLEDAD DE GRACIANO SANCHEZ

SAN LUIS POTOSI

Income Segmentation by Number of Minimum Wages (VSM) SAN LUIS POTOSI-SOLEDAD DE GRACIANO SANCEZ HOUSING DEMAND BY INCOME RANGE (VSM),

YEARS 2011-2015 MUNICIPALITY

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(Table 3.2) up to year 2014 and 28.76% of the demand for year 2017. Note that the variation in percentage between Tables 3.2 and 3.3 is partially due to the change in metrics from VSM to UMA (Chapter 2.5) and also due to the fact that table 3.3 does not represent a historical statistic but rather a section in time for year 2017. The main reasons for chosing this particular housing segment are:

• Houses built for this segement account for the vast majority of the formal housing sector in the country.

• Houses are built within a regular (legal) framework, which involves, land tenancy, infrastructure, services and property rights.

• Improvements in energy efficiency for this housing segments can potentially benefit the construction industry in terms of competitivity (know how); it also benefits

families, by saving them money in energy bills and by providing them with a better life quality; it benefits the urban system by making a more efficient use of the available resources and lowering preassure on supporting systems (land, energy, water, drainage, etc.).

• Construction in this segment will continue in the forthcoming decades which is both an opportunity and a challenge for the local construction industry and the local urban system.

• There is a political will to shift towards more sustainable urban systems in Mexico especially in the social housing sector, therefore, this research aims to add knowledge for that pourpose at local level.

From a research perspective, even though the chosen housing segment might not be the biggest in quantitative terms, it is the one that drives the country’s housing industry because it represents the majority of the new built house mortgages granted in Mexico within a legal and formal framework in terms of employment, land use and tenure. In consequence, these housing segments also hold a high transformative potential in terms of innovation and implementation of new knowledge and technologies for the construction industry, locally in San Luis Potosi City as nationwide.

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