Mexico City, Mexico — Real estate experts estimate that housing prices in colonies affected by the earthquakes would fall by between 25 and 30 percent in the next three months. They say the fall will be due mainly to cracks in buildings from the earthquake.
This would be a similar phenomenon from the earthquake in 1985, when housing prices in colonies such as Rome and Countess fell by about 50 percent. According to estimates of the extinct Metropolitan Emergency Commission, that quake damaged nearly 30,000 buildings.
Leonardo González, real estate analyst at Propiedades.com explains “An earthquake like this is a major unanticipated depreciation in the residential real estate market where prices go down, especially in the properties that were affected.”
Civil Protection and the government of CDMX say that colonies most affected by the earthquake include Roma, Condesa, Lindavista, Eugenia and Del Valle Norte. At the end of August, these areas recorded an accumulated price increase of around 20 percent according to figures from Inmuebles24. However now, real estate values are falling.
Data from the Federal Mortgage Society reveal that the average rise in the first half of the year for all CDMX was 7.6 percent .
Karim Goudiby, CEO of Vivanuncios explains, “One consequence of the earthquake will be that demand for housing will rise in neighboring colonies that have been damaged because people will continue to want to live in areas close to their workplaces.”
“In 1985, the first thing that was seen was an additional demand for housing. It is generally the case that people living in these areas (in affected colonies) try to relocate in neighboring areas, although not in the same areas where they already lived. They traditionally seek places where they feel a little more safe, that is, where they have not seen as much damage,” said Jorge Paredes, CEO of brokerage firm Realty World.
In the case of rent prices, the fall would be up to 25 percent in the affected areas, according to industry experts.
“People who think of renting in one of the colonies affected by the earthquake could try to negotiate the price of the rent by 20 or 25 percent below its price since they are in an affected area where several condominiums fell, but it’s hard to predict, especially for the short time that has passed,” commented Goudiby.
The monthly rent of a two-bedroom apartment of 65 square meters in the Condesa colony stood at 16,828 pesos per month at the end of August, being the highest price in the entire Cuauhtémoc delegation.
Meanwhile, the prices of apartments with the same characteristics in the North and South Del Valle were 11,711 pesos and 11,491 pesos, respectively.