Los Cabos is Now Mexico’s Most Expensive City for Housing

Housing has grown restrictively expensive in the Mexican city of Los Cabos, in the state of Baja California.

In Los Cabos, located in Baja California’s southern tip, housing prices have nearly doubled the national average (US$100,000), reaching approximately US$116,000, according to the latest Housing Price Index report from the Federal Mortgage Society (SHF), a key real estate sector indicator in Mexico.

This places Los Cabos at the top of the price chart, surpassing even Cancún, Mexico’s premiere vacationing spot and one of the country’s most luxurious and popular destinations among foreigners and nationals.

Baja California’s GDP grew of 3.7% in the second quarter of 2023 compared to the same period the previous year. Although the state is among the strongest in the country economically speaking, the increase in housing prices has been disproportionate.

Despite relatively stable inflation and no significant increase in the working-class population, housing prices have continued to escalate abnormally. High interest rates add to the pressure. Mexico’s central bank (Banxico) has maintained them above 10% since 2022.

The SHF’s report highlights the complexities of Mexico’s real estate market. In Los Cabos, the rapid increase in prices is largely attributed to its status as a luxury tourist destination and its growing appeal to international buyers, driving up demand.

Rising prices not only reflect a robust real estate market but also create pressure on local communities, often pushing lower-income residents to less developed areas or out of the formal housing market entirely. Many residents in Baja California are finding it increasingly difficult to afford homes.

Economists stress the importance of implementing public policies to tackle these challenges, advocating for the government to introduce social housing programs and tax incentives that would help make homeownership more attainable for local residents.