Gentrification Hits Oaxaca and Yucatán, Pushing Rents Up

Mexico — Gentrification, a process of urban transformation in which lower-cost or traditionally working-class neighborhoods are occupied by higher-income residents, is no longer confined to Mexico City (CDMX). The phenomenon is now advancing into southern and southeastern states such as Oaxaca and Yucatán, leading to rising housing prices and shifting local dynamics.

Gentrification Expands Across Mexico

According to data from Propiedades.com, rental prices in these regions increased by 6% to 7% in the first quarter of 2025. This surge reflects heightened housing demand, driven in part by digital nomads and foreign residents with greater purchasing power.

Key Factors Driving the Trend

• Digital Nomads and Foreign Residents: Cities like Mérida and Oaxaca have become attractive destinations due to their quality of life and relatively low costs compared to other countries.
• Tourism and Long-Term Stays: Extended stays by affluent tourists reduce housing availability for locals and inflate rental prices.

Impact on Local Communities

Oaxaca: 6% Increase in Rents

Oaxaca has experienced rising demand for housing, particularly in areas near the historic center and tourist zones. Consequences include:

• Displacement of Local Residents: Many can no longer afford rising rents.
• Cultural Shifts: Traditional festivals are increasingly tailored to tourist interests, diluting their community roots.

Mérida: 7% Increase in Rents

Mérida’s reputation for safety, infrastructure, and culture has drawn both Mexican and foreign migrants. However, this has led to:

• Tighter Housing Market: Fewer affordable options for long-term residents.
• Higher Cost of Living: Local wage earners face growing financial pressure.

Consequences of Gentrification

• Silent Displacement: Families and small businesses relocate to more affordable areas.
• Loss of Cultural Identity: Neighborhoods adapt to new demographics, often at the expense of traditional character.
• Increased Inequality: The income gap between newcomers and locals becomes more pronounced.

Potential Solutions and Regulations

While no national policy currently addresses gentrification, proposed measures include:

• Differential Taxes: Higher levies on short-term rental properties.
• Affordable Housing Programs: Protections for long-term residents.
• Community Involvement: Greater local participation in urban development plans.

Gentrification presents a complex challenge for Mexico, balancing economic growth with the need for inclusive urban development. As the phenomenon spreads, policymakers and communities must seek solutions that mitigate its adverse effects while harnessing its potential benefits.