A new report shows vertical housing demand in Mexico is rising, but new developments fail to meet buyers’ budgets. Resale properties see a 19.6% spike as developers overlook real demand.
Demand for housing in Mexico continues to grow, but new vertical developments aren’t keeping pace with what buyers can actually afford. That’s the central takeaway from the 2025 Great Verticalization Report by 4S Real Estate, which reveals a mismatch between soaring demand and the type of housing entering the market.
According to the report, overall housing demand—covering both new and used properties, vertical and horizontal—grew 7% in the past year. But while new vertical housing sales declined by 1.6%, the resale market surged, with a 19.6% jump in transactions. The data points to a key trend: buyers still want apartments, but they can’t find options that match their budgets in the new inventory.
“The real problem isn’t a lack of demand, but rather a lack of product aligned with buyers’ real purchasing power,” said Ignacio Torres Zorrilla, CEO of 4S Real Estate.
Torres explained that most new developments cater to high-end buyers, with prices often exceeding 4 million pesos. Meanwhile, the bulk of interested buyers are seeking homes priced between 1.8 and 4 million pesos—a range largely underserved by new construction. As a result, they’re turning to the secondary market to find what they need.
Supply Growing, But Out of Sync
Between 2017 and 2024, Mexico’s vertical housing inventory ballooned by 213%, but that growth hasn’t been balanced. The number of units priced above 4 million pesos continues to rise, while affordable options—particularly in the 0.5 to 2 million peso range—have shrunk by 18% in just the past year.
That decline is critical. The report, which draws on data from the National Housing Information and Indicators System (SNIIV), shows that in nearly every state outside of Mexico City, more than 70% of active housing demand is focused on homes priced under 4 million pesos. Yet that’s exactly where new supply is most lacking.
This disconnect not only limits access to formal housing but also pushes potential buyers toward the secondary market, where homes are often more affordable, better located, and immediately available.
Lifestyle Shifts Driving Demand
The report also points to a generational shift reshaping Mexico’s real estate landscape. Generation Z is beginning to enter the housing market, bringing new priorities that challenge traditional development models.
Proximity to transportation, walkability, shared spaces, and urban connectivity are becoming essential features. At the same time, changing household structures—more single-person, single-parent, and single-child families—are increasing demand for smaller, more practical units in well-connected urban areas.
Buyers are no longer just looking for square footage—they want functionality and flexibility, all within a reachable price point.
Regional Contrasts: Who’s Absorbing Supply?
The report highlights stark contrasts in how different cities are responding to the current supply-demand mismatch.
- Struggling Cities: Monterrey, Tijuana, and Querétaro saw declines in vertical housing sales, largely due to a lack of affordable new units.
- Stable Performers: Mexico City, Guadalajara, Veracruz, and Mérida have maintained relatively strong absorption rates, thanks to better alignment between what’s being built and what buyers can afford.
- Rising Stars: Tourist hubs like Mérida, Mazatlán, Puerto Vallarta, and Tulum are seeing a rise in vertical housing demand, driven by lifestyle migration and interest in beachside living. Vertical housing in these cities is increasingly being seen as a way to combine modern living with resort-like settings.
Developers Must Adapt or Fall Behind
What’s next for vertical housing in Mexico? According to 4S Real Estate, the key challenge is reconnecting with real demand.
That means shifting focus toward:
- Pricing: Units in the 1.8 to 4 million peso range.
- Location: Proximity to transit, jobs, and services.
- Design: Functional spaces with shared amenities that suit modern, often smaller households.
“Resale isn’t a threat, but rather a sign of what the market truly wants,” Torres emphasized. “Those who align their product with that reality, and not just with the expectation of financial returns, will be better positioned to lead the new phase of verticalization in Mexico.”
The report sends a clear message to developers: luxury towers may be grabbing headlines, but Mexico’s future in vertical living depends on affordability, functionality, and thoughtful urban integration. If the industry wants to keep up with demand—and avoid losing ground to the resale market—it must evolve now.
Mexico real estate, vertical housing, housing market 2025, apartment demand Mexico, housing supply gap, resale property Mexico, 4S Real Estate, affordable housing Mexico
