Homes in Oaxaca, Mexico: “Why are so many houses unfinished?”
At least once a month I get asked the question: Why are there so many houses in Oaxaca that have been started and are clearly not finished? It is one of the most notable sights in this colonial city in the south of Mexico, as well as in the towns on its outskirts and beyond. The phenomenon is clearly visible as you traverse the connecting highways in the central valleys.
The brickwork of the homes is finished, but there is no glass in the windows, and otherwise it seems obvious that no one lives in these cash cows, buildings in which significant sums have clearly been invested. And even if the homes are finished and occupied, rebar still extends skyward from the roofs. Why was it left there, an eyesore by Western standards?
It’s a misconception that leaving the rebar intact at the top of your roof means your home isn’t finished and therefore you don’t have to pay property taxes. In fact, at least in the city of Oaxaca and the suburbs, a tax reform began to be implemented in the early 2000s where you are assessed based on both your land and your living space, with different rates. Curiously, any structure with a concrete roof was considered habitable space and therefore taxed at a higher rate. Even a shed used only for vehicles. You see, many Oaxacan residents tile their sheds and use them more for living and entertaining than for parking vehicles, and some residents don’t even own cars or trucks. Many residents circumvent the regulation by building a canopy of river reeds, known as a carrizo, thus keeping their vehicles shaded and not having to pay the increased rate. In our case, our concrete roof is only used for our vehicles, so we had to negotiate the matter with the tax department.
Since many homeowners are of modest means, you have the option of having a government-certified architect come to your home to take measurements in order to then calculate the increase or delay the process. If you choose the latter, the new rate only goes into effect upon your death or sale of the home, with penalties, interest and tax liability being passed on to your heirs or purchasers. Let the negotiations begin! We chose to take the bull by the horns, did the revaluation and immediately started paying about ten times what we were paying before, still a bargain compared to what we were paying as Toronto homeowners, even without the current bonus they are taxed at the rate of elderly people (over 60), i.e. 50% of the usual tax rate for a main residence. At the end of the day, our daughter will inherit a slightly smaller bequest to tax the transition.
Then why the armature? After their deaths and earlier, most Oaxacans have nothing to offer their children but their homes, or rather where their existing homes are located. Thus, building a second or third level on top of a home is always considered when funds become available at a snail’s pace and when the time is right. If you cut the extension rebar after your initial build is complete and later decide to build another level, it’s more expensive; instead of just tying in the old rebar, you have to break up concrete to gain access to the bare rebar used in the earlier construction. There is a different sense of aesthetics or, more likely, a priority given to economics. Therefore, it is wise to leave the armature.
Going back to all those partially finished homes, it all has to do with the cost of borrowing in Mexico and the fact that Oaxaca is one of the poorest states in the country, with most residents having no savings. Only the unsophisticated or the very rich have mortgages (that’s why buy everything on credit). I have seen interest rates from 9% to 65% for secured loans. On the latter, a few years ago I was considering buying a scooter for our beloved godmother. Buying credit would cost us 65% per annum.
So, the norm is to buy when you have cash. This means that if you want to build on a piece of land, you buy 1,000 bricks, then another thousand, then block, then rebar, and then cement. You hire your masons and your plumber who roughs it in the underground installations. You build, then save, then build more. You can leave your “obra negra”, as it is called, indefinitely without worrying about theft because there is nothing to steal.
You can then have your electrician break up the interior concrete, bricks and blocks, install the wire and connections for switches, and the like. Once these fixtures and the rest of the home are covered in concrete, your future home is once again protected from vandalism and theft (yes, acknowledging that copper may still be available, but it’s pretty hard to cover with cement). This is your “obra gris.” It can also be left unattended indefinitely.
The above are the two most common completed stages of home construction that one encounters while driving the roads and highways around the city of Oaxaca, its central valleys and beyond. All of this makes economic sense, while at the same time providing the homeowner in development with a reasonable degree of security. While it delays the completion of the home, it avoids being saddled with exorbitant mortgage rates.
Family members often provide some of the labor involved in advancing these two stages of construction. Finishing the home, however, often requires more specialized trades and with it much more significant financial costs. Thus, we find many homes in the “obra gris” stage, remaining there for years, if not a decade or more.
The final construction phase includes finishing works such as more detailed and fine tiling, painting, door and window frames and glazing, electrical and plumbing, etc. Especially regarding the latter, in principle a partially completed dwelling is not left unattended in this state of construction, so a night watchman or “velador” will most often be hired to ensure security. Only then is the family ready to move in, and the home will look finished on the outside – with fittings that still extend upwards.
So just remember, an unfinished home is probably a sign of a hard-working family struggling to pull it all together, for themselves and their individual members, without succumbing to the pressure to take out loans at often exorbitant interest rates.
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