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Exodus of the Rich
San Diego — It takes American eyes a minute to see the signs of wealth in Tijuana's Zona Diamante (Diamond Zone), high-end neighborhoods that cling to the hills south of downtown, above the country club and racetrack. Nowhere to be found are the front lawns of Southern California that stretch back from the sidewalk. Here in Agua Caliente, Chapultepec, Colonia Cacho, and other colonias of the Diamond Zone, houses sit close to the street, maximizing safer, more private back yards. Front yards, which lie behind ten-foot walls and wrought-iron gates built straight up from the sidewalk's edge, are usually just deep enough to park cars inside the gates. Those cars, luxury sedans and SUVs, are one hint of wealth. Enormous carved-wood front doors, stained-glass windows, cupolas, and hotel-scale fountains are others. But alongside the indications of wealth are a growing number of signs that state
se vende and se renta ("for sale" and "for rent").
These aren't the standard two-by-two-foot signs hanging from wooden frames in the front yard. Some are discreet one-by-one-footers taped to the inside of windows. Some are a bit larger and fastened to the front walls facing the street. And other houses, perhaps with more desperate sellers, feature five-by-ten-foot banners tied to the railings of second-floor balconies.
One day in early September, on the main drag through Chapultepec, four houses were for rent and two for sale. On a block in Colonia Cacho, two were for rent and one was for sale. And within sight of the main entrance to Lomas de Agua Caliente hung two For Rent signs and six For Sale signs. On many trees and telephone poles fliers were stapled that advertised real estate agents and property management companies.
The spectacle of these signs is a novelty for the Diamond Zone, where Tijuana's older, moneyed families have lived with discretion. But are they evidence that upper and upper-middle classes are shrinking? Luis Serrano, president of the Tijuana Association of Real Estate Professionals, doesn't think so. "The upper classes are still strong," he says, "and getting stronger. Right now you have in Tijuana all kinds of high-end cars: Mercedes, Volvo, Audi, BMW. The class that can afford these cars is growing. Real residents of Tijuana, not the people in the outer colonias who are from somewhere else, but the 45 percent of the population who are real Tijuanenses, they are successful and growing more successful every year."
Forty-two-year-old Serrano leans forward in his chair at a boardroom table in the chamber of commerce's Zona Rio offices. He's graying a touch at the temples. Though dressed informally in gray slacks and a tan Hawaiian shirt, he's pressed, polished, and groomed. His hair and complexion are light enough to earn him the nickname güero, which Mexicans apply to their fair-haired, fair-skinned countrymen. Despite his belief that the well-to-do classes in Tijuana are growing, he acknowledges that at least a minor exodus from the Zona Diamante is under way.
Sergio Otañez, an agent who has sold real estate for 25 years in the Diamond Zone, says "Five or 10 percent more" houses are for sale there than usual.
Serrano is quick to point out that not all of the For Sale signs are due to people leaving the area. Speaking mostly in English, occasionally consulting a translator in the room, he says, "People change houses. They want a bigger house, or maybe a smaller house. So they buy a new house in the same area, and the old one sits empty. The other thing is people moving to Mexico City or another state because there's been a change in their job or something. Another point is the insecurity in Tijuana. It's very true that we have a lot of problems with insecurity right now. It's the reason that many people have decided to cross the border and live in San Diego. They feel they are a lot more secure there than in Tijuana. It's a fact of life in Tijuana. We cannot hide that."
Asked what he means by "insecurity," Serrano answers, "Mostly kidnapping. Yes, it's true. The business of kidnapping is they go for the money. They try to make a good business by kidnapping people with money and collecting big ransoms. It's a real problem right now. We cannot hide that fact. We are here to serve the people, so we do not hide anything from our clients. We understand that we can't lower the number of kidnappings by ignoring them. So we are very honest about the risk. But I tell the people that it's not easy to move to the United States. We hear from people all the time who changed their place of residence to San Diego, then came back again because the style of life is very different, and the cost of living is very high there."
Hard statistics on kidnappings in Tijuana are impossible to come by as most are not reported to authorities. A study by the National Autonomous University of Mexico concluded that less than 10 percent of kidnappings are reported. A paper on Tijuana kidnapping for ransom published by the Carlsbad-based international security and crisis-management firm Clayton Consultants says, "Authorities state there [were] only 17 reported kidnaps in the city during the first six months of 2006. However, the Citizen's Council for Public Security reports that the number is well over 40, compared to 21 in 2005 and seven in 2004. More worrisome is that this year's cases have resulted in the death of six victims following the payment of a ransom. Since most cases are not reported to the police, other observers estimate that the number could be as high as four to five weekly. As a result, many local wealthy businessmen have moved to other Mexican states or across the border to San Diego."
Though he insists again that it isn't an indication of a weakening upper class, Serrano says there are also financial reasons for the exodus. "People can't service the credit they have on that big house. They have problems paying the mortgage, so they decide to sell the house."
Serrano says prices in the Diamond Zone run from $250,000 to over a million, most being closer to the lower end of that range. For $350,000, a buyer can easily get more than 2500 square feet, three or more bedrooms, at least two baths, and a two-car garage. To a San Diegan, that sounds like a bargain, and it is if you're paying cash. But though financing in Mexico has become attainable in the past 10 years -- it used to be nearly nonexistent -- it's not as generous as it is in the United States. "We start at 11 points here in Mexico," Serrano explains. "If you pay on time for the first 12 months or so, you can get a better rate. The lowest rate you can get is 9 percent. And while you have 30-year terms in the States, sometimes even more than 30 years, in Mexico, you have 15 years to pay off the house. So new buyers who have the capacity to put 20 or 30 percent down to buy a $300,000 or $400,000 house here could take that down payment and buy a bigger house in the States, because it's easier to make payments in the United States even if the cost of the house is higher."
Another cause of the unusually high number of For Sale and For Rent signs in Tijuana's wealthy neighborhoods, Serrano believes, is unscrupulous and incompetent real estate agents. In Mexico, there are no classes, certifications, or licenses required to become a real estate agent. One need only register with the local government and start working. "A problem we have right now," Serrano explains, "is brokers who are not part of our association who don't make any market studies to determine the true price for a home. They just use whatever price the owner decides on, hang the sign up, and try to sell it. But the houses are often overpriced. So instead of the true market value of the house, you get someone's sentimental value on the house. They think, 'My house is worth a million dollars,' but it's only worth half a million."
Here's something you might be interested in.
Exodus of the Rich
Exodus of the Rich
San Diego — It takes American eyes a minute to see the signs of wealth in Tijuana's Zona Diamante (Diamond Zone), high-end neighborhoods that cling to the hills south of downtown, above the country club and racetrack. Nowhere to be found are the front lawns of Southern California that stretch back from the sidewalk. Here in Agua Caliente, Chapultepec, Colonia Cacho, and other colonias of the Diamond Zone, houses sit close to the street, maximizing safer, more private back yards. Front yards, which lie behind ten-foot walls and wrought-iron gates built straight up from the sidewalk's edge, are usually just deep enough to park cars inside the gates. Those cars, luxury sedans and SUVs, are one hint of wealth. Enormous carved-wood front doors, stained-glass windows, cupolas, and hotel-scale fountains are others. But alongside the indications of wealth are a growing number of signs that state
se vende and se renta ("for sale" and "for rent").
These aren't the standard two-by-two-foot signs hanging from wooden frames in the front yard. Some are discreet one-by-one-footers taped to the inside of windows. Some are a bit larger and fastened to the front walls facing the street. And other houses, perhaps with more desperate sellers, feature five-by-ten-foot banners tied to the railings of second-floor balconies.
One day in early September, on the main drag through Chapultepec, four houses were for rent and two for sale. On a block in Colonia Cacho, two were for rent and one was for sale. And within sight of the main entrance to Lomas de Agua Caliente hung two For Rent signs and six For Sale signs. On many trees and telephone poles fliers were stapled that advertised real estate agents and property management companies.
The spectacle of these signs is a novelty for the Diamond Zone, where Tijuana's older, moneyed families have lived with discretion. But are they evidence that upper and upper-middle classes are shrinking? Luis Serrano, president of the Tijuana Association of Real Estate Professionals, doesn't think so. "The upper classes are still strong," he says, "and getting stronger. Right now you have in Tijuana all kinds of high-end cars: Mercedes, Volvo, Audi, BMW. The class that can afford these cars is growing. Real residents of Tijuana, not the people in the outer colonias who are from somewhere else, but the 45 percent of the population who are real Tijuanenses, they are successful and growing more successful every year."
Forty-two-year-old Serrano leans forward in his chair at a boardroom table in the chamber of commerce's Zona Rio offices. He's graying a touch at the temples. Though dressed informally in gray slacks and a tan Hawaiian shirt, he's pressed, polished, and groomed. His hair and complexion are light enough to earn him the nickname güero, which Mexicans apply to their fair-haired, fair-skinned countrymen. Despite his belief that the well-to-do classes in Tijuana are growing, he acknowledges that at least a minor exodus from the Zona Diamante is under way.
Sergio Otañez, an agent who has sold real estate for 25 years in the Diamond Zone, says "Five or 10 percent more" houses are for sale there than usual.
Serrano is quick to point out that not all of the For Sale signs are due to people leaving the area. Speaking mostly in English, occasionally consulting a translator in the room, he says, "People change houses. They want a bigger house, or maybe a smaller house. So they buy a new house in the same area, and the old one sits empty. The other thing is people moving to Mexico City or another state because there's been a change in their job or something. Another point is the insecurity in Tijuana. It's very true that we have a lot of problems with insecurity right now. It's the reason that many people have decided to cross the border and live in San Diego. They feel they are a lot more secure there than in Tijuana. It's a fact of life in Tijuana. We cannot hide that."
Asked what he means by "insecurity," Serrano answers, "Mostly kidnapping. Yes, it's true. The business of kidnapping is they go for the money. They try to make a good business by kidnapping people with money and collecting big ransoms. It's a real problem right now. We cannot hide that fact. We are here to serve the people, so we do not hide anything from our clients. We understand that we can't lower the number of kidnappings by ignoring them. So we are very honest about the risk. But I tell the people that it's not easy to move to the United States. We hear from people all the time who changed their place of residence to San Diego, then came back again because the style of life is very different, and the cost of living is very high there."
Hard statistics on kidnappings in Tijuana are impossible to come by as most are not reported to authorities. A study by the National Autonomous University of Mexico concluded that less than 10 percent of kidnappings are reported. A paper on Tijuana kidnapping for ransom published by the Carlsbad-based international security and crisis-management firm Clayton Consultants says, "Authorities state there [were] only 17 reported kidnaps in the city during the first six months of 2006. However, the Citizen's Council for Public Security reports that the number is well over 40, compared to 21 in 2005 and seven in 2004. More worrisome is that this year's cases have resulted in the death of six victims following the payment of a ransom. Since most cases are not reported to the police, other observers estimate that the number could be as high as four to five weekly. As a result, many local wealthy businessmen have moved to other Mexican states or across the border to San Diego."
Though he insists again that it isn't an indication of a weakening upper class, Serrano says there are also financial reasons for the exodus. "People can't service the credit they have on that big house. They have problems paying the mortgage, so they decide to sell the house."
Serrano says prices in the Diamond Zone run from $250,000 to over a million, most being closer to the lower end of that range. For $350,000, a buyer can easily get more than 2500 square feet, three or more bedrooms, at least two baths, and a two-car garage. To a San Diegan, that sounds like a bargain, and it is if you're paying cash. But though financing in Mexico has become attainable in the past 10 years -- it used to be nearly nonexistent -- it's not as generous as it is in the United States. "We start at 11 points here in Mexico," Serrano explains. "If you pay on time for the first 12 months or so, you can get a better rate. The lowest rate you can get is 9 percent. And while you have 30-year terms in the States, sometimes even more than 30 years, in Mexico, you have 15 years to pay off the house. So new buyers who have the capacity to put 20 or 30 percent down to buy a $300,000 or $400,000 house here could take that down payment and buy a bigger house in the States, because it's easier to make payments in the United States even if the cost of the house is higher."
Another cause of the unusually high number of For Sale and For Rent signs in Tijuana's wealthy neighborhoods, Serrano believes, is unscrupulous and incompetent real estate agents. In Mexico, there are no classes, certifications, or licenses required to become a real estate agent. One need only register with the local government and start working. "A problem we have right now," Serrano explains, "is brokers who are not part of our association who don't make any market studies to determine the true price for a home. They just use whatever price the owner decides on, hang the sign up, and try to sell it. But the houses are often overpriced. So instead of the true market value of the house, you get someone's sentimental value on the house. They think, 'My house is worth a million dollars,' but it's only worth half a million."
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