Policy-Induced Suburbanization: Mass-Produced Housing and Location Choices in Tijuana, Mexico

Mexican cities began an urban expansion process fueled principally by public mortgage supply in the early 2000s. The new urban landscape, comprising mass-produced suburban housing developments for low-income families, deepened socioeconomic differences. For years, developers have claimed land prices are the reason for suburban expansion in Mexico, not policy-enabled construction economies. This study tests the hypothesis that cost reduction strategies through scale economies explain the suburban location and the homogeneous landscape built under the reformed mortgage system. Using data on housing production costs for Tijuana, the results show that building homes using technology developed during policy implementation yields scale economies and reduces building costs. Additionally, statistics on housing developers’ location decisions illustrate how production economies have contributed to a landscape that increased segregation, exclusion, and housing vacancy in Mexican cities.