Overpriced rent rates, price gouging.

Dec. 25 2022

I needed to find another rental due to the fact that where I rent at the moment, is rented out to vacationers who had my unit reserved Jan - April "high season".

What I did find was lots of crap rentals for 7,000+ pesos per month, that I would rate to be in the local price range of 4,000 max per month, due to deficiencies, and general poor conditions of the rental properties.

At least for the time being, I finally had to take one that is a bit overpriced, but NOT a total a rip-off as some others were that I looked at in the same price range.
Good thing was no security deposit, "mes de garantía ", or contract was needed, just pay by the month, no obligations.

Generally speaking, I found lots of "bandwagoning" going on by landlords, trying to charge unreasonable and excessive pricing , e.g to extranjeros for their rental units, when there is not a just, fair and reasonable basis to do so, I.M.O.

It used to be, not too long ago, that for that amount, an good rental could be found that was "tourist quality", e.g with modern A/C, agua caliente, etc.
I found rates ranging between 10 - 18,000 per month for "tourist quality" rentals

Albeit hard to find, there still are a few in the 5 - 8,000 peso monthly rent price point range that the owners rent that are a good value.
Thanks to those property owners who have kept their rent prices stable, with no, or minimal increases.

@hromero
as far as your objection to my comments--->
" It seems unreasonable to me that someone would expect "no or little price increase" in an environment where general inflation in Mexico is running at over 7% for a wide variety of basic necessities. "

I'm 100% aware of inflation here in MX, as well as elsewhere.
I'm NOT "expecting" little or no price increase", nevertheless in some situations that has been true.

The detail is that much of the inflation is WAY OVER the 7% you noted.
It seems that it is uneasonably exaggerated, unnecessary, & out of line.
THAT is what, let's say, doesn't sit well with me.

It's not price gouging, it's supply and demand. It's hard to criticize people for taking advantage of the market. They are in the rental business to make money, not to provide discounted housing for gringos.

Jaui what areas or colonias did you conduct your rental search ?

Maybe not so much price gouging, but things have gone up hugely everywhere here.

Up until about 6 weeks ago, we went out to breakfast 2 or 3 times a week, going to 5 or 6 different places. How have things changed? Here are two examples: Daniel's great chorizo burrito was 80 pesos until September. It went up to 100 pesos then. Three weeks ago it went up to 120 pesos. Ouch!!! Espuma's fabulous french toast was 110 pesos. After their remodeling, it is now 300 pesos. No, we are not going there anymore, and Daniel's will be less often. I can't give an exact example for La Tejita, but their prices skyrocketed. The non tourist places so far haven't increased, or at least not much. We now go to breakfast once a week.

Yes, prices for everything have gone up.

Our weekly maid and gardener have been paid 400 pesos for their 5 to 6 hour day for a couple of years. (Yes, they are given a good lunch) The big discussion is whether they are going to go up to 450 pesos or 500 pesos. It's tough when our pension only goes up 2% per year.

We have a tourist apartment that we only rent out for a maximum of 10 weeks a year. We value our privacy so limit the intrusions in our lives. We raised our rental rate from 2000 pesos per night to 2200. Why? Because our living costs have gone up too.

What to do? Eat out less, and still enjoy ourselves to the fullest! We can't imagine living anywhere else.

It's not price gouging, it's supply and demand. It's hard to criticize people for taking advantage of the market. They are in the rental business to make money, not to provide discounted housing for gringos.

@Bart

I understand that, and you're entitled to your opinion.

The influx of and the ever increasing demand for local longer term rentals by extranjeros most likely is the main cause of increasing rent prices, as well as what the other user mentioned about a general price increases for most everything.

That said, the situations I encountered that I refer to in the subject line, were NOT cases of asking rental property owners to "provide discounted housing for gringos", as you noted in your reply.

Do you think any of the recent price increases relate to the start of the tourist season? We have always felt the restaurant prices to be reasonable especially compared to home. It’s hard to notice much of a change when you compare year to year though, since remembering last years prices is pretty much impossible.

It will be interesting to see if prices moderate in spring when they have to depend on locals more.

We have had exactly the same thoughts. Either way, those are some hefty increases.

It will be interesting to see if prices moderate in spring when they have to depend on locals more. "

12-25-2022

@Timmac

You made an excellent point

In would seem to me that business that don't mainly cater to extranjeros , that also for the most part depend on the local Mexican population, can only go so far with price increases, before the "bottom falls out of the market", and they lose their customer base.

Extranjeros more likely are able to tolerate price increases.
Currencies such as the US$ serve somewhat as a "buffer" for that, though the dollar has even depreciated a tad as well.

Locals aren't, as wages do NOT rise accordingly to the %age of the price increases.

As the other User justly commented, her pension only went up 2%, while prices for many products and servicies, generally speaking, are up from 5% to 40% +.

Here are a few real life examples I found:
The pizza that went to 115 from 109, or la malteada to 50 from 45;
At Soriana Cafe Friday Pizza Night started at 99, 1- 1½ years or so ago. The regular price without the discount, tamaño familiar was 165. Now the Friday Pizza Night price is 150, with a "List price" of 180.
Taking into account it is the giant size, at 150, I think it still is a good value, though not as it was at 99.
I also liked it better than what I recently ate at the new Dominos.

I wouldn’t blink at $6 for a burrito, but $15 for French toast is pretty extreme. In general restaurants love breakfast because the food cost is so low, but charging $15 for a couple of slices of bread soaked in an egg wash with a bit of cinnamon is high even for the states.

I wouldn’t blink at $6 for a burrito, but $15 for French toast is pretty extreme. In general restaurants love breakfast because the food cost is so low, but charging $15 for a couple of slices of bread soaked in an egg wash with a bit of cinnamon is high even for the states.

@Timmac

Exactly

Your comment is akin to the point I was trying to make in my lead post of this thread.
Thank You ☺

I would think that customer choice would affect that price within weeks or days. Some increases are sustainable, but in the absence of a remarkable breakfast experience, that seems unsustainable. (Many years ago I had French Toast at the San Francisco Marriott Palace hotel. I thought it was outrageously priced… until I tasted it.)

In the spring of 2022 and in October I saw a sign outside a Zihuatanejo area restaurant one day each week, “Pizza 2 x $300”. On November 1 the sign changed to “2 x $400”.

No doubt some of that relates to inflation of the price of ingredients and some relates to the approach of the tourism high season. I expect there will be price moderation in April or May, but not back to $300.

But customer choice depends highly on repeat business. If I’m on vacation, I am probably less concerned about price and more likely to splurge. Since I’m only there I short time, I don’t know what prices were last week and haven’t been to a lot of restaurants to compare prices. Even if I’m a regular visitor, I couldn’t tell you what the prices were last time I visited. We were there a month ago. I couldn’t tell you the price of any of the meals we ate. I know they all seemed reasonable, but that’s through the lens of US costs. Likewise, when we return in a couple of months, I doubt if I would notice any price changes.

With all due respect, this seems like an unjustified rant that is purely self-serving. During the two years of the worst of the pandemic, when local accommodations had to lower pricing in order to bring in business and still have less occupancy, I didn't see corresponding comments about how local landlords had lowered their pricing too much and that they should be paid more than they were asking. On the contrary I remember reading many comments about the good deals and of all the availability. While there were some generous people who attempted to support locals during those times by sending cash without reciprocal service, the vast majority of people either decided to stay home without paying anything to local landlords or to take advantage of the much lower rates being offered. If the landlords you are encountering are charging "unreasonable" rates then they won't get business and then you should be able to negotiate a better deal for yourself. If, however, they are renting them out at the prices that they are asking then maybe it is your expectations that are unreasonable. I know places in the non-tourist neighborhoods with air conditioning and hot water that can be had for as low as 3,000 pesos a month. I doubt they would meet the "tourist quality" that you are looking for but the options exist if price is of greatest concern to you. It seems unreasonable to me that someone would expect "no or little price increase" in an environment where general inflation in Mexico is running at over 7% for a wide variety of basic necessities.

--
Humberto Romero
www.casaarcoiriszihuatanejo.com

Maybe not so much price gouging, but things have gone up hugely everywhere here.

Up until about 6 weeks ago, we went out to breakfast 2 or 3 times a week, going to 5 or 6 different places. How have things changed? Here are two examples: Daniel's great chorizo burrito was 80 pesos until September. It went up to 100 pesos then. Three weeks ago it went up to 120 pesos. Ouch!!! Espuma's fabulous french toast was 110 pesos. After their remodeling, it is now 300 pesos. No, we are not going there anymore, and Daniel's will be less often. I can't give an exact example for La Tejita, but their prices skyrocketed. The non tourist places so far haven't increased, or at least not much. We now go to breakfast once a week.

Yes, prices for everything have gone up.

Our weekly maid and gardener have been paid 400 pesos for their 5 to 6 hour day for a couple of years. (Yes, they are given a good lunch) The big discussion is whether they are going to go up to 450 pesos or 500 pesos. It's tough when our pension only goes up 2% per year.

We have a tourist apartment that we only rent out for a maximum of 10 weeks a year. We value our privacy so limit the intrusions in our lives. We raised our rental rate from 2000 pesos per night to 2200. Why? Because our living costs have gone up too.

What to do? Eat out less, and still enjoy ourselves to the fullest! We can't imagine living anywhere else.

400 pesos (app. $20USD for 6 hour day = app $3.50USD/hr for cleaning and gardening (yes, I understand a good lunch is given) sounds like an incredible deal.
Considering the going rate now in California is $15-25/hour (just given as a reference, take it or leave it).
Are they 'employees' of yours, thus making you responsible for all sorts of other 'obligations'?
Or are they more 'freelancers' aka 'Independent Contractors'.

If they are looking for more work please pass along contact info

Keep in mind the minimum wage in Mexico was just raised to a smidge over 200 pesos A DAY!

Keep in mind the minimum wage in Mexico was just raised to a smidge over 200 pesos A DAY!

Yep...and all sorts of other financial machinations are based on that...such as requirements to obtain residency.
In California they still talk in hushed tones about "Affordable Housing"
There are bad jokes everywhere.
Generosity is next to godliness

On our last trip to San Francisco, we saw so many homeless people living on sidewalks. There is also an "upper crust" homeless class living in rusty campers. Truely sad. I wonder if Elon Musk, after screwing up once too many times, will end up in a rusty camper in the Pacific Heights neighborhood?

Are they 'employees' of yours, thus making you responsible for all sorts of other 'obligations'?
Or are they more 'freelancers' aka 'Independent Contractors'.

If they are looking for more work please pass along contact info

Those “other obligations” can add up. I have an employee-maid. Not only are there the costs for aguinaldo (mandatory Christmas bonus); “profit sharing” (that seem to be based on revenues, not profit); etc., the accountant who makes the seguro payments is an expense. Then there is the “severance pay” liability that accrues every year.

“Severance pay for a full-time employee equals three months’ worth of wages, in addition to 20 days’ worth of wages for each year the employee worked. This amount must be equal to the most recent salary earned and include accrued benefits as well.”

For years I paid seguro for the maid but, because she could not provide official identification to seguro, she couldn’t get seguro benefits. So in addition to seguro payments I also paid the employee’s medical visits, medications, etc.

And the obligations can come back to bite. About the same time as I hired the maid, I needed yard upkeep done.

My property manager had a guy whom she assigned to various properties. She got him into a routine doing some work on my property. The property manager charged me for his work.

I never told him what to do; the property manager did. If I wanted something specific done, I talked with the property manager who talked with the guy. Sometimes the guy would do it; sometimes the property manager would have someone else do it. I didn’t care. I always got charged for it.

The guy continued to work at other properties, showing up at my place two or three times a week, coming and going as he wished. Although he was not my employee I got to know him and liked him. When he needed some extra money for medications or things, I contributed to paying for it.

The property manager died and an employee took over the business. The arrangement continued.

One day, the guy said he was quitting and demanded severance pay from the first day he did work on my property. He said was going to report me for having been his employer for over 15 years and never paying seguro for him. It was a mess that cost thousands of dollars for someone whom I never considered to be my employee.

Employee relations is not for a faint-hearted gringo.

Are they 'employees' of yours, thus making you responsible for all sorts of other 'obligations'?
Or are they more 'freelancers' aka 'Independent Contractors'.

If they are looking for more work please pass along contact info

Those “other obligations” can add up. I have an employee-maid. Not only are there the costs for aguinaldo (mandatory Christmas bonus); “profit sharing” (that seem to be based on revenues, not profit); etc., the accountant who makes the seguro payments is an expense. Then there is the “severance pay” liability that accrues every year.

“Severance pay for a full-time employee equals three months’ worth of wages, in addition to 20 days’ worth of wages for each year the employee worked. This amount must be equal to the most recent salary earned and include accrued benefits as well.”

For years I paid seguro for the maid but, because she could not provide official identification to seguro, she couldn’t get seguro benefits. So in addition to seguro payments I also paid the employee’s medical visits, medications, etc.

And the obligations can come back to bite. About the same time as I hired the maid, I needed yard upkeep done.

My property manager had a guy whom she assigned to various properties. She got him into a routine doing some work on my property. The property manager charged me for his work.

I never told him what to do; the property manager did. If I wanted something specific done, I talked with the property manager who talked with the guy. Sometimes the guy would do it; sometimes the property manager would have someone else do it. I didn’t care. I always got charged for it.

The guy continued to work at other properties, showing up at my place two or three times a week, coming and going as he wished. Although he was not my employee I got to know him and liked him. When he needed some extra money for medications or things, I contributed to paying for it.

The property manager died and an employee took over the business. The arrangement continued.

One day, the guy said he was quitting and demanded severance pay from the first day he did work on my property. He said was going to report me for having been his employer for over 15 years and never paying seguro for him. It was a mess that cost thousands of dollars for someone whom I never considered to be my employee.

Employee relations is not for a faint-hearted gringo.

It is stories like yours which is why I asked. Bummer

Our gardener came to us from a very good friend, an attorney, whose ranch he lives on and cares for. The attorney made it very clear to us that we were not to pay for anything except aguinaldo and the daily wage because he was covering it.

That, along with plan that we are not leaving here and not getting rid of either of them makes it work well for us.

I understand that minimum wage will be increasing by 20% on January 1, 2023.

https://www.littler.com/publication-press/publication/mexico-increases-general-minimum-wage-2

While that does not mean that all wages will increase 20%, it suggests upward wage pressure. If someone were earning 20% above minimum wage on December 31, 2022, the next day, they would n]be a minimum wage earner. You can bet they will be expecting a significant increase. Maybe 20%.

Then their coworker who had been making 20% more than that person would expect 20% increase too. We can see where that logic goes.

Those severance pay provisions, Christmas bonuses, etc. Bump them 20% too.

Pay be the “outrageous increases” noted above were merely anticipating the January 1, 2023 realities.

I understand that minimum wage will be increasing by 20% on January 1, 2023.

https://www.littler.com/publication-press/publication/mexico-increases-general-minimum-wage-2

While that does not mean that all wages will increase 20%, it suggests upward wage pressure. If someone were earning 20% above minimum wage on December 31, 2022, the next day, they would n]be a minimum wage earner. You can bet they will be expecting a significant increase. Maybe 20%.

Then their coworker who had been making 20% more than that person would expect 20% increase too. We can see where that logic goes.

Those severance pay provisions, Christmas bonuses, etc. Bump them 20% too.

Pay be the “outrageous increases” noted above were merely anticipating the January 1, 2023 realities.

Do you understand the wage increase you speak of is not for the state of Guerrero?

I thought it was a federal thing and was for the entire country.

Do you understand the wage increase you speak of is not for the state of Guerrero?

I did not understand that the wage increase does not apply for the state of Guerrero. I was basing my comments on reports such as these.

“On December 1, 2022, the National Minimum Wage Commission (“CONASAMI” for its acronym in Spanish) agreed to increase Mexico’s general minimum wage to $207.44 Mexican pesos per day, and to $312.41 Mexican pesos per day in the Free Economic Zone of the Northern Border, effective January 1, 2023. The minimum wage in force for 2023 will result in an overall increase of 20% (10% as direct increase and $15.72 Mexican pesos as a fixed amount increase).”

https://www.littler.com/publication-press/publication/mexico-increases-general-minimum-wage-2

“This December 1st at 7:00 a.m., the plenary of the Council of Representatives of the National Commission of Minimum Wages (hereinafter Conasami) was called to a session to define the minimum wage for 2023.

“As a result of such session, it was established that there will be a 20% increase as of 2023, so that the general minimum wage will be $207.44 and in the Northern Border Free Zone it will be $312.41.”

https://vegaguerrero.com/derecho-laboral/mexico-minimum-wage-increase-in-2023/?lang=en

I dont see anything there that excludes the state of Guerrero.

Can you point me to references that the federal decision of a 20% increase in minimum wage, “is not for the state of Guerrero”?

You are correct there is a country wide increase [my bad]

So it looks like a daily increase to $207.44 Mexican pesos per day.

Which my maid clearly makes way more than this!

Do not see how this will affect gringos much.

You are correct there is a country wide increase [my bad]

So it looks like a daily increase to $207.44 Mexican pesos per day.

Which my maid clearly makes way more than this!

Do not see how this will affect gringos much.

I worked for decades dealing with employee compensation involving employees over a wide range of wage/benefits rates from minimum wages to $100/hour. My experience is that an increase in minimum wages works upwards over time. The greater the increase in the minimum wage, the faster the wage pressure moves. A 20% increase in the minimum wage is a massive increase. (I’m not suggesting it is unwarranted, only that it is large.)

Imagine if your job were more difficult than a minimum wage job and you were paid 20% more because of that. Now imagine that one day your lesser-paid coworkers were making just as much as you. I think that you would expect a wage increase too in order to preserve your historical wage relationship.

Then your supervisor who historically earned 15% more than you would expect a similar wage increase. “Why should I have supervisory responsibility and get paid less than the person I supervise?”

Wage pressure is not only internal to a workplace. It is between workplaces.

I bet my employees could tell me how much others are being paid for comparable work (or at least work they think is comparable). I bet yours could too. As they start hearing of others getting “wage pressure increases” resulting from the increase in the minimum wage, we gringos can expect to experience wage pressure. And at a 20% increase, I think we can expect to hear it in months or weeks, not in a year.