Americans Living in Tijuana and working in San Diego

Fascinating article in today's New York Times about what housing costs have driven some folks to do.

I wasn't aware that residente permanente income requirements are now over $4500 a month (and my understanding is that immigration is increasingly cracking down on those who use tourist visas with a border run every six months as a work-around for temporals and or permanentes).

How the Path to Homeownership Runs Through Mexico
San Diego residents are moving to Tijuana to get more for their money. Some hope to save for down payments on houses that are way out of reach north of the border. Here's a link to the article followed by a cut-and-paste for those without NYT access.

https://www.nytimes.com/2022/07/25/realestate/homeownership-san-diego-tijuana-mexico.html


By Debra Kamin
July 25, 2022, 5:00 a.m. ET

TIJUANA — Gustavo Galvez has dreams of owning a home in San Diego, Calif. His path toward homeownership, however, includes a detour: While he saves for a down payment, he plans to spend the next several years renting in Tijuana, Mexico.

Mr. Galvez, 37, was born in Mexico, but moved to San Diego when he was 6. Now married with a wife and 7-year-old son, he chose to move to Tijuana with his family last July. It’s a return, he said, that is both temporary and strategic. “We want to pay down our debt and increase our savings, so we can come back to the United States and become homeowners,” he said.

Stories of migrants crossing from Mexico to the United States in search of a better life are well-known. But for the past decade, a reverse migration has quietly been gaining steam: Americans, priced out of the housing market and frustrated with sky-high costs of health care, electricity and basic goods, are increasingly opting to rent or buy homes in Mexico.

The pandemic, which unmoored millions from the commute to a physical office, as well as the Sentri pass, which allows approved, low-risk travelers a fast lane into the United States at the Mexican border, has accelerated this trend. Consumer prices, including rent, are 62 percent lower in Tijuana than in San Diego, according to cost of living database Numbeo, and in Tijuana, it takes about $2,500 a month for a standard of living that in San Diego would cost $6,600.

For Americans living in Tijuana but earning U.S. salaries, their dollars can go far: Monthly rents in Tijuana vary widely depending on neighborhood, but most apartments fall between $400 and $1,000 per month.
In San Diego, the median sales price of a single-family home hit $1 million in April, although by June, it had cooled slightly to $987,225. A February report from the AI real estate firm OJO labs declared the city the least affordable metro area in the United States, bypassing San Francisco, in large part because of a 14 percent increase in median home sale prices from the year prior.

But the rise in home prices pales in comparison to the jump in rents. In June, the rent for a one-bedroom home — $2,901, according to rent.com — was 19 percent higher than a year ago. Two-bedroom apartments were averaging $3,772. Nationally, the average for a two-bedroom is $2,047.

Mr. Galvez knows these numbers well. In San Diego, he and his wife rented a two-bedroom cottage in the North Park neighborhood for $2,300 a month. They now pay $1,450 a month for a 1,500-square-foot house in a gated community that sits within a 10-minute drive of the San Ysidro border crossing. The proximity is important because Mr. Galvez, a commercial insurance broker at U.S. company, crosses five days a week for work to his office in San Diego.

Life in Tijuana, Mr. Galvez said, is more stressful for him and his family. The noise levels are higher; the air is not as clean. Despite Tijuana’s well-publicized struggles with drug cartels, he doesn’t worry about crime, he said, because violence is significantly higher among those involved with drug trafficking and isolated in specific neighborhoods. The sentiment that crime statistics don’t tell the whole picture is echoed by many new residents, and supported by research that has shown that despite Tijuana’s extremely high murder rates, the majority of crimes are isolated in three of the city’s rougher clusters.

Mr. Galvez said he misses San Diego’s green spaces, and is frustrated by Tijuana’s pothole-ridden roads. But he has his eyes on a long-term goal.
“Living here gives me a cushion to build my legacy,” he said.
For Jodi Cilley, living in Tijuana has been a balm for her nerves.
Ms. Cilley, 44, teaches at San Diego City College and is the president of the Film Consortium San Diego. When she moved to Tijuana from San Diego in 2018, she was returning to a city she knew well — she had lived there once before, from 2004 until 2010. The cost savings, she said, not just on rent but also on monthly household bills, doctor visits and even fine dining, allow her to work in a field she loves rather than chase a career with a higher paycheck.

“It’s so much less stressful to be able to know I can pay my rent every month and still have money left over,” she said. “I can eat anywhere, I can go to the nicest restaurants and bars in town. And I can do the job I want to do rather than get one that pays me more just so I can survive.”
She rents a two-bedroom, two-story house for $700 a month. Her job, which was partly remote before the pandemic, is now fully remote, but she crosses the border about once a week for Film Consortium events, to eat at In-N-Out Burger or to go shopping at Costco.

She speaks Spanish but often socializes with other American friends, all of them expats like herself who have found, in Tijuana, an escape from the crushing debt and lack of savings to which much of her generation is resigned. Since her return to Tijuana, she said, there’s been a noticeable uptick in the number of Americans living in the city. Even when she was keeping to herself during the pandemic, she noticed the results of gentrification around the city.

“San Diego is out of my reach right now,” said Michael Ellis, referring to the city’s real estate prices. He has lived in Tijuana since 2018. “But I think in the future I can buy here.”

“You see the results of so many Americans,” she said. “You see new nice restaurants, you see 800 new coffee shops that would never have existed here before and would never have survived.”

And as the number of Americans in the city has increased, so have prices.
Rents in Tijuana have doubled over the past decade, and the price of land has tripled, said Maricarmen Castellanos, founder and director of Probien, a Tijuana-based luxury real estate firm. She estimates that Americans make up fewer than one in 10 of her clients. But while she gets many inquiries from Americans about buying vacation homes in the beachfront communities of Ensenada and Rosarito, south of Tijuana, the vast majority of her American clients are looking to rent, not buy. “Americans are very used to living paycheck to paycheck. Many Americans don’t have the down payment for a purchase,” she said.

Over the past decade, a boom in luxury condos has filled Tijuana’s skyline with new residential towers, with units priced as high as $1.5 million each. Many buyers of these new high-end homes, she said, are Mexicans who work in San Diego. Others are investors from across Mexico, as well as local doctors who have benefited from the city’s booming medical tourism industry.

“I saw this city when there was nothing and now you see these incredible prices and I’m like, how? But someone is always willing to pay the price,” Ms. Castellanos said.

With the influx of new residents, however, Tijuana’s longtime citizens aren’t just contending with rising prices. Many of them, especially the tens of thousands of Mexicans who cross the border at San Ysidro each day for work or school, have seen their quality of life diminish.

“Traffic-wise, it’s terrible. Many people who have lived here forever and cross the border now have to wait two to four hours in line to cross to San Diego to work,” said Gonzalo Manrique, who directs the public policy and law programs at Tijuana’s Pacífico University.

Mr. Manrique believes that when the housing market dips, the number of San Diegans coming to Tijuana will as well. “It’s temporary, but right now it’s affecting us all,” he said. “There’s a big, important sector of the Tijuana economy that has always depended on working in San Diego, and spending five or six hours of your life a day waiting at a border is not the American dream.”

U.S. citizens who stay in Mexico for longer than 180 days must apply for a residency visa; either temporary (good for four years) or permanent. Neither affords citizenship or the right to vote, and both require a minimum income (for permanent residency, it’s an average of $4225 a month, equal to 500 times the Mexican minimum wage) and the establishment of a trust in order to purchase certain types of property. U.S. citizens who earn income in Mexico are required to declare those wages on their U.S. tax returns.

And while some American renters in Tijuana are biding their time saving for a down payment on an American home, others are hoping to first become homeowners south of the border.

Michael Ellis, 41, is a freelance publicist who moved to Tijuana in 2018, trading a one-bedroom in San Diego’s Hillcrest neighborhood for a three-bedroom house in Tijuana where he pays $1,200 a month and collects rent of $500 on one of the rooms. Living in Tijuana, he said, has given him a financial cushion that allows him to travel, as well as build up his savings. He hopes to eventually buy a home in Mexico and earn extra income utilizing it as an Airbnb.

“San Diego is out of my reach right now,” he said, referring to the city’s real estate prices. “But I think in the future I can buy here. And if I were still paying a gazillion in dollars in rent, I wouldn’t be in the financial position I’m in now.”

New residents say the savings are immense. Ms. Cilley estimates she has tucked away $40,000 since moving south. And for Mr. Galvez, life in Tijuana is creating long-term means to an end.

“I don’t enjoy living in Mexico as much as I did in the United States. For me, paved roads, order, clean streets and recreational opportunities are worth paying more for,” Mr. Galvez said. “But I’m a first-generation United States citizen, and I don’t have an inheritance. I have to create wealth so I can pass it on to my son.”

Wow, that $4225.00 needed for Permanente is quite a jump since I qualified.

People can come in as Temps at 2600 USD income; renew for 3 years then transition to Permanente with no further proof of income.

Thanks for posting this article.  

CA has always been high-priced; kudos to those who are willing to put up with  the commute from TIJ as they save for a house in CA.  While I understand the lure of CA and its beaches/lifestyle, it's a struggle to buy a home there that wouldn't be worth it to me.  Maybe these folks have exceptional family ties to the area or a unique career only found in CA??

For retirees, Northern Baja (or Sonora...San Carlos, Alamos, Rocky Point) may allow them easier access to Medicare in CA or AZ.  Ensenada is booming but pricey (what expat area in MEX isn't these days??).  

Personally I don't like San Diego weather, a tad too cool most of the year.

I lived in West Los Angeles in 1966-68. Then, California was cheaper to live than St. Louis. My studio apartment in Westwood cost $90.00/month with pool. I worked at UCLA Medical Center. My, how things change.

Coastal California has been outrageously expensive for a long time. About 20 years ago I stopped overnight on my drive from Canada to Mexico to visit a friend I hadn't seen in years, since she moved back to Calif. from Canada. She was working as a receptionist for a small boutique hotel in Monterray, but lived in Seaside- she said almost everyone who working in Monterray couldn't afford to live there.

She lived in a tiny, and I mean tiny, apartment attached to the back of a house- I think it was converted attached garage. She had a tiny bedroom, a tiny living/ kitchen area, without even a real kitchen- just a hot plate, a microwave and minifridge, a tiny bathroom, and a postage stamp size backyard area. I can't remember how much she said she was paying for that, but it was outrageous. I was living on Vancouver Island at that time, which is one of the priciest areas of Canada, but you could have rented a 3 bedroom house there for what she was paying for that little apartment.

BisbeeGal wrote:People can come in as Temps at 2600 USD income; renew for 3 years then transition to Permanente with no further proof of income.

Even $2600.00 USD ($3340.00 CAD) is unobtainable for many people. Canadian Pensions (OAS & CPP) paid at maximum (Approx. $1700.00 CAD per month) don't even come close. I suppose the bright side is that it may keep out people that really can't afford to be down here.

Can't afford to live here on less than 3300 Canadian/month? I live quite comfortably on less than half that. Of course, if you want a full time maid and gardener, go out to eat 8 times a week, and want to buy expensive imported food, that's a different story.

CanuckBob wrote:

BisbeeGal wrote:People can come in as Temps at 2600 USD income; renew for 3 years then transition to Permanente with no further proof of income.

Even $2600.00 USD ($3340.00 CAD) is unobtainable for many people. Canadian Pensions (OAS & CPP) paid at maximum (Approx. $1700.00 CAD per month) don't even come close. I suppose the bright side is that it may keep out people that really can't afford to be down here.

It seems that the government's goal is to allow only quite well-heeled retirees to have residency visas.~$4200 a month goes way beyond just keeping out people who can't afford to be in Mexico. I'd guess that at least 80% of the long-time expats I know couldn't meet today's income requirements. Many are still living quite well on social security supplemented by very modest withdrawals from savings - perhaps around half or less of the $50,000 per year required for a permanente applied for outside of Mexico.

On the other hand, it seems to me that while the income requirements are excessive the asset requirements (in lieu of SS/pension income) are pretty realistic. Where I've seen people get into serious trouble is getting into their mid-to-late 70's and no longer being able to afford private health insurance, while also not having the assets to pay for hospital care when a serious condition shows up. Day-to-day stuff (doctor and dentist visits, most prescriptions) are way cheaper and far more accessible in Mexico than NOB but a heart attack requiring bypass surgery or a cancer diagnosis without access to Medicare (or national insurance programs for Canadians) is another matter.

Yes, potential medical expenses are something that many people either ignore or don't consider in their calculations to move here. I suggest to anyone asking that they better have either insurance or $100,000 USD available for emergency medical care.

Just a footnote on insurance: Those who have "pre-existing" conditions can't get any...so they'd better have substantial savings!

Words of wisdom from CanuckBob and gringal - as usual!

I still remember how many folks blithely relied on IMSS for catastrophic backup and paying out-of-pocket for everything else when we first moved to Lakeside in 2008. Of course not too long after that the IMSS office in Chapala started actively looking for ways to deny coverage for expats. During those years private insurance was still really affordable as well. Since this was pre-Obamacare and we were early retirees it felt like heaven after paying hundreds of dollars a month for bare-bones high-deductible (70K each) catastrophic insurance in the U.S.

Fast forward to today and the pandemic has certainly revealed the huge weaknesses in both the Mexican and U.S. health care systems. Being back in the U.S. (Tucson) for a few years (ironically mostly because of being priced out of Lakeside rents due to the "Trump bump") we've experienced the good and bad of both systems. Can't tell you how much we miss our Lakeside doctors and dentists - not just because of the quality of the care but because of sheer accessibility (being able to be seen in days not weeks directly by the caregiver vs. long waits and endless paperwork and wasting time with insurance companies and underlings at the doctor's offices). On the other hand we're very happy to have missed living through AMLO's management of COVID (he did the impossible and made Trump look good by comparison) and to have the safety net that Medicare provides (patchy as it is). Seems like the best-case scenario is to have the resources to self-insure down there and just go to the best private hospitals in Guad when the need arises just like the wealthy Tapatios do, but if you have that kind of money you can probably afford to live anywhere. That's a long way from "retire in Mexico and live on your Social Security check" but I guess we have to admit those days ended quite awhile ago.