Across the border from El Paso, Texas, a mass exodus triggered by a murderous war for drug trafficking routes into the United States has left huge swaths of Ciudad Juarez uninhabited, rocking Mexican home builders and gutting the large industrial city of its upwardly mobile working class.
Residents are fleeing many towns along the Mexican border, but the migration is perhaps most acutely felt in Juarez, which until recently was among Mexico's fastest-growing cities, its industrial jobs attracting immigrants from across the country and Central America.
Before the border violence escalated, Mexico's biggest builders were successfully weathering that nation's worst recession since the 1930s, banking on the quick assembly of millions of new homes fueled by government-subsidized mortgages. But now they're canceling projects in Juarez and other border cities, and abandoned homes are attracting the side effects of Mexico's drug war: violence and extortion.
In May, Consorcio Ara, Mexico's third-largest home builder by market share, halted a housing development in Reynosa, a border city in the state of Tamaulipas, after squatters demanded payment in exchange for protection. Ara also abandoned a development in Ciudad Juarez after repeated threats and robberies.
"We decided it best to finish the work we had started and leave the investment for another time," said Germán Ahumada Russek, Ara's chief executive.
A Construction Surge to Meet Huge Demand
The economic situation underlying the current crisis is far different than it was during the peso devaluation crisis of 1994, which sent interest rates surging and led to widespread mortgage defaults. Now, the Mexican government has imposed rigorous credit standards and capitalized a collective mortgage fund with mandatory contributions by workers. The model was hailed as foolproof, and the Mexican government sold billions in bonds supported by new homeowners' monthly mortgage payments.
Mexico's five main home builders worked rapidly to satisfy what the government estimated in 2009 was a 8.5-million unit deficit in housing. Empresas Ica, Mexico's biggest construction firm, opened a prefab housing plant in September where 90-square-meter homes can be assembled in as little as three hours.
Today, more than 100,000 houses backed by government mortgages in Ciudad Juarez now stand empty, almost all of them vandalized, the daily newspaper El Diario reported. The population of Juarez has diminished, and unemployment has shot up from virtually zero to 40% as the violence has taken on a fever pitch.
"Some people have gone back to where they are originally from because of the economy," said Hector Arcalus, Juarez's city manager, adding that at least 15 new housing developments had been planned for the city.
From Prosperity to Murder Capital of Mexico
Ciudad Juarez, until recent years the emblem of the prosperity Mexico enjoyed in the 1990s, is now the country's undisputed murder capital, as hundreds of abandoned and vandalized homes at the Riberas del Bravo project attest. The new development of two- and three-room homes, built expressly for maquila workers, is now a wasteland of bloody shootouts.
Diana Olvera Castro, 29, and her husband, a maquila worker, live with their three children in a downtrodden abyss of vandalized homes, missing doors and windows and tagged with gang graffiti.
"They put me in charge of the home next door. The following day they started dismantling it. We preserved what we could but the following night they came back," she said. "You can't leave, not even during the day, or you'll come back to find your house in shambles."
Riberas del Bravo is a microcosm of Juarez's steady destruction. "It's not the worst of the slums or the squatter settlements where we're seeing this violence, it's these middle class developments that are becoming increasingly dangerous places to live," said David Shirk, head of the Transborder Institute at the University of San Diego.
"It's the people who were working at the maquilas, who lost economic opportunities that were created for them by globalization, so it's their kids and their young family members that fill the ranks of the so-called ni-ni's – those who neither study nor work," he said.
Juarez has seen an estimated 7,000 killings since late 2007, when President Felipe Calderon took office and declared war on drug traffickers and the criminal organizations who had gained strength in the power vacuum of Colombia. But until the violence abates and the jobs return, this once-thriving city will continue to unravel.