In a global economy we are all connected, and there is perhaps no country more dependent on the US than Mexico. Nearly 80% of Mexico's exports go into the US and about 10% of its population work in the US according to some estimates. So it should be a no brainer that Mexico's economy and real estate market should be hurt by trouble to the north. But not so fast! Mexico's has a far more robust economy than in the past that experienced major financial crashes (inflation was 35% and lending rates exceeded 59% in 1995). Economic reforms encouraged trade and foreign investment which reduced external debt and reduced trade deficits. While a slowdown in exports is expected in 2008, one of Mexico's greatest assets is its oil. Mexico's nationalized oil industry was the sixth largest in the world in 2006, producing 3.71 million barrels a day. This provides steady revenue to the government, and has increased due to $130 per barrel prices. Mexico's lending practices are far more conservative than in the US which reduces risk of mass foreclosures. There is no such thing as an adjustable rate mortgage in Mexico and most loans require a substantial down payment and extensive credit checks. The mortgage backed security market exists but is very small compared to the US (US$5.8 billion by 2008 EIU). The predicted global economic slowdown in 2008, will have a minor effect on Mexico's real estate market because there are just too many factors that favor growth. The market has many undervalued areas, demand is growing, infrastructure is improving, foreign direct investments are increasing, the country is getting richer, etc., etc. The US economic slowdown is temporary, and so is the opportunity in the Mexico real estate market. Thoughts? Sources http://www.eia.doe.gov/emeu/cabs/Mexico/Oil.html http://www.latinbusinesschronicle.com/app/article.aspx?id=2503 Medium and long-term financing: Structured finance. EIU: Country Finance: Mexico, 2008.