In Los Cabos, wealth disparity in the form of luxury and poverty coexist, and while they’re not found side by side, you wouldn’t have to drive very far to see examples of each. The luxury is well chronicled, from the upscale coastal resorts that welcome four million tourists annually to the multi-million-dollar second homes with ocean views and access to world-class golf courses.
The poverty, which in its most extreme form includes makeshift settlements without electricity, water, or sewage services, is less chronicled for obvious reasons. It’s hard to look at, and indeed, the poorest neighborhoods of Los Cabos are seldom ever seen by tourists, except perhaps for those who are brought via taxi or private transportation along the toll road from the Los Cabos International Airport to Cabo San Lucas.
Where does Los Cabos rank in terms of poverty rates?
Los Cabos is hardly unique in having residents that represent both ends of the economic spectrum. The same could be said for virtually any city or popular tourist destination worldwide. However, the case in Los Cabos is unique and requires some site-specific context. Statistically speaking, for example, it has less poverty than any other major tourist destination in Mexico.
According to 2020 governmental statistics, the rate of moderate poverty is lower in Los Cabos (26.9%) than in Cancún (31.9%), Puerto Vallarta (32.1%), or Mexico City (29.5%). Not coincidentally, perhaps, Los Cabos residents also have the highest monthly salaries among these destinations, according to figures from the first quarter of 2025. Not only that, but Baja California Sur, the state in which Los Cabos is located, now has the lowest poverty rate among working individuals in Mexico.
These working conditions are a big part of the reason Baja California Sur, and Los Cabos in particular, have experienced such a massive population boom in recent decades. Over half the people in the state are originally from someplace else, but were drawn here by opportunities for abundant jobs and good wages, with many of these jobs found in the growing tourism sector.
Nonetheless, inequality exists, as President Claudia Sheinbaum pointed out during her last visit to the area in May. “When I was in Los Cabos, the last time I was campaigning, I said — and I still think so — that this terrible inequality seen in Los Cabos is perhaps seen in few places in the country, and that’s even though Mexico, and particularly during the neoliberal period, grew with this enormous inequality: hotel rooms costing hundreds of dollars, and the workers who work in these hotels barely have access to housing.”
Why affordable housing is such a problem in Los Cabos
President Sheinbaum hit the nail on the head by zeroing in on housing as the main contributor to poverty in Los Cabos. It’s one thing to have a nice job and make a good living in a place with some of the highest average wages in the country, but what does it mean if you can’t find an affordable place to live?
Los Cabos’ astonishing 14.4% annual population growth has predictably led to a massive housing crisis, with an estimated 50,000 workers in the tourism sector unable to find an affordable home. Instead, they typically rent or live with family members, with rents, like prices for houses, skyrocketing in recent years based on the enormous demand.
Given this undeniable need, the president had earmarked Los Cabos to receive 17,400 new homes as part of her nationwide plan to increase affordable housing. Unfortunately, the Los Cabos portion of this plan has already been suspended due to the difficulty in buying land for the project. As you might expect, real estate is expensive in Los Cabos. The most extreme example of this is the 2.3-acre El Cielo 2 oceanfront homesite at Maravilla, which hit the market in 2022, listed at a cool $90 million.
Maravilla is one of the many real estate developments disproportionately targeted at the wealthy, most of whom didn’t live in Los Cabos before their purchase, and are seeking a secondary home rather than a primary residence. As of 2025, for instance, the average home price in the Los Cabos real estate market is now US $727,000, with the majority of these homes found in upscale developments situated along the coast.
However, even buying land in less desirable areas for locals comes at a steep price (2,500 pesos per square meter), one that Mexico’s government found hard to justify.
What extreme poverty looks like in Los Cabos
One of the consequences of the ongoing affordable housing crisis is that there are now thousands of people in Los Cabos living in high-risk areas. These are places like arroyos that are extremely vulnerable in the case of hurricanes, particularly when the homes there are makeshift ones that lack not only proper building materials and permits but also basic services.
How many of these makeshift communities are there? Way too many. There were 144 neighborhoods with “irregular settlements” as of 2023, with the vast majority of them found in either Cabo San Lucas (70) or San José del Cabo (52). The number of people living in these makeshift communities is still uncertain. But it is estimated to be around 20,000, a figure that roughly correlates with the 4.77% of Los Cabos residents believed to be living in extreme poverty.
However, it’s not just those living in the worst conditions who are victims of the housing crisis, as those in more stable neighborhoods are often paying an exorbitant amount of their monthly salaries to cover their rents.
What can be done about the housing problems in Los Cabos?
The ejidos (or communal ownership groups) that the government was negotiating with to buy land for new housing units have a right to seek a fair return for their properties based on the current real estate market, even if it makes finding solutions more difficult. But it’s also fair to say that the need for solutions is becoming increasingly more urgent.
Yes, the tourists who pay a pretty penny to visit Los Cabos and who account for a whopping 38% of the local GDP deserve great service and accommodations. On the other hand, the people who make this place their home, many of whom work in the hospitality industry, deserve something too, which at the very least is not just a decent salary, but an affordable place to live.
Chris Sands is the Cabo San Lucas local expert for the USA Today travel website 10 Best, writer of Fodor’s Los Cabos travel guidebook and a contributor to numerous websites and publications, including Tasting Table, Marriott Bonvoy Traveler, Forbes Travel Guide, Porthole Cruise, Cabo Living and Mexico News Daily. His specialty is travel-related content and lifestyle features focused on food, wine and golf.
