A growing fraction of Oaxaca City [1] lodgings fall into these categories. On city residential side streets, often several blocks removed from the tourist zone, are many of the casas de huéspedes (guesthouses), bed-and-breakfasts, and homes where increasing numbers of families are renting rooms to visitors.
Such lodgings vary from scruffy to spic-and-span, humble to luxurious. At minimum, you can expect a plain room, a shared toilet and hot-water shower, and plenty of atmosphere for your money. Rates are highest in Oaxaca City [1] and the Bahías de Huatulco [2], ranging between $20 and about $100 for two. Discounts are often available for long-term stays.
Note: Oaxaca bed-and-breakfasts are generally (but not always) rather expensive, since they are a lodging style sought out by mostly North American travelers accustomed to paying high prices. If you want to save money, check out the Mexican version of the same thing, the homier casa de huéspedes.
In addition to the guesthouse, bed-and-breakfast, and homestay-style lodgings listed in the destination sections of this guide, you should also consult the many classified advertisements of the local tourist newspapers, especially in Oaxaca City [1] and Puerto Escondido [3], and travel websites in the destination sections and the Internet Resources section [4] of this guide. Moreover, Spanish Language School, common in Oaxaca City [1], usually recommends a list of homestays (family accommodations) to their participants.
Links:
[1] http://www.moon.com/destinations/oaxaca/oaxaca-city
[2] http://www.moon.com/destinations/oaxaca/pacific-resorts/bahias-de-huatulco
[3] http://www.moon.com/destinations/oaxaca/pacific-resorts/puerto-escondido
[4] http://www.moon.com/destinations/oaxaca/resources/internet-resources