Many here have wells from which they draw their water, others use city tap water, some have a combo of both. The water quality is probably fine, however the infrastructure by which the water gets from point A to point B is the issue. Some of the old conduits or canals are deteriorating. These deteriorating canals allow unsafe water in and that gets transported into some homes. I think this is why most choose to use bottled water.
When doing our remodel we had intend to use well water. Our household system was designed with this in mind. Our well was dug, and I asked to have the water tested. Well let's just say we now have a LARGE cistern storage tank for City water, and use our well water for the pool, and for watering.
For the past nearly 5 years we have purchased Cristal water from the big delivery trucks. The price for that water has escalated, The large bottles, or garrafones hold 20liters. When we first started with Cristal I believe the bottles were 15 or 16 pesos. They are now 21 pesos.
Recently a little coffee and sandwich shop that was located next to the entrance to my local Chedraui closed and in it's place came a purified water shop.
The process is pretty cool. They take regular potable water, run it through a bunch of filters, then pass it through UV, and voila, clean purified water. And look - only 10pesos!
Here are some of the tanks and filters