BajaNomad - Property Values?

Property Values?

Ricky - 5-11-2020 at 08:36 PM

Thinking about purchasing a condo in the Rosarito area before the current crisis. Now, I love Baja, and chomping at the bit to return. BUT what does the group here think of the pre - closure prices vs the current market? I’m sure prices should drop, but by how much? 10%, 25% 50%? Inquiring mind. Thanks in advance!

RFClark - 5-11-2020 at 08:51 PM

Prices will probably increase this fall not go down. There seems to be a lot of interest.

mtgoat666 - 5-11-2020 at 10:41 PM

Quote: Originally posted by lencho

Quote: Originally posted by RFClark

There seems to be a lot of interest.

That surprises me in face of the current uncertainty; where are you seeing this interest? Are you in real estate?

economy is in dumps, usa unemployment is at 25%,... mexico seems to be in same boat as usa,... y'all be dreaming if you think demand will be there to sustain prices!
economy will take years to recover

mtgoat666 - 5-11-2020 at 10:43 PM

Quote: Originally posted by Ricky

Thinking about purchasing a condo in the Rosarito area before the current crisis. Now, I love Baja, and chomping at the bit to return. BUT what does the group here think of the pre - closure prices vs the current market? I’m sure prices should drop, but by how much? 10%, 25% 50%? Inquiring mind. Thanks in advance!

who knows???

it's mexico, property title is very nebulous (a crap shoot), do not invest more than you can afford to lose!

Don Pisto - 5-11-2020 at 11:02 PM

rent something and wait it out......nothing but uncertainty out there

RFClark - 5-11-2020 at 11:10 PM

Personally, I think that people are planning to get out of the U.S. before the end of the year. South of San Felipe there have been a number of beach houses with offers recently. During and just before the lockdown.

chuckie - 5-12-2020 at 03:58 AM

What PT Barnum said.....

BajaMama - 5-12-2020 at 06:52 AM

If I recall correctly, in the Punta Chivato area prices tanked in the mid to late 2000s as a result of the great recession. It always seemed to me that Baja had more tourists/temporary-permanent residents prior to 2007 but never really recovered. There were so many little shops that never re-opened in Mulegé and there seemed to be more people overall. Maybe Americans just drifted further south? I am wondering the same. What will happen to property values in BCS and Baja as a result of covid 19? Will the lack of HQ medical care in the face of a deadly virus be a deal breaker for older Americans wanting to spend time in Baja?

wilderone - 5-12-2020 at 07:27 AM

Check out the listings online - see how long they've been on the market. There are local realtors you can talk with to get their opinion. If you've got a few months, check the number of listings now, and compare a month from now - compare with new listings, and see if the prices came down. If a unit has been on the market for a year, probably willing to negotiate. Also might be some long term rentals available instead (Las Gaviotas?). Consider that once you buy, that's your primary go-to destination. If you like Baja generally, you might want to roam - not spend all your time in Rosarito. Airbnb rentals are popular - some seasonal homeowners like a house-sitter for months at a time. Thing is, there are options without incurring the full financial responsibility. Or buy a trailer of some sort - park it for a couple months at a time somewhere.

Lee - 5-12-2020 at 10:45 AM

Quote: Originally posted by Ricky

Too many variables. Are you planning to f/t? How well do you know the area? 2nd home? Have you written off the rest of Baja?

My advice: rent, house sit, hang out in Rosarito. Do not buy right now. Baja RE is effected by RE up North. No one knows how all the BS right now will play out. If anything, I'd say prices will come down, may be way down, before going up.

Resale, in my opinion, is an iffy situation. Unless you're in for the long haul, getting your money out could take a long, long time.

sd - 5-12-2020 at 11:17 AM

California -

Depression Era level of unemployment.

Deferred mortgage payments. Deferred rent payments.

Failure of restaurants and business is just starting.

Open ended Pandemic.

We will see large reduction of values here, and it follows to Baja. Yours is not an investment, but a lifestyle choice. If you stay a minimum of 6 months a year, go enjoy if you can afford to. Renting would be the best start.

ncampion - 5-12-2020 at 12:01 PM

Don't think I could give away my house in Loreto right now or in the foreseeable future.

thebajarunner - 5-12-2020 at 02:17 PM

Last time we had a big economic downturn I pursued several possible deals in Baja.
Strangely, even with a serious down market, and values seeming to plummet, the asking prices went up for lots of stuff I was looking at.
There was quite a bit of discussion on this board about the illogical trends of pricing, given the slack times.

I am no expert in Mexican real estate. Owned a lot in La Mision years ago, but when I discovered the the ejido issues were so complex I gave it to a good friend down there. Happy to make him happy.

As always, in tough times, "cash talks" But I would not count on a major downturn in prices if history holds. Even in a slack market with little sales, prices tend to stay up in Baja.

I have been involved in major residential development in Central Cal for forty years, and right now, even in hard times, we are not cutting prices, and we are selling a couple houses a week.

Bottom line is real simple.....?quien sabe?? Who Knows??!!

Lee - 5-12-2020 at 04:03 PM

Quote: Originally posted by thebajarunner

Last time we had a big economic downturn I pursued several possible deals in Baja.
Strangely, even with a serious down market, and values seeming to plummet, the asking prices went up for lots of stuff I was looking at.

Prior to '08, Todos Santos' market was a feeding frenzy. Cash in hand buyers lining up. Then it dropped off drastically. No one was buying in the same way. Still, prices didn't drop. Remained the same and even appreciated.

Don't know the percentage of cash vs. mortgage buyers. I believe most buyers in the Todos area are p/t and buying a second home. Think most sellers know these buyers have cash.

BajaMama - 5-13-2020 at 12:50 PM

It will be interesting to watch. We will either re-build or buy an existing home in 2-5 years. Hope to spend 3-6 months a year. That's the current plan anyway.....

Alm - 5-13-2020 at 01:48 PM

Quote: Originally posted by Lee

I remember selling my condo in Canada in 2011, well after the crisis.

Prices went up to pre-2008 levels but nobody was buying. Sales volumes were lower than at the bottom of 2008. Home is sitting on the market 9 months - this is a heck of a time in a big city, you take it off the market and re-list next year. If you can wait.

Those who couldn't wait, lowered the price. Occasionally an attractive property was causing a bidding war but mostly it was competition of sellers. Often several condos on sale in a low-rise building, one drops the price and 5 others drop lower yet. On the average, detached homes dropped by 1%, condos by 7-8% and there was a huge disparity btw the majority who didn't drop (and didn't sell for a year or two), and those who sold with 15-20% drop. With renovations, realtors commission and if there was mortgage in the picture, those who bought less than 5 years earlier had lost ~30-60K. Cash buyers fared better.

This lasted 2 or 3 years, until 2014. If your time horizon is 10 years or longer you'll probably get your money back.

[Edited on 5-16-2020 by Alm]

Hook - 5-14-2020 at 08:20 AM

The ASKING prices in San Carlos Sonora, after the 2008 downturn, stayed flat or continued to rise, slightly; much to the surprise of many of us.

I concluded there were a couple factors involved in this. Maybe some conclusions can be drawn from this for other areas.

Probably the foremost reason had two related factors.

One, the sellers purchase of the home was not financed; they paid cash for it, probably before the run-up in prices of the early 2000s. So, no mortgage payments to service.

And, two, real estate in Mexico is actually very cheap to hold onto, while you wait to get your price. Even combining the cost of a fideicomiso, property taxes, utilities and maybe a gardener, it's dirt cheap to hold onto property, compared to the US. So, there isnt a monetary incentive to lower your asking price. The house isn't costing you that much to hold onto.

And, since the vast majority of homeowners in THIS area, still owned a home in the US or Canada, they always had a place to retreat to. They didnt have to have the cash from the sale of the 2nd home, to continue living elsewhere. And that second home in Mexico was still a fun, cheap place to vacation. A further reduction in strong motivation to sell.

All that SEEMED to change by about 2010. I say SEEMED, because, it was (and still is) difficult to get hard and fast statistics on what a home ACTUALLY ENDED UP SELLING FOR. While an MLS of sorts was created by the real estate agents in town, it never listed (and still doesnt, I dont believe) WHAT A HOME ACTUALLY SOLD FOR. You had to get that by word of mouth from friends, neighbors, friendly RE agents, etc. An outside shopping buyer might have trouble getting that info.

Naturally, if homes were actually being sold at a large discount to the asking price, that isn't something that real estate agents would want to reveal. They are mostly employed by sellers and their commission is based on the selling price, of course. If a buyer was unaware that most homes were actually selling for 60% of the posted asking price, they might offer full asking price. Or maybe only 10% less.

Indeed, word on the street from about 2010-2014 was never offer more than 60% of the asking price. In many cases, it worked.

Now, a strong motivating factor to sell was coming into play. In a retirement area like San Carlos, people seem to come here in 10 year waves. It started in the 70s, and accelerated rapidly in the 80s and 90s and early 2000s. Even right around the 2008 downturn, there were a large number of persons who retired (myself included) and moved to San Carlos. That certainly helped prop up RE values, during that downturn.

Corresponding to this are people who are growing too old to be away from their health care systems in the US and Canada. Age takes it's toll. So, there seemed to be a corresponding exodus at those ten year intervals. Some who retired before age 60, might actually stay for TWO ten year intervals (or a portion of the second period).

But the horrific news stories of the cartel violence and the collusion by many levels of the Mexican government, began to really take its toll on potential buyers around 2014, or so. This was coupled with the aging baby boomers starting to return home in greater numbers than the Gen X people could replace them.

This downturn, due to the virus, could easily exceed the "Great Recession". I would not be buying right now, unless you are getting RE at a deep discount to the asking price. One never knows the level of desperation to sell in a sellers mind. Health reason? Travel restrictions? Cartel violence? Increase in property crime, due to incompetent policing?

Unless a property is very unique in some way, I think offering no more than 60% still makes sense. Especially in properties (like many in BCS) that require a flight or a multi-day drive on a single lane road to get to. Who knows what the airlines are going to do after all this? Who knows what routes they will cut out?

Ricky - 5-14-2020 at 11:28 PM

Thanks to everyone for their insight!

CasaMaximus - 9-17-2020 at 01:52 PM

I know in Todos Santos they have gone up, people from the North working from “home”. Most Bay Area tech firms do not care where home is. Houses that were $250-$300k are now $350-$400k.

RocketJSquirrel - 9-17-2020 at 02:09 PM

Quote: Originally posted by RFClark

Prices will probably increase this fall not go down. There seems to be a lot of interest.

I agree. The house across from my place was just listed for a ridiculous price.

People are bailing out of urban USA looking for safer places. I read an article yesterday where real estate prices in Aspen Co, for example, are up 440% over last August.

These days you can work from anywhere. Why not live near decent people? I know I do.

ncampion wrote: We will see large reduction of values here, and it follows to Baja.

I don't agree. Mexico is actually more stable than the USA. People here are used to adversity. They don't expect their government to solve every bit of frustration they have. They know it won't.

Smart people are making the move.

Nonetheless, we are all full of chit and no one can really predict where all this goes. If you really think you can...

SFandH - 9-18-2020 at 08:49 AM

Quote: Originally posted by ncampion

Don't think I could give away my house in Loreto right now or in the foreseeable future.

Give it to me. I'll take it. I'll even pay to have the paperwork completed. :cool:

BajaTed - 9-18-2020 at 12:13 PM

Northern Baja:
Lets see;
First; only 5% of the world population gets to live by the ocean.
Best weather around the continental U.S,
My home sits on solid rock, it's mostly made of concrete and won't burn or fall down.

CasaMaximus - 9-18-2020 at 01:37 PM

Quote: Originally posted by SFandH

Quote: Originally posted by ncampion

Don't think I could give away my house in Loreto right now or in the foreseeable future.

Give it to me. I'll take it. I'll even pay to have the paperwork completed. :cool:

I feel you. I just donated 3 one-half acre parcels in a gated community to a local charity and paid their property association fees forward a few months mostly out of concern the property owners association is becoming insolvent.

CasaMaximus - 10-12-2020 at 08:50 PM

I spent the day touring property in the La Paz Municipality of Todos Santos today and report starter property of 1500 sf are listed above $206 per square feet and homes of substance in excess of $250 per sf and up.

My sense is $200 is a value but the difference between the starter and statement properties is an additional $100 per square feet. Best of luck in your search.

phmilo - 1-3-2021 at 09:54 AM

We've been visiting and 'shopping' real estate in Todos/Pescadero for several years. Prices have gone up steadily, but the market is very opaque. Lots of houses go on and off the market, and asking prices vs. value seem to be pretty disconnected.

It seemed to me that there were a bunch of places where the condition and quality didn't match the price and those sat for a long time. Well built/maintained places with nice features/good views/quality construction seemed to move off the market consistently.

We made a couple of offers on places that had issues that I felt could be easily overcome. These are things that I felt made them sit on the market with little interest. I priced the offers accordingly at 20-35% less than asking prices. This is a pretty steep discount, but I was looking for a value and not in a need to buy. Even with covid, people seemed to hold fast to unreasonable expectations.

It looks like the winter season did/is happening this year, and property is moving again. I'm sure it's a mix of pent up demand and people's desire to move on. We had negotiated to ~325K$ vs. an ask of 400K$ back in March. We were re-approached several times by the seller, but they never moved much on their ask. The recently re-listed at 345K and it now has an offer (not ours), so I expect it's pretty close to our 325K$. We finally got an offer accepted on another property and are working through the closing process now. I think we wound up with a better value in the property. The place is nicer and has more amenities. We started at 20% less than ask and settle at about 14% less. The place will need only minor cosmetic fixes and upgrades for now.

We are right at the low end of CasaMaximus range 250-300/ft^2. And I think that represents an accurate assessment of the current market.

Construction prices are still cheap, so there is a lot of value in building. But what is the value of having a usable place and not having to deal with building in MX?

Howard - 1-3-2021 at 10:43 AM

Quote: Originally posted by phmilo

Construction prices are still cheap, so there is a lot of value in building. But what is the value of having a usable place and not having to deal with building in MX?

Priceless

Bajabus - 1-3-2021 at 10:53 AM

We have had our property just south of Elias Calles since the early 90's. The house is not worth anything but over the years many have made offers on the land. Each higher than the last. We are still holding out and I see no evidence of good ocean property going down unless there really is some sort of cataclysmic event.

surabi - 1-3-2021 at 01:35 PM

Quote: Originally posted by phmilo

Construction prices are still cheap, so there is a lot of value in building. But what is the value of having a usable place and not having to deal with building in MX?

Every so often I check out real estate in Todos Santos, as my daughter and grandkids live there and she'd love me to live close by. What I have consistently noticed is that almost no house there, whether it's $200,000 or 2 million, has a well-designed kitchen. It's like no builder there knows anything about designing a workable kitchen. The fridge is always stuck over in a concrete box at the edge of the kitchen, like an afterthought, with no counter space next to it to put things down when putting away shopping, or taking things out- the whole kitchen layout is ill-conceived.

I had my house built to my own design on the mainland and while I admit that it was often a stressful process, there were no major hassles and I got exactly the house I wanted.

That said, unless you speak Spanish, have some construction knowledge yourself, and enjoy the process of having a home built from the ground up, buying something already built may be preferable.

pacificobob - 1-3-2021 at 03:50 PM

i have built here in Mexico several times. never had an issue. i do have knowledge of construction and the Spanish language however.
i think if you get references, see completed work by the builder, a have an agreement regarding price, schedule and are present [or a representative] for everyday of the work, you will be happy with the result. if the owner is unable to monitor the project, get a knowledgeable person to "mind the store" ...pay them well to monitor build quality, and progress.

Lee - 1-3-2021 at 04:25 PM

Quote: Originally posted by surabi

I had my house built to my own design on the mainland and while I admit that it was often a stressful process, there were no major hassles and I got exactly the house I wanted.

Hired a Santa Fe architect (for a Todos home). Guessing home designs that don't work not done by a pro but the home owner -- even then, how is it possible to screw up a kitchen, assuming some thought was given to home design? Don't go cheap on design.

Mulege Canuck - 1-3-2021 at 08:19 PM

Never build your dream house, buy someone else’s.

I love Baja, but every year there are places people have just walked away from. Put a low ball offer in and see what happens. Only pay what you can walk away from. I would not consider buying property in Mexico an investment.

surabi - 1-3-2021 at 08:57 PM

Quote: Originally posted by Lee

Quote: Originally posted by surabi

I had my house built to my own design on the mainland and while I admit that it was often a stressful process, there were no major hassles and I got exactly the house I wanted.

Actually, most of the homes I was talking about that have terrible kitchen layouts were designed by supposedly professional architects or built by pro contractors.

When it comes to kitchens, there is something known as the Golden Triangle of kitchen design- the fridge, the stove, and the sink should form a triangle. It doesn't matter how long each of the legs of the triangle are, but following that model results in kitchens which are easy to move around in and efficient.

I designed my own kitchen, and did a lot of research on kitchen design when I did it. I ended up with a very good kitchen- not particularly big, but everything is super convenient. Counter space right next to the fridge to set things you are putting in or taking out, space for dirty dishes next to the sink, ample counter space on both sides of the stove for food prep, drawers instead of cupboards and no high wall cupboards you need a stool to get things down from, or the tops of which accumulate an inch of dust.

[Edited on 1-4-2021 by surabi]

Alan - 1-4-2021 at 07:43 AM

The other side of the equation when considering purchasing property in Mexico is the price of the peso. Many years ago when I purchased my home the peso was trading at 10:1. If I were to sell today for even the exact same price I purchased it, in the eyes of Mexico I would have doubled my purchase price as the peso is now closer to 20:1 and I would need to pay Capital Gains taxes on that profit so in dollars it would actually be a loss.

[Edited on 1-4-2021 by Alan]

brucedog - 1-4-2021 at 07:57 AM

Quote: Originally posted by Alan

The other side of the equation when considering purchasing property in Mexico is the price of the peso. Many years ago when I purchased my home the peso was trading at 10:1. If I were to sell today for even the exact same price I purchased it, in the eyes of Mexico I would have doubled my purchase price as the peso is now closer to 20:1 and I would need to pay Capital Gains taxes on that profit so in dollars it would actually be a loss.

[Edited on 1-4-2021 by Alan]

Our builder warned about this and we upped the value of the build on the permit. This makes the permit more expensive but gives you a higher start value (initial purchase price is the value you state on the building permit). We don't plan on selling but it's nice if we ever need to.

Bajabus - 1-4-2021 at 09:04 AM

Save all your receipts to count against your capital gains. Don't get talked into declaring a lower value than you actually paid for the property. Get your permanent residency.

Alan - 1-4-2021 at 09:22 AM

Quote: Originally posted by brucedog

Quote: Originally posted by Alan

Also property taxes are next to nothing and there is something like a 50% discount if you pay them early.

Cancamo - 1-4-2021 at 09:45 AM

Property Tax Discounts, (Predial),

20% paid in January
15% paid in February
10% paid in March

50% with INAPAM card, (Folks over 60).

surabi - 1-4-2021 at 09:58 AM

Quote: Originally posted by Bajabus

Save all your receipts to count against your capital gains. Don't get talked into declaring a lower value than you actually paid for the property. Get your permanent residency.

The only receipts you can deduct are official facturas issued to your RFC#.

Cancamo - 1-4-2021 at 09:59 AM

INAPAM
Instituto Nacional De Las Personas Mayoras Adultas

Von - 1-4-2021 at 09:13 PM

Rosarito? Im looking on the Oregon coast just as cheap to buy a plot and build a 1200 sqft house. 10xs safer cleaner , peaceful and worth it. Good luck ,weve been in rosarito since the 30s boy has it changed My grandfather bought when it was 1 or 2 cars an hr out front on blvd 2000 two lane black top. Its Corrupt, loud, stinks , and people drive so well and respectful not

maybe in a hundred yrs things will change. Good luck