BajaNomad - Baja real estate prices

Baja real estate prices

k-rico - 2-17-2009 at 08:15 AM

Buy low, sell high - simple enough, but so hard to do. You need to go against the flow and put down some hard earned cash.

If you had to predict where the real estate prices in the TJ/Ensenada corridor will be 10 years from now, what would you say?

Higher, lower, about the same, and why?

Given that the baja economy is greatly affected by the US economy, especially in the north, and the pig in the python boomer demographics will soon be in full swing retirement, maybe buying today at highly discounted prices will look like a wise move 10 years from now.

Waddya think?

flyfishinPam - 2-17-2009 at 08:37 AM

if you're a speculator only here to make money on the RE transaction then you'd want to buy low sell high but if you want the property for personal reasons it doesn't matter. the market will mirror whatever happens in the USA. so the question is now how will the US economy perform 10 years from now. i personally don't give a crap anymore just enjoying life and in a nice place to do it.

Bajaboy - 2-17-2009 at 08:40 AM

If you're looking strictly for a return, I'd put your money in the market. I do think that area will increase in value just as the rest of Southern California. But there are so many "ifs" along the way. If you plan on using the property then it might make more sense.

Zac

DENNIS - 2-17-2009 at 08:42 AM

Quote:

Originally posted by k-rico
maybe buying today at highly discounted prices will look like a wise move 10 years from now.

Waddya think?

The market here has come to a stand-still. There are no buyers. People are discounting their properties to rock bottom but, still there are no buyers. Hearing of an occasional sale or purchase is unusual, big news.

CaboRon - 2-17-2009 at 08:47 AM

Quote:

Originally posted by DENNIS

Quote:

Originally posted by k-rico
maybe buying today at highly discounted prices will look like a wise move 10 years from now.

Waddya think?

Same here Dennis,

I have counted over two hundred for sale signs in Todos Santos.

CaboRon

Bajajorge - 2-17-2009 at 08:57 AM

The Baja Boom has now turned into the Baja Bust. Just as the real estate market in the US, the bottom has fallen out big time. In San Felipe one of the better custom home builders(a Mexican local) had over 200 housing starts during the "Boom". As of about November 2008, he had only 3 housing starts. Ain't the economy grand?

flyfishinPam - 2-17-2009 at 09:00 AM

10 years from now why don't you become a Mexican citizen then buy ejido land and sell after ten years when you can make money on it? or just squat on some land for five years and its yours practically free. what the hell!

Woooosh - 2-17-2009 at 09:22 AM

Quote:

Originally posted by flyfishinPam
if you're a speculator only here to make money on the RE transaction then you'd want to buy low sell high but if you want the property for personal reasons it doesn't matter. the market will mirror whatever happens in the USA. so the question is now how will the US economy perform 10 years from now. i personally don't give a crap anymore just enjoying life and in a nice place to do it.

Totally agree. If it's your home and it is paid for- it doesn't matter what the current market value is. I think the USA will need to make a full housing recovery before Baja even becomes noticed by investors again. It may never recover if the security situation doesn't improve.

The Baja boom in norte was about people who thought they were cash rich- looking to maximaize their investment portfolios. It wasn't even making sense before the bust when those OC developers started building million dollar homes in Puerto Nuevo. I think they all believed each others hype- like the Donald.

k-rico - 2-17-2009 at 09:35 AM

Interesting replies. A couple have pointed out that the market is at rock bottom, maybe so, maybe it will go lower. But that is exactly my point.

Buy low.

I know there are other places to put money. I've just been thinking lately that maybe, because it is a buyer's market, perhaps taking advantage of the situation is a good idea. I already own 3 properties in the TJ area. I live in one and rent the others (to Mexicans). Just thinking another rental might be good - reliable 6% or so annual return on investment and growth potential.

"When there's blood in the streets, buy real estate." As the saying goes.

DianaT - 2-17-2009 at 09:38 AM

Anyone know what has been happening to prices and selling in the more out of the way places---away from the bigger tourist and real estate boom areas?

Thanks
Diane

Barry A. - 2-17-2009 at 09:49 AM

K-rico------------long term (10 yrs plus) I believe your thinking is right on. If this type of thinking does not pan out, it will only be because EVERYTHING has tanked, and then who cares anyway---------we will all be in the same fix.

Me, I am betting on the the Market, as History tells me that is the best thing to do--------but I sold some stock and paid off ALL my debt in mid-2007 because I did not like what I saw even then--------now I am thanking my lucky stars--------50% luck, 50% paying attention.

I am fully invested now other than about $100K in Money M. funds and GNMA Funds, and waiting--------stick with what you know most about, and wait for better times to reward you-------------that's what I think. (for what it's worth---:rolleyes

Barry

BajaGringo - 2-17-2009 at 09:56 AM

Quote:

Originally posted by jdtrotter
Anyone know what has been happening to prices and selling in the more out of the way places---away from the bigger tourist and real estate boom areas?

Thanks
Diane

Those areas did not see a big spike in the "boom" Diane, and although the market is soft, have not taken a big hit either. It is in those areas what RE activity exists today in Baja is happening.

Bajaboy - 2-17-2009 at 10:12 AM

Quote:

Originally posted by k-rico
Interesting replies. A couple have pointed out that the market is at rock bottom, maybe so, maybe it will go lower. But that is exactly my point.

Buy low.

I know there are other places to put money. I've just been thinking lately that maybe, because it is a buyer's market, perhaps taking advantage of the situation is a good idea. I already own 3 properties in the TJ area. I live in one and rent the others (to Mexicans). Just thinking another rental might be good - reliable 6% or so annual return on investment and growth potential.

"When there's blood in the streets, buy real estate." As the saying goes.

So why not invest in San Diego area? I would not want all of my real estate holdings in Mexico. We have been poking our noses around and there are some incredible deals to be had. But, I am with Barry...the market will turn-around well before real estate. Just in case I am wrong, though, I put some money into a real estate fund.

BMG - 2-17-2009 at 10:19 AM

Quote:

Originally posted by BajaGringo

Quote:

Originally posted by jdtrotter
Anyone know what has been happening to prices and selling in the more out of the way places---away from the bigger tourist and real estate boom areas?

Thanks
Diane

Those areas did not see a big spike in the "boom" Diane, and although the market is soft, have not taken a big hit either. It is in those areas what RE activity exists today in Baja is happening.

How do you find out? What is the source for finding out what property and houses are selling for? So many deals are between private parties like when we bought our house so unless we or the seller tells someone, how can anyone else know?

k-rico - 2-17-2009 at 10:30 AM

Quote:

Originally posted by BMG

Quote:

Originally posted by BajaGringo

Quote:

Originally posted by jdtrotter
Anyone know what has been happening to prices and selling in the more out of the way places---away from the bigger tourist and real estate boom areas?

Thanks
Diane

Those areas did not see a big spike in the "boom" Diane, and although the market is soft, have not taken a big hit either. It is in those areas what RE activity exists today in Baja is happening.

I use this site for the area I'm interested in. There are other websites for other areas. RE/MAX has a lot of offices in Mexico.

http://www.bienesraicesenlinea.com.mx/

BajaGringo - 2-17-2009 at 10:31 AM

Quote:

Originally posted by BMG
How do you find out? What is the source for finding out what property and houses are selling for? So many deals are between private parties like when we bought our house so unless we or the seller tells someone, how can anyone else know?

It is mostly word of mouth. I work with and travel to a lot of companies down here (in and out of the tourist corridor) and have watched what has happened on a regional basis. The only way you can get a good handle on what is going on is to invest some time in the areas you are interested in. Folks down here love a good "chisme" and details like selling price of a piece of property can usually be had.

I really think that areas like San Quintin, Bahia Asuncion and others that still have cheap ocean front/view property available are the deals to go for right now. They have access to services, building materials and labor and yet are fairly insulated from the narco violence that has taken over other areas of Baja (so far).

That is my take on the market right now and one that we are pursuing.

YMMV...

Gaucho - 2-17-2009 at 11:10 AM

I absolutely agree with BG. If you really want to get in on the "ground floor" of the next great waterfront community I would look at areas in and around San Quintin and Bahia Asuncion. Hearing from Shari and others what lots are going for is just unbelievable compared to the prices further down the cape. Times are tough but if I had an extra 10-15k to spend I would be buying in those areas.

DianaT - 2-17-2009 at 11:22 AM

Our home is Bahia Asuncion is ocean front---property line next to the federal zone and with the improvements we have on it, we are just curious what it might be worth, but it is difficult to determine. The only similar property is Laurieboat's next door to us.

We like to keep up on the value of things, but in this case, it is difficult to determine. Everything else that has been selling in Bahia Asuncion is very different, not useful as comparables.

Oh well, probably not important at this time, just like to keep up on things.

Diane

Bajahowodd - 2-17-2009 at 11:24 AM

I'll leave to those more knowledgeable than myself regarding places like San Quintin and Bahia Asuncion, but in general, the Mexican real estate market lags behind the U.S. market. Prices have been declining for several years in parts of the states. Prices haven't hit bottom yet, and not for awhile, as unemployment keeps rising. In my opinion, once there are signs of recovering prices in the U.S. then would be an ideal time to lock in on Mexican real estate. That being said, simply from the standpoint of the best deal. What others have said regarding enjoying their lifestyles, is another story.

Gaucho - 2-17-2009 at 12:00 PM

When I consider a piece of property I look at the tangibles. The things that won't change (for the most part). Location, view, size of the lot, proximity to restaurants, stores etc...

"You can change the house but you can't change the location" :yes:

DENNIS - 2-17-2009 at 12:06 PM

I wouldn't buy real estate if it had no definite resale value. I have a house for sale which I would have trouble giving away. I wonder if I'll live to see the day when I'm not a prisoner to my house.

oldlady - 2-17-2009 at 12:40 PM

I hope so.

BajaGringo - 2-17-2009 at 12:47 PM

Quote:

Originally posted by DENNIS
I wouldn't buy real estate if it had no definite resale value. I have a house for sale which I would have trouble giving away. I wonder if I'll live to see the day when I'm not a prisoner to my house.

Okay Dennis, since you're giving it away I'll take it if you insist...

:lol:

Osprey - 2-17-2009 at 12:59 PM

It's tough to know just what to do. My old Mexican house is about 1000 sq ft on a 9000 sq ft lot. Since it has a nice ocean view, the lot is worth more without this old house than with it given what our new marina will do to values around here. My old tin roof leaked so bad I could not longer ignore it so I had to explain to everyone involved in a new roof that I wasn't making a marketing improvement, was not trying to improve a house which will be bulldozed down if/when I sell the lot, I was just keeping it livable until I move, die or sell. Since everybody dies, odds are I won't care but my kids will/might/who knows?

DianaT - 2-17-2009 at 02:03 PM

Quote:

Originally posted by Gaucho
When I consider a piece of property I look at the tangibles. The things that won't change (for the most part). Location, view, size of the lot, proximity to restaurants, stores etc...

"You can change the house but you can't change the location" :yes:

Always, location, location and location the three most important rules in buying real estate. :yes:

But some things do change, like the surrounding area, the town etc. Things certainly have changed in Bahia Asuncion!

DENNIS - 2-17-2009 at 02:06 PM

Quote:

Originally posted by oldlady
I hope so.

Me too. Thanks.

CortezBlue - 2-17-2009 at 07:02 PM

Ok, I have been through this before, in the USA, back in 1987 during the Keating fall out. It took several years to come back. New guidelines were put into place, so it made it more difficult to buy a home and the housing market rose 3 to 5 percent per year in value. In 1992 these guidelines were loosened up in order for more people to be able to buy a home, and bing band boom, here we are again.
Will the market come back? yes, but it will be many years. Remember an economy is like a giant spring, it is cyclical and the more the economy is messed with,(Greenspan), the longer it will take for it to re-adjust. The spring broke this time and it needs to be fixed or replaced. However, I think it is possible that the Mexico market may come back quicker with more and more americans trying to get out of the socialist trends that are starting to take place in the US. Each and everyone of us today received a $16000 tax bill, plus all of the interest. Some folks that I know laughed at me when I bought my home in Mexico. When I explained the Fidi, they all warned me that the backs could get nationalized. All of those folks are now wanting to find out about living in Mexico becuase our banks have been nationalized.
If you own in Mexico, and own a home enjoy it, there are no other options!!

CaboRon - 2-17-2009 at 07:07 PM

If you are in a fidecomiso you do NOT have the deed,

And never will.

You don't own anything Free and Clear :lol:

CaboRon

Bajahowodd - 2-18-2009 at 12:45 AM

Mexico is a far more socialist country than USA. Too many people listening to Rush. Maybe you need to think after listening. I'd love to know how many of the anti-socialist folks are on Social Security and Medicare. And by the way, there have been tentative efforts made to extend Medicare to Mexico, inasmuch as the care available matches first world, but at third world prices.

rogerj1 - 2-18-2009 at 12:54 AM

OK, here's my 2 cents worth.

First post wisely mentioned the baby boomers moving through the python. So coming out of the python they all want smaller, easier, more convenient and now affordable retirement housing. Safety, access to healthcare, availability of leisure activities are most important to seniors, which is the only sector of the housing market that will matter. Most people are scared to death of Mexico right now, so it will be awhile before seniors come back in any numbers.

My fearless prediction on investments: Forget about appreciation for awhile, the only thing that will matter with investments going forward is dependable cash flow. So for real estate, that means, after maintenance and administrative costs, you can get a cash flow that's competitive with bonds and stock dividend yields which are currently around 5-7%. If you go back 40-50 years before the baby boomers started skewing housing prices, real estate was all about yield.

BajaGringo - 2-18-2009 at 01:06 AM

Problem is, I don't think you can put too much faith in economic models of the past. We are moving to a global economy and now in a global recession. These are uncharted waters...

fishbuck - 2-18-2009 at 01:18 AM

I'm thinking that building supplies might be coming down in price.
True or false?

CaboRon - 2-18-2009 at 05:42 AM

Quote:

Originally posted by Bajahowodd
Mexico is a far more socialist country than USA. Too many people listening to Rush. Maybe you need to think after listening. I'd love to know how many of the anti-socialist folks are on Social Security and Medicare. And by the way, there have been tentative efforts made to extend Medicare to Mexico, inasmuch as the care available matches first world, but at third world prices.

If Medicare were extended to Mexico more people would be able to retire here.

CaboRon

k-rico - 2-18-2009 at 08:38 AM

I don't know if this is a trend, but it is a fact that both of my tenants are Mexican-Americans who decided to move to the Mexican side of the border to reduce their housing costs. Both work in San Diego and commute using Sentri passes.

A few of my neighbors are also Mexican-Americans who recently retired from American jobs, sold their southern California houses (before the real estate collapse), and bought modern new houses in the private gated TJ development I live in (I'm one of the few gringos) for at the time was probably a third, maybe 1/2 now, of what they sold their stateside houses for.

Plus, living close to the border, it is quite possible to use Medicare in the states for non-emergency health care.

If I were selling a house now in the TJ - Ensenada corridor I'd target Mexican-American buyers by using Spanish speaking realtors and Spanish language newspapers in the San Diego south bay area and perhaps the Spanish speaking areas of Los Angeles.

shari - 2-18-2009 at 08:43 AM

cement just went up to 140 pesos a sack and wood is just through the roof right now. I just saw a waterfront lot here though 770 square meters with power and water...municiple titled and the guy wants 200,000 pesos....wont last long for sure as there are few waterfront places left.

cantinflas - 2-18-2009 at 08:50 AM

I just want to know where Roger is getting 5 to 7 percent right now? Please tell me as I have both and am not getting anythin close to that.

[Edited on 2-18-2009 by cantinflas]

tripledigitken - 2-18-2009 at 09:25 AM

Many of the DOW component stocks are yielding in excess of 5%. Alcoa Aluminum (AA) is currently paying 9% for example. Yes, the share price is most likely to go down before it begins it's climb back up. As long as they pay dividends, you will always get the 9% as income, based on your original investment.

Ken

rogerj1 - 2-19-2009 at 02:30 AM

The trick on yield is to buy something that will weather a recession and has enough earnings to cover the dividend: Philip Morris 6.1%, Altria 8.2, AT&T 7.1, Pfizer 9%, Merck 5.3, Diageo 5.9.

Basically, Drugs, Booze, and Cigarettes!

If stocks make you queasy, you can buy bonds from companies like Goldman Sachs, Morgan Stanley, Prudential Financial yielding 5-7% with 2-5 year maturities. These are the sort of alternatives to real estate that are out there right now. U2U if you want more specifics.

cantinflas - 2-19-2009 at 01:40 PM

Thank you Roger. It seems I have some shuffling to do.

Woooosh - 2-19-2009 at 02:32 PM

Quote:

Originally posted by CaboRon

Quote:

If Medicare were extended to Mexico more people would be able to retire here.

CaboRon

Or be able to move further away from the troubled border regions to real Mexico.