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rogerj1
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US Real Estate downturn, Mexican market
This is part of an article from a Real Estate agent in Puerto Vallarta talking about their market. Basically, they don't see the downturn in the US
affecting Puerto Vallarta. What else are they going to say, they're biased, right? They're conveniently overlooking 2nd home buyers who've tapped into
their primary homes to get the money to pay cash for property in Mexico. I can't imagine that the average buyer in Mexico is in the position to pay
cash for real estate. How many people pay cash for homes in the US? We're going through a deleveraging cycle in residential real estate that may take
longer to unwind than most people expect. Moody's economy.com doesn't project a bottom until mid 2009. Am I wrong to think that real estate in Mexico
could get a lot cheaper before this is over and done with?
"US Real Estate Turndown – How Does This Affect Vallarta?
What seems to be on the mind of everyone I’ve talked to is how the slowdown north of the border will influence our local market. Many areas of the
United States have been affected by a fall-out in key real estate markets, triggered by the abuse of subprime and other adjustable-rate mortgages.
Borrowers either bought or refinanced homes with subprime loans that offered artificially low introductory rates. Now facing re-pricing, borrowers are
experiencing their payments doubling or are having to pay off large balloon payments, just as their homes values are declining.
So how is that affecting Vallarta’s market? First, Vallarta’s real estate market has been driven primarily as “cash-only” – mortgage financing yet to
become really popular or necessary for many purchasers. Most realtors we spoke to said that less than 10% of their sales involve financing, except for
new product developments, which may offer short-term financing. So, Vallarta doesn’t have to worry about a subprime meltdown; it doesn’t exist here.
What has proven to be the primary reason for the turndown north of the border has actually protected our local market, because of the fact that
financing is still difficult to get in Vallarta. Realtors report that it still takes too long to obtain approved financing and not enough has been
done to improve the overall application process. There are good brokers, and there are not-so-good brokers, and finding the right one can make a world
of difference. But it still is not working as efficiently as all would like to see it.
Second, the people caught up in this subprime meltdown got there because they couldn’t afford the terms of a regular mortgage or even the down
payment. This has never been, nor will it be any time soon, the profile of the typical Vallarta homebuyer. Americans who have the money to buy a
second home still have that money – this turn in the market has not affected them to any great extent."
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bancoduo
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Not so sure. Lots of people used the equity in there US homes to make purchases of property in Mex, that's over for a while. It will hurt RE in Mex.
Don't listen to me, I'm drinking again. You should listen to your reputable, FRIENDLY real estate agent in PV. 
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bobw
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I think that there will be surprising movement in the Mexican markets. Not all potential buyers are over leveraged. Once the fire sales start as
people try to sell of their vacation properties to save their homes, a whole group of buyers will show up to help them out.
That most certainly is my plan; I'll wait another year or two for the market to get hungry and hopefully find what I want at a much more reasonable
price than what gets listed these days.
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oxxo
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I was just talking to a realtor friend of mine in Los Cabos about this very thing. The market in Los Cabos is dead, dead, dead. She is a member of
the Los Cabos realtor group (sort of like MLS) and it is the same in all the offices. Sales are off 80% and more from 2 years ago.
She is hoping that the market will experience some rebound after the Presidential elections. A few Canadians have stepped into the breech and are
doing a little buying.
I know several people here in the Los Cabos area who have put their places for sale - inventory is high - but they are not panicking yet. None of
them I know HAVE to sell.
Prices remain firm - but nothing is selling. Go figure!
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bajaguy
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Well, if sales are slow, they will just raise the prices
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CortezBlue
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You forgot one major thing!
Canada
The Canadian dollar is in a superior position and they are buying land both here in the USA and Mexico, cheap.
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bobw
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| Quote: | Originally posted by CortezBlue
You forgot one major thing!
Canada
The Canadian dollar is in a superior position and they are buying land both here in the USA and Mexico, cheap. |
But you forgot one thing...
CFCs... Cheap F*&%^ Canadians 
Canadians from around here seem to be trying to solve the real estate crisis in Arizona right now... the adventurous ones are looking at Nevada as
well.
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wilderone
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They're about 10 years too late. But we'll take their money.
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rogerj1
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You're right, I hadn't thought about the Canadians. I'd read an article several months ago about Canadians buying in the Phoenix area with the jist
being that there wasn't sufficient buyers to dent the huge supply created by overbuilding and the impact of foreclosures. Anyone familiar with
Canadian buying in Mexico? Is it stable, increasing?
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oxxo
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| Quote: | Originally posted by oxxo
A few Canadians have stepped into the breech and are doing a little buying.
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Woooosh
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Resorts have a real estate market unto themsleves- independent of what is happening elsewhere. I have aproperty in a Colorado ski resort that is
still apprerciating in value- while people in the Denver city market are taking it in the shorts. Baja will continue to thrive although the players
may change accents.
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Cypress
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Have decided against any real estate purchase in Baja. Reasons. 1. Overpriced. 2.
Overpriced. 3. Legalities that contribute to #1 and #2. Did I mention that the
fishing is overrated? The people are wonderful! Baja is a great place to
visit.
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cajhawk
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Many more Canadians in the market. As for being overpriced, it is still quite a bargain for oceanview or golf course property compared to the US. A
house on the golf course WITH an oceanview and there is no comparison between most of Baja and the US with the exception of (overpriced IMHO) Cabo.
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backninedan
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The market in Loreto is at a standstill, in fact several owners have lowered prices in an attempt to make a sale. I have no doubt it will recover,
but 2 to 3 years recovery time is my guess. We shall see.
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flyfishinPam
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Mexico cannot be compared to the US
| Quote: | Originally posted by cajhawk
Many more Canadians in the market. As for being overpriced, it is still quite a bargain for oceanview or golf course property compared to the
US. A house on the golf course WITH an oceanview and there is no comparison between most of Baja and the US with the exception of
(overpriced IMHO) Cabo. |
I don't know why potential buyers fall for this line. 
Mexico cannot be compared to the US.
You have to look beyond the house purchased and beyond the property perimeters to the local, state and federal government, utilities, services,
medical, etc. Those things are just not in place nor are they reliable in Mexico like they are in the US.
what happens if your house gets robbed in Mexico? well those who have lived here long enough to have been through the experience will tell you, to
call the police is a waste of time they do nothing of worse they actually case yur joint for future break in potential. Hire a lawyer to defend you?
You will find you have no rights, price scales are different for foreigners, etc. and that's just the tip of the iceberg.
It is NOT cheaper in Mexico than in the US when you consider all of these things.
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jack
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| Quote: | Originally posted by flyfishinPam
I don't know why potential buyers fall for this line.
Mexico cannot be compared to the US.
You have to look beyond the house purchased and beyond the property perimeters to the local, state and federal government, utilities, services,
medical, etc. Those things are just not in place nor are they reliable in Mexico like they are in the US.
what happens if your house gets robbed in Mexico? well those who have lived here long enough to have been through the experience will tell you, to
call the police is a waste of time they do nothing of worse they actually case yur joint for future break in potential. Hire a lawyer to defend you?
You will find you have no rights, price scales are different for foreigners, etc. and that's just the tip of the iceberg.
It is NOT cheaper in Mexico than in the US when you consider all of these things. |
flyfishinPam is 100% right, as my Dad found out when he had his house on the Baja.
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Baja Bernie
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I seldom get involved in this sort of thread--But
I think you guys/gals forget one thing....It was the Canadians who pushed the prices up with their clumsy, shotgun buying in the first place.
A few of them are reasonably smart investors but the many approach investment with a club that at this moment appears to be the value of the looney.
I do believe that many of them will not be able to lie in the weeds and scoop up deals because so many of them have been tapped out by their shotgun
buying.....
Just a simple mans thoughts. Two years does seem to be a reasonable time line.
My smidgen of a claim to fame is that I have had so many really good friends. By Bernie Swaim December 2007
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bobw
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| Quote: | Originally posted by Baja Bernie
I think you guys/gals forget one thing....It was the Canadians who pushed the prices up with their clumsy, shotgun buying in the first place.
A few of them are reasonably smart investors but the many approach investment with a club that at this moment appears to be the value of the looney.
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No doubt that some Canadians have been off on some nasty shopping sprees. More or less, the last 3 years have seen an appreciation of about 50%
between the CDN $ and the US$. A lot of people that were borderline before rushed out and bought figuring that there wouldn't be any better
opportunities.
Given the drop in prices in AZ/NV/FLA there are lots of Canadians buying; think drunken sailors on shore leave levels of buying. Will they get the
best prices? unlikely. But, a lot of them feel that they've got their market opportunity, so they're buying before the window closes.
Speaking for myself, I need to see prices come down substantially in the Baja before I see it as my opportunity window. Getting quoted $150 sq ft for
build out is a ridiculous price, so I'm going to have to wait until I feel that the prices are more in line before I commit; hopefully that'll be
before the CDN/US dollar value changes too much....
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motoged
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| Quote: | Originally posted by bobw
| Quote: | Originally posted by Baja Bernie
I think you guys/gals forget one thing....It was the Canadians who pushed the prices up with their clumsy, shotgun buying in the first place.
A few of them are reasonably smart investors but the many approach investment with a club that at this moment appears to be the value of the looney.
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No doubt that some Canadians have been off on some nasty shopping sprees. .....
Given the drop in prices in AZ/NV/FLA there are lots of Canadians buying; think drunken sailors on shore leave levels of buying.
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So....let me get this straight.....Americans scoop real estate and it is "wise investment"....Canadians buy property with a bit more of a view than
Ponoka and they are "drunken sailors" ???!!!
Maybe it's just the oil-crazed Albertans with their nouveau Texas mentality that are acting like drunken sailors....they are driving up real estate
values in western Canada, as well
Don't believe everything you think....
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bobw
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| Quote: | Originally posted by motoged
So....let me get this straight.....Americans scoop real estate and it is "wise investment"....Canadians buy property with a bit more of a view than
Ponoka and they are "drunken sailors" ???!!!
Maybe it's just the oil-crazed Albertans with their nouveau Texas mentality that are acting like drunken sailors....they are driving up real estate
values in western Canada, as well |
Well sitting here in Calgary, maybe it's just an Alberta thing. But, yep... spending like drunken sailors is pretty accurate. Calgarians (aka
"Calgreedians") have bought up all the lake properties for 5 hours drive in any direction; I see more luxury cars rolling right now than even when I
did live in Texas. The money is flowing right now and most don't have the common sense to put some of it away for the inevitable lean time coming up.
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