I have been conducting a very unscientific evaluation of whether or not the real estate price meltdown in the U.S. is affecting those in Mexico. My conclusion is that all of the people involved in real estate sales in Mexico say everything is still appreciating and booming…and everyone else vehemently disagrees. No surprise here, I guess. People who sell property for a living have to keep it optimistic even when the evidence suggests otherwise. Most people I know identify that as denial.
A long-time resident-friend of mine in La Paz, Baja Sur, Tim Means, who owns Baja Expeditions, describes the downturn as a godsend, so that the growing town can take a breather and get some more developer environmental restrictions in place. Price increases there have stalled and decreased, in some cases. On the mainland side another friend has recently bought a 5/bedroom 4/bath 3,000 square foot penthouse condo right on the sand three miles south of Puerto Vallarta for $545,000. At well under $200 per square foot, he paid considerable less than he would have two years ago. All over Mexico there is a huge inventory of pricey properties and the hammers are still swinging, especially along the coast, which will increase the supply.
Foreigners from countries with a strong currency are finding the Mexico prices attractive, but most buyers have tradtionally been Americans who would lay down cash derived from stateside property equity. That ATM option is now gone and will be for some time. As Mexico “for sale” signs linger, the prices are sure to decline. Just how much? Who knows. If you have been thinking of buying in Mexico, now is a good time to start kicking the tires and making ridiculous offers. It will be interesting to see just where the bottom is.