PV Real Estate Conference

For those of you who may be wondering what happened to the real estate conference Vallarta Lifestyles usually hosts in February, we are going to have the conference, we’ve just pushed back the date until May 7th. This conference has really become more of a educational conference for realtors and developers, rather than something for the public. So we decided to hold it later, in a less busier time for real estate professionals. We are currently working on the schedule and hope to have it posted in the next few days.

In case you didn’t get NAR’s latest report…

Here’s the details: -Median existing-home price was $201,100 in January, down 4.6% from a year ago (National average)-Total housing inventory rose 5.5%-At the end of January, existing homes available for sale were  4.19 million, a 10.3-month supply at the current sales pace (up from a 9.7-month supply in December). -Single-family home sold at an annual rate of 4.34 million in January. This is 22.4% below January 2007. -The median existing single-family home price was $198,700 in January, down 5.1% from a year ago.-Existing condominium and co-op sales dropped 6.5%, and are 30.2% below the year ago levels. The median existing condo price ($220,400) is only 1.0% lower than January 2007.-Existing-home sales in the Northeast fell 3.6 percent to an annual rate of 810,000 in January, and are 25.7 percent below a year ago.  The median price in the Northeast was $270,800, up 3.1 percent from January 2007. 

MLV Inventories for February 2008

The total number of listings for Multi-List Vallarta increased just slightly to 832 listings, from 822 in January. There seems to be a leveling off on the number of listings being added, after a steep run-up in the last quarter of 2007. However, 822 property listings, this is just for the re-sale market. When you add into this how many development properties we entered 2008 with, (6,500), we have 7,322 properties listed for sale in and around the bay. 

MLV Inventory Totals

Puerto Vallarta – A Real Estate Success Story

This article was recently featured in the Vallarta Opina (in Spanish) and the March issue of the Vallarta Real Estate Guide:

 

What we can establish as being “a success”? Well, in 2000 Puerto Vallarta had roughly $50 million in resort real estate sales (“resort real estate” is defined as real estate purchased primarily by retirees or second-home purchasers). There were rarely homes selling for more than $1 million and few large real estate developments. In 2007, there was more than $500 million in resort real estate sales, with condos selling for over $2 million and homes in excess of $5 million. There were more than 100 developments spread out around Banderas Bay, allowing Puerto Vallarta to lead in sales volume for resort real estate in Mexico, ahead of major markets such as Los Cabos, Acapulco and Cancun.

Credit Meltdown Explained

To get a better understanding on what brought on the current credit crunch and how it is effecting certain sectors of the economy, take a look at this simple powerpoint presentation someone on Wall Street recently created (someone with too much time on his/her hands). You can see it here.

Miami Condo Mortgages Drying Up?

BankUnited of Florida recently posted on their website a list of 191 condo projects that are “non-permissible”, meaning they will not issue any mortgages on these properties, even to buyers with good credit. They say they are doing this because sales have been slow, buyers are backing out of contracts and no one really knows the value of the units. And if they don’t know the value, they can’t set loan-to-value ratios with any certainty.

Taking this a step further, this means that anyone who has purchased a unit at one of the projects will have an even harder time trying to sell it because financing won’t be available, at least from BankUnited. And if they see is as risky or uncertain, other banks are sure to follow. For developers, it will be difficult if not impossible to sell the inventory they currently have. 

The list includes condo projects in some of Miami’s most prestigious locations, such as Biscayne and Brickell Blvds.

Comparing US and Mexican Mortgage Markets

Good article in the Daily Times about the Mexican real estate market. Here’s a summary, but you can read the whole article here.

• So far the sub-prime crisis has had limited impact on Mexico’s mortgage market.
• Mexican mortgages carry fixed interest rates, not sub-primes or ALTs.
• Deliquency rates for mortgages over 90-day late is at 5% whereas in the USA they are at 21% for adjustable rate sub-prime mortgages.
• Mexico does not have a liquid secondary market where mortgage securities can be traded, which has caused such problems in the USA.
• Mexicans carry far less debt than Americans do. Mortgage debt represents less than 10% of GDP, compared to 82% of GDP in the USA, a ratio that has increased fourfold in the last two decades.

How will US credit crunch effect the PV Market?

I received a comment recently from someone who felt that market prices would fall here by up to 40 or 50%. Let me say that that just isn’t going to happen. And here’s three good reasons why.

• Vallarta is primarily a second-home market. The fall-out in the USA is with first-time, first-home buyers primarily, people who perhaps shouldn’t have bought the home in the first place. 
• The fall-out in the USA is with regards to sub-prime and ALT mortgages, that are now coming back to bite the mortgage and banking industries. In Vallarta there are no sub-prime or ALT mortgages. Heck, there’s hardly any mortgages. Most sales are either cash or with very short-term financing.
• I’ve been through two market turndowns (‘95 and 2002) in Vallarta before and both times we did not see large drops in pricing. People held onto their homes because they were paid for, they weren’t forced to sell, and so they held onto them. Back then we had people coming in looking for great deals, but for the most part, they didn’t happen. People made low-ball offers, thinking this market was hurting just like back in the USA. But it wasn’t and it won’t. The market dynamics are very different.

 In my last few posting I’ve talked about their being quite a large inventory of condos on the market, perhaps as much as 3-5 years worth. That seems high compared to traditional existing home inventory levels, but you need to take into consideration that these are new developments and they expect their inventory to be sold over 2-4 years, (depending on how many units they have), in phases. Its my opinion that inventory levels are high, but no too far out of line, at least not yet! We’ll have to see how this plays out moving further into 2007. What we probably don’t need right now is more developers moving in and building even more condos and homes. We got enough to last us awhile.

Value of our Current New Development Inventory

A project for one of our staff members was to identify all of the real estate projects currently in development in and around Puerto Vallarta, find out how many units the project consists of and how many are currently available for sale. I posted earlier some of our findings. We also gathered information regarding the price ranges for each development. With this information we calculated the average price and then multiplied it by the number of units in the development to get a rough idea of what the total gross sale value would be for the development. We did this for each development and then added them up. The total? $5 Billion dollars. No matter which way you look at it, that’s a lot of money invested in new real estate currently on the market!  Taking the average price in this manner probably has put this value higher than it really is, as there is usually more product at the lower end than at the higher end. If we based this on the lower end, this would come in closer to $4 Billion – still a large number. 

Local RE News…

Costa Vallarta Realty News

Greg Stanton, owner of Costa Vallarta Realty confirmed this month that Ivan Osuna  and Benjamin Quintero are now operating partners in this North Shore real estate office. Lisa Kovacs is also a minor partner and continues to handle all billings and payments. For further information contact Costa Vallarta Realty at (329) 295-5973.

New Punta de Mita Hotel & Restaurant

Hotel des Artistes & Punta de Mita Beach Club Hotel & Spa announced their grand opening in Punta de Mita, featuring luxurious two and three bedroom beachfront suites. This luxury boutique hotel will feature world-class dining in an air-conditioned restaurant, piano bar, beach dining, athletic club & spa, art gallery, roof top infinity pool and bar. Operating as a luxury boutique hotel, it will also offer a full rental program to homeowners.  The restaurant, Café des Artistes Del Mar will be operated by renowned restauranteur, Thierry Blouet. Punta de Mita Beach Club & Spa will features 12 luxury two- and three-bedroom beachfront suites selling full and fractional ownership.  All the suites are fully furnished and range from 1463 to 2460 square feet. Pricing starting at $866,250. 50% Sold Out.  Reservations are being accepted for the remaining two and three bedroom suites.  For sales information contact (329)291-5159. If you haven’t been out to Punta de Mita for awhile, this is an excellent reason to do so!