This writer’s columns has been picked up a by a number of US publications, which by and large is good for Vallarta. It was written by Scott Burns and I first picked it up from Paul who wrote in, and found it on the Dallas Morning News.
In fact, new construction goes far beyond the confines of Puerto Vallarta. It is everywhere along this beautiful coast. In the places where it is not yet completed, billboards (in English) announce the imminent arrival of another opportunity to live in unsurpassed luxury and elegance where you can view the world from a plethora of infinity pools. Here, in this part of Mexico, real estate is big business.
Well he’s got that right. Real estate has become really big business in and around Vallarta.
What that means for anyone who has contemplated a second home in Mexico or retirement in Mexico is very simple: A buyer’s market is either here or on its way. The supply of condos and homes for sale exceeds demand.
Well, although that hasn’t been confirmed yet, we seem to be heading in that direction. But we do have a few things going for us that will at least soften this, and Scott brings up a few good points with regards to this.
But let’s put it another way. While the number of millionaire households in the U.S. has shown stunning growth in the past few years, millionaires are in short supply relative to the number of luxury opportunities that have been created. Does this mean a crash is coming to Puerto Vallarta? I wouldn’t bet on it. The market here isn’t likely to suffer the steep declines we’re seeing in places such as San Diego, Las Vegas and Miami. Here’s why:
According to Vallarta Lifestyles, whose current 265-page issue is bursting with real estate ads, the average condo resale price rose 79 percent from $196,000 to $351,000 between 2003 and 2007.
Hey, we’re quoted! He should pick up the most recent issue, its over 300 pages! Its good to hear that he also doesn’t feel that a crash is coming, although compared to those places, that doesn’t say much.
That’s a hefty premium over the 32 percent increase in the OFHEO (Office of Housing Enterprise Oversight) index for the United States during the same period, or even the 50 percent increase for the Pacific states. Sounds ripe for a fall, doesn’t it?
Not so fast.
Keep talking Scott, like what I’m hearing so far…
Another thing to remember is that Mexico isn’t blessed with our creative financing. Most homes are purchased for cash. So if speculators have bought houses and condos in Mexico, they’re probably well-financed speculators compared to the folks who used Liar Loans to borrow their way to bankruptcy in the U.S. Here, property owners are likely to hang tough, waiting for a better market.
But people from the U.S. are the primary buyers in Puerto Vallarta. And the majority of them are from California. I would not be surprised if many of the condos sold in the past few years were purchased with cash from refinancing a house in California.
That’s a very good point. How many people in California, or elsewhere in the USA, refinanced their principal residence in order to buy for cash in Mexico? And how with that play out going forward?
Bottom line? It won’t have the stark drama of places such as Fort Myers, Fla., or Stockton, Calif. But Puerto Vallarta looks like a long-term opportunity for buyers and renters alike.
Its going to be an interesting year…