Along with the staff of Grupo Real del Mar, we recently contacted the majority of the real estate developers to see how the market was doing. Those that participated received a copy of the more comprehensive report, but below are some number I compiled regarding the results. We asked these projects to tell us how many units they have in their development, how many have been sold, and how many were sold between January – June 2008. From this we compiled the following information:
77 – Number of projects surveyed
(There were another 30 developments that were not contacted, or we had trouble getting information from them, so were not included in this survey this time. This survey was done quickly – not as much time was allotted as compared to our January survey)
75 – The largest number of sales for a development – Icon, 2nd Most – Alamar, 3rd Most – Peninsula
(Note: for most of the developments surveyed, they are part of Multi-Dev Vallarta and so we can substantiate the claims made by developers as to what they actually sold. However, this could not be done for Icon or Peninsula so we can only take their word as to what their actual results were)
18 – Developments had more than 10 sales
57 – Developments had less than 10 sales
124 – Average number of units in a project
62 – Median average number of units in a project
800 – Number of total units available for the largest project surveyed
5 – Number of units available for the smallest project surveyed
125% – Percentage increase in inventory in 2007
5% – Percentage increase in inventory so far for 2008 when compared to same period last year
This is good news. There has been a substantial decrease in the amount of new units coming onto the market. In 2007 we more than doubled the number of properties available for sale with 50 new projects announced. With a 5% increase for this year, we are working towards reducing our overall inventory.
6 – Number of developments that cancelled their project or were put on hold indefinitely
This has helped lower our overall inventory of new development product
45% – Percentage of sales compared to last year
Sales are only off 10% for the year, compared to last year’s sales. However…
40% – Percentage top five selling projects account for total of all sales
If you take out the numbers for the top five developments, we find that the distribution of sales has not been good. Two out of five sales were done by just five developments out of a group of 82 surveyed. If you take out the sales of the top five developments, sales are a little more than 50% of what they were for the same period last year. We also found that:
28 – Had no sales whatsoever during this period
That’s right, whereas 40% of sales were done by just five developments, 35% of the developments had no sales whatsoever.
5 – New Projects for 2008 so far have sold less then 1% of their inventory. (Not a good start)
26 – Projects are more than 80% sold out
This is good, and it also explains why a number of projects showed slow or no sales during this period. They are down to their last few units, and with any project, the last units are usually the least desired units and take longer to sell.
20 – Project are less than 20% sold out
This should be expected, as we had so many new projects come online in 2007, a number of these are not even into their first year of sales.
4 – Reported that they are now completely sold out and off the market
Sales have been decent for a few developments and poor (35% (28 developments) with no sales so far this year) for the majority. However, as mentioned above, there are 26 projects that are more than 80% sold out trying to unload their last remaining units, usually the least desirable and therefore harder to sell. Inventory, fortunately, is being reduced. Six projects have been put on hold, removing this from total inventory and four projects are now sold out. There were very few new projects announced for this year, compared to 50 last year, further reducing upcoming inventories. With sales still taking place, with few or little new projects coming online, and with some canceling or scaling back their projects, this will all help to “normalize” the market further so that sales are more in line with inventory numbers.
Sales showed that projects priced under $500,000 showed most activity. Everything above was weak.
What is more important and significant is how long this downturn may be. Although national and Canadian sales are helping, the US market is essential. How quickly this market may rebound is very important to our local market. That, unfortunately, is still hard to determine at this stage. Certainly we should have a better idea when this study is done once again in January, 2009.