Every year in January we call up developers in the region to ask them a few questions, primarily with regards to how sales have been for them for the past year and what they have for inventory going into the new year.
First, it is always difficult to obtain clear, factual statistical information regarding real estate sales in the Puerto Vallarta region.
This survey represents information given to us by developments. It is difficult to substantiate this information other than by comparing to information given in past years. We cannot ascertain the complete accuracy of these numbers and the statistics generated from them.
We have done our best to obtain the best information possible and where we have had doubts about the accuracy, we have asked through alternatives sources to confirm the information received. It is not the best system, but it is the best system we currently have to give us a portrait of the current real estate development market.
In 2007 the Vallarta real estate market had a banner year, with excellent sales and the addition of 50 new developments into the market. This increased the inventory of new product listings from 3,450 in 2006 up to 7,250 at the beginning of 2007. Shortly into the new year Villas de Mexico announced they would be building 1,000 homes in Costa Banderas and Grupo Real del Mar announced Alamar in La Cruz, which would have 800 units. So that number could have been as high as over 9,000 new units on the market. However, we were tracking all units available in a project back then, because projects usually sold out about as fast as they could be built.
Well, that started to change in 2008. When we did the survey again in we decided to only ask what units would be on the market, available to purchase, during 2009.
We discovered that many projects were scaling back, introducing product in phases, converting a portion of their inventory into a hotel component and some just outright canceling the development. A number of the 50 projects that were announced in 2008, some were still in the pre-sale stage and hadn’t actually broke ground, so they could stop the project. When we added up inventory using this new methodology, we came up with 4,200 units were actually on the market. 667 of these were units of 18 new projects announced in 2008, 685 of these were sales (compared to 1,620 in 2008) and the rest were units that were actively for sale on the market with developers. (The re-sale market available of the MLS has about 1,200 properties for sale, so that makes 5,400 properties for sale in the region).
At the beginning of 2008 we calculated the total volume new of real estate available on the market to have a value of US$5 billion. For the beginning of 2009 this had been reduced to US$3 billion. Sales volume was $500 million in 2007, down to $300 million in 2008.
The most active market regions were Marina Vallarta/Hotel Zone, Nuevo Vallarta/Flamingos and La Cruz/Bucerias. It seems that the farther you moved away from the center of the bay, the weaker sales became. We also discovered that 2/3s of the real estate developments are less than 50% sold out, so many still have a ways to go in a slow market.
I’ll give some of the MLS stats in the next report.