As the high-season ends and we look back at what transpired from November until April, we’ve seen the market go from one of denial to acceptance. By January, real estate developers could no longer ignore the fact that our market is no different than any other market in Mexico or the USA for that matter. Global economic conditions have seen more than 40% of the world’s wealth simple disappear in a very short period of time. That has removed many people who were once considering a second home, or perhaps even a retirement home, from the market, or at least delayed it for a number of years.
Second homes buyers have been hit the most, as this is seen more of a luxury, and luxury items can be the first to go when times get tight. But for the retiree, (if there’s still enough in his 401k to retire), purchasing a retirement home is a lifestyle decision. And for that Vallarta still has much to offer. If you want to retire, why not somewhere warm, a lower cost of living, exciting social scene, but still situated close to your community back in Canada or the United States where family is still located? Perhaps more than ever, with diminished retirement funds, this will drive this sector of the real estate market.
But for most of the high season, realtors and developers reported more of a sense of “wait and see” from their prospects and clients. They wanted to first understand the severity of this recession, how badly it would effect them, and when we could expect to see a bottom and the beginning of a turnaround (however slow it may be). Its been this roller-coaster ride of the stock market that has made this all very difficult.
As well, they want to see how this will effect real estate prices in Vallarta. That is still hard to determine. Having personally weathered two of these downturns in the past (‘95 and ‘02), past experience has shown me that prices do not drop like they do traditionally in downturns as in the USA. For the most part, properties here are paid for – few properties have mortgages on them. Many are retirement homes, which are now part of their new style of life – people live here most of the year. It seems the urgency to sell, or the need to sell, is less urgent here.
Although realtors and developers have been showing properties to prospects, its been more “showing than selling”. But people are still interested, they just aren’t sure when to make the jump and buy. That’s building up a demand, which will most likely start appearing in the fall. Already there is talk of “light at the end of the tunnel”. We all could use some more of that good news.