Had dinner out on the town with a few Realtors a couple of nights ago, some of the top in the industry and who between them have many years selling and developing real estate in the region. Its been a tough year for them all. They have had to make major changes in their operations, scaling back, closing down satellite offices and getting more involved in the day-to-day operations of their businesses. When times were good they could spend more time away from the office, working on pet projects such as developing real estate. But now they are back at the office, keeping a very close eye on the bottom line – its all about cash flow these days.
For some it is rentals that seem to be keeping them going, and for other offices out there. Rentals have been good, at least compared to sales. The upper-end of the market for real estate sales has basically come to a standstill. Luxury properties are just not moving. It seems people are taking a year off, renting a few places to try them out, rather than jumping in and buying something themselves. There are still inquiries, people are interested, they just want to be a little more secure about the state of the US economy before moving forward with something. The active market right now is under $500,000 USD. There is some action above that, but nearly all below $1 million. And for the properties that are selling around $1 million, the eventual sales price was significantly below the asking/listing price.
There is some concern whether there is a “shadow” market, involving people who want to sell but are waiting for the market to get better. The number of listings in the MLS service Multi-List Vallarta has leveled off for the past year, so sales seem to be keeping up with new listed properties. But are there many people out there waiting, and when these properties will come on the market, how will it effect it? There are still a lot of investor-held properties out there; they have to put them on the market sooner or later.
In 2003 the MLS tripled its sales from the year previously. Tripled – in one year. Well sales have now been cut by about 2/3s, so are we getting back to “normal”? Problem is there’s a lot more inventory now than back then. Its not outrageous, and we’re better off than some other markets in Mexico, but its there and its going to take some time to get it back to normal. Fortunately for the health of the market nearly all the properties are held free and clear, as financing is still a small part of the market.