Someone beat me to releasing my own real estate report! Here is it in its entirety:
For the past few years we have contacted local real estate developments at the beginning of the year to see how they did for sales for the year prior. This year the information was a little more difficult to obtain and understandably, with 2009 being a very tough year for nearly every development. Please note that these are sales only for new product and not for re-sale or existing real estate. Its a little more difficult to extrapolate numbers for re-sales as not all sales are reported by real estate offices. Here, however, are our findings for real estate developments:
We interviewed 122 projects, of which 18 were cancelled or taken off the market, and nine that would not give information (but we could guesstimate using past inventory levels).
43 developments reported no sales for 2009. So more than 40% did not have one sale.
Only seven reported double digits (or more than ten) in number of sales for 2009.
In 2007, our first year of doing this survey, we calculated there were 1,520 sales.
In 2008, sales dropped by more than half to 685.
In 2009, sales continued to drop by more than half again to 315.
That’s a 54% drop from 2008 and an 80% drop when compared to 2007 sales. We’ve received sales reports from other real estate tourist destinations such as Aspen and Hawaii and they also saw similar drops in sales, so we are not alone.
Going into 2008 we calculated there were just over 8,100 properties on the market.
Going into 2010, after many cancelled projects and projects deciding to phase in their inventory, we estimate current inventory levels to be about 3,370 units for sale. That is good news. Unfortunately the majority were not through sales but cancelations and projects slowing down development by introducing their product in phases. Some other projects decided to offer a hotel component to their project, effectively taking a number of units off the market as well.
40% have pricing that starts below $300,000 (crucial number as that seems to be where market activity is taking place in the re-sale market)
and 20% have pricing that starts above $1 million.
2009 is behind us, as is the worst, in our opinion. Sales should begin to recuperate in 2010 with robust sales in 2011, if the US economy continues to improve and Mexico’s problems regarding security and drug violence do not get any worse. Last year’s H1N1 flu scare, along with the US stock market hitting 6,500, took a lot out of this market. Hopefully we do not see these types of issues again for some time. There has been reports that activity has improved during this high season and this should be expected to continue to some degree, primarily through people who have been interested in buying in the past but have held off because of the problems mentioned previously. With the stock market now over 10,000, people are more secure with regards to what their net worth is and their job and business security, so they are now making moves to purchase (pent-up demand). However, people are going to be hesitant to purchase developments that are not complete, concerned about the fiscal health of the developer. In years past the market has been driven by new-sale products. In markets such as these, people tend to go more for re-sales as they know exactly what they are getting. This will force many developments to continue to build out and will not be able to rely on pre-sales to pay their construction costs, putting another burden on developments.