Vallarta/Riviera Nayarit Real Estate MLS (Multi-Dev Vallarta) Update

September 14, 2011

Over the summer real estate agencies seemed to have had a decent summer, at least keeping up to the activity they had seen in the earlier part of the year. July, however, was quite a good month with 21 sales reported in the MLS Multi-List Vallarta. That’s the good news. Unfortunately most of the sales had low prices. For the first time in quite some time, houses outsold condominiums (13-8). However, the average sales price for a home was only $185,000 ($350,000 for condos). One house sold for $3 million, however we removed this before calculating average price as it would have distorted it and would not have been a good indicator. So a good month for the number of sales, but not for what they sold for, except for the one in Punta Mita.

July was also an interesting month for the number of days these properties were on the market. Nine out of the 21 sales were on the market for over a year and one for four years. The average days on market for July was 775 whereas the average for the year has only been 380 (which is still quite high). So it seems that July was kind of a late Spring Cleaning; with properties that had been on the market for some time finally lowering or accepting a lower price in order to move the property. It is still a buyer’s market, and quite a good one at them. There are some very good deals out there.

In June there was also one sale for over a million ($1,250,000), which we removed as well to calculate average home sales price, as it was so far off the others. There were just three other house sales and they were all for under $170,000; even lower than July. Even condos fell to just over $200,000 for the average sales price.

In August home prices were back up to $381,000 (but just three home sales) and condos up to $250,000. The average sales price for a condominium is now back to what they averaged in 2007.

Days on Market has average 380 days so far this year.

An encouraging sign is that for the first time in awhile, American visits topped Mexican and Canadian visitors, in both July and August. Hopefully this is a trend for the upcoming high season.

The number of sales for the year is above 2010, although that’s not a hard year to beat! I think we’ll see 2011 in the future as the year the market started to bottom out and turn around.


Vallarta Real Estate Development Study 2011

May 27, 2011

In late April of this year we contacted a number of real estate developments in and around Banderas Bay to obtain information with regards to their inventory and how sales have been. Not all were as obliging as in years past to review how their sales had been in 2010, and considering market conditions, that was to be expected. However, since we knew their inventory levels from past years, we could obtain an approximate number of what their sales were.

It is always difficult to obtain clear, factual statistical information regarding real estate sales in the Puerto Vallarta region. It is difficult to substantiate 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 do 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.

We contacted every development we could establish was open for business and came up with 136 projects. Seems like a large number, but we found that about 15%, (18) of them actually had less than ten units in overall inventory, while about 30% had between 11-50 units . Twelve of these projects had more than 100 units in total inventory, which also encompassed 1/3 of total units on the market. (Note: we had previously reported this differently, (and therefore incorrectly) that there were 44 projects with less than 10 units. For this we had calculated how many units they have in their current inventory left to sell, not their total inventory).

For these 136 projects, we calculated they have about 2,300 units actively listed for sale. This is down from a high of 7,200 in 2007. However, what needs to be taken into consideration is a “Shadow” market that exists of dormant inventory.

Since 2008 we have found that many development scaled back the size of their project, some cancelled, but many decided to only release product in phases. A good example would be Alamar. We originally included that this project had over 600 units for the market. However, they only released for three towers, and eventually even put the third tower on hold. This reduced the number of units they have on the market but this doesn’t mean this product will not be released sometime in the future. There are still around 500 units that at some point Alamar will decide to continuing building and introduce this product to the market.

We calculate that there are about 2,500 of the shadow, dormant units on the market. Fortunately they do not directly affect our market at this time, but any new developer considering starting up a new project in the region should be aware of this inventory. As much of it hasn’t been constructed yet, but the land most likely has been paid for, they have the flexibility of introducing product that is more relevant to today’s market, such as smaller units with less amenities.

As has been reported in past years, 2007 saw 53 new project come into the local market providing a total inventory of 5,400 units. In 2009 only eight new project entered the market with 200 units. In 2010 there were nine new project providing over 400 units.

In 2007 there were 1,620 new project sales (this does not include re-sale property sales). This diminished to 685 in 2008, 340 in 2009 and increased slightly to 430 in 2010. However, one project, a large one, informed us of sales substantially above the others, and we suspect that these numbers were inflated or involved trades.

When we considered where the inventory is located, 1/3 was in the Marina Vallarta/Hotel Zone region, another 1/3 in Nuevo Vallarta/Flamingos, the balance evenly distributed between the regions on either side of these two: downtown Vallarta and the South Shore, and to the north, the North Shore and northern Riviera Nayarit.

The market is particularly difficult for developers right now. They benefited heavily during the boom years but now many find themselves with product that is not what they market may be looking for, developed at costs that makes it difficult for them to be competitive. They find themselves competing with the re-sale market (which is seeing good activity) and in some cases, competing with re-sales in their own project. But more on that in a future post.

Vallarta Real Estate Sales up in March

April 4, 2011

The March report for sales for Multi-List Vallarta, a marketing and MLS service for the Puerto Vallarta and Riviera Nayarit region, showed a substantial increase over what the average usually is. 22 sales were reported for MLV (re-sales only, MLV does not include new sales for real estate developments), which is double what is usually reported. Nine of these sales originated from Tropicasa Realty, which had an exceptional month.

Is a trend emerging here? I contacted Wayne Franklin, the owner/agent of Tropicasa Realty, to ask him. I always enjoy a conversation with Franklin about real estate in the region, as he has seems to be able to get his head up and above the day-to-day operations and give a good, objective perspective to what he sees is going on. As well, he comes with years of real estate experience in both markets, the USA and here in Vallarta. It may be that Tropicasa is a little ahead of the curve on sales, as not everybody is currently experiencing the same level of activity.

  1. “We input our sales data into the system, which not all agencies are doing.  So the data could be somewhat skewed. (My note: This has been an ongoing problem for years; to get agencies to report their sales. There is really no other way of obtaining the information if they don’t report them. This is now increasingly more difficult as there are now two MLS systems with not all real estate agencies belonging to both MLS systems. Hopefully, though, this will get worked out in the future, so go statistical information will be available.)
  2. Some clients are just sick and tired of being sick and tired.  In other words, they’re full of the drivel that’s in the media and they just want to get back to making life decisions for themselves. (My note: I agree with Franklin, people are getting tired of the sensationalism, especially when they come down here and find out the situation is not all like its being portrayed in the media.)
  3. Some clients are tired of the US government and the decisions being made and are looking at exiting the madness, temporarily or permanently.
  4. Other clients are simply retiring earlier than expected, thinking that it doesn’t look like things will improve in 5 years when they would normally be retiring, so they’re just making the decision to do it now.
  5. I have seen in the past year the buying public being more investor-minded people, as well as at the other end of the spectrum, the high net worth clientele coming into the market.  Typically seen as the “smart money”, these people I think are seeing an outstanding and unique opportunity that has not existed in this market, and are taking advantage of it.  Typically, when the investors start coming back into a market, that’s the beginning of the return.
  6. Also, keep in mind that there is only a small portion of the market as a whole in Vallarta that was severely affected by all of this.  The remainder stayed at relatively retail levels and wouldn’t move from there.  Clearly, those properties haven’t yet sold.  BUT what will end up happening is that when the distress properties or financially challenged owners have been able to sell, then all that will be left is the retail inventory.  It will then begin selling as there will be no alternatives for the investor market.  I certainly see that taking place in the next 18-24 months, if not sooner. (My Note: My concern with this is that a “Shadow Market” has been created, of people who have not listed their homes because they can’t get the price they want, but still want to sell. What does this consist of? Is it significant?)
  7. As to volume, just as an aside, including a couple deals that I’m currently negotiating, in Q1 of 2011, we sold the same volume that we did in 2010 … FOR THE YEAR!  It IS a whole new ballgame this year.  There IS hope!

Excellent news from one real estate agency in the region. In the next couple of months I’ll be talking with other agents to get their perspective for our regular Real Estate Trends article that is featured in the Summer/Fall issue of Vallarta Lifestyles, as will be available here as well.

With regards to the sales that did take place in March, the average sales price is still down with the condominiums averaging less than $300,000 and interestingly, homes still lower with an average of less than $250,000. The highest priced sale was $685,000; the lowest was $58,000 – there really is something in this market for everyone’s budget!

An early-in-the-year Perspective

March 1, 2011

So far this year seems to be one that in the fall, a number of real estate professionals remarked would be a year of transition with not a lot of activity, but moving from the worst part to an improving market. It seems though, that the market isn’t really so much recovering as it treading water at the bottom of the cycle curve as it works through the excess inventory currently on and off the market.

I say “off the market” as I believe there is a “shadow” market, an inventory of properties of homeowners that would like to sell but have held off because of the lack of activity and hence, no idea as to what the fair market value of their home may be. If there aren’t any sales of properties similar to yours, how can you justify what it is worth? It takes a sale to make a comparable, and there have not been a whole lot of sales.

Exactly how many properties would this consist of? I have no idea. But it came up from watching the inventory of the MLS service Multi-List Vallarta. For the past two years the inventory has been very consistent with around 1,100 re-sale property listings (there’s about another 900 new property listings in Multi-Dev Vallarta – properties offered by real estate developers). With the re-sales, we see about 100 new listings come onto the market each month. But we are only seeing 15-20 sales taking place during this time. So what is happening – are sales not being reported? That’s part of this, but certainly not all of it. I think the majority are homeowners who have gotten tired of seeing no action on their homes so they have allowed it to expire, or, thinking its the real estate agent’s fault, listing it with another agency (which gives it another new, unique MLS number). The one’s that decide not to list again are just sitting on the sidelines, waiting for the market to recover and in the meantime, using or renting out their property.

There’s also a form of shadow market with developers. The inventory most developers now place in the MLS are those that are ready, or will be ready, to deliver in the near future. They are not entering in the MLS future planned phases. And there are a number of developments in this situation. This form of “shadow” market is not a severe, however, as the units haven’t been started yet therefore would not add to the overall inventory of properties on the market. They are just “planned” for the future.

Although this year is an improvement over last year, with more sales taking place, I don’t believe this can be construed as a recovery. Properties that do sell average time on the market of nearly a year. There is a substantial difference between the initial list price and eventual sale price. Many properties are “chasing the market” by continuing to reduce their listing price, trying to find what currently is fair market value.

Most activity seems to be in the under $250,000 range, for both homes and condos. Actually the average sale price for a home is less than the average sales price for a condominium ($250,000 for homes and $333,000 for condominiums in 2010). But when you get over $250,000, and especially over $1 million, the bottom becomes more difficult to determine.

Tenacatita Land Conflict

September 13, 2010

When I was in Canada this summer there was quite a bit in the news about what has been taking place in Tenecatita, a small town and bay a couple of hours south of Puerto Vallarta. It seems that a Guadalajara developer is claiming that this is his land and obtained a court order to take the land back. The land had been ejido, but supposedly it had been regularized. Its now coming out the the documents to regularize it may have been fraudulent.

It was in the Vancouver newspapers as there are a few Canadians who owned land here, have now had it confiscated and are wondering what the rights are. This was recently published in the Guadalajara Reporter:

Increased pressure is being put on the state governor to lift the police blockade in Tenacatita and reopen road access to one of Jalisco’s most popular and unspoiled beaches. Legislators in the federal Chamber of Deputies (Mexico’s lower house) unanimously passed a motion Tuesday calling for state authorities to reopen the highway leading to Tenacatita beach and banish the police officers and private security guards preventing the public from visiting the beach.

The legislators also resolved to set up a working committee to keep an eye on the situation at the beach, which is now virtually inaccessible to the public and patrolled by guards in the employ of wealthy Guadalajara businessman Andres Villalobos, as well as a few armed state police officers.

Villalobos has closed off the road – the only access to the public beach – since the beginning of last month when he won a court injunction to evict dozens of families, who for decades had been living and working on a disputed swath of land adjoining the beach.

The violent eviction – involving 150 armed state police officers – outraged members of the local farm commune (ejido), who have claimed possession of the land since the 1960s and were granted land titles through a federal titling program in 2006. Villalobos, on the other hand, says he purchased the land in 1991 and obtained the federal beach concession in 1993.

Families evicted said police officers used excessive force during the eviction (tear gas and rubber bullets were utilized, it was reported), although Villalobos maintains it was his staff and police that came under the severest attack. Legislators this week asked the federal government to “intervene” in the dispute to “avoid social instability in the region.” They also want the federal government, through the Registro Agrario Nacional, to “reevaluate” the boundaries in dispute in order to “find a solution between all those involved.”

This is very unfortunate; news that the Mexican real estate industry doesn’t need at this time and especially unfortunate for those who purchased, or who thought they had purchased regularized land. Purchasing ejido property is like gambling; you don’t know if you are going to win or lose. The best thing to do is stay clear of it. AMPI, the real estate association in Vallarta, has the same recommendation and does not allow ejido properties to be included in their MLS. Matter of fact, its illegal to promote the sale of ejido property – its not supposed to be land for re-sale.

But people still do it and some win, and as this case shows, some don’t. Unfortunately its taken by the media and public that all Mexican real estate is tainted. That’s just not the case. Back in the US and Canada, if someone offers to sell you Indian reservation land, you know better, right. Well, you should down here as well.

Puerto Vallarta MLS offers new Training Video

April 30, 2010

Multi-List Vallarta, the MLS system for real estate professionals and the public for the Puerto Vallarta and Riviera Nayarit regions, recently added some new features to their public-side MLS Search. This short three-minute video shows you how to best use the system to get the most from it. It covers general searching, advanced search and how to best become familiar with the new zones and regions recently updated for the MLS system.

In English:

En Español:

Update: Canadian MLS and Competition Bureau

April 17, 2010

I posted last month about how the  Canadian Commission on Competition had ruled against the Canadian Real Estate Association, (CREA) saying that its MLS system is monopolistic. The bureau has been investigating CREA for three years and filed the application after negotiations, which started in October, broke down.

On March 22nd, CREA announced that they would open up their MLS so that the public will be able to list their properties directly into the MLS system. However, it seems that that isn’t good enough for the Commissioner, Melanie Aitken. She came back with the following, written up in the Montreal Gazette:

“The commissioner of competition has stated in multiple media statements that amendments amount to a blank cheque because new anti-competitive rules could be introduced by CREA or its member boards. In CREA’s view, this allegation is preposterous,” the real estate group remarked in its court filing.

Aitken reiterated in her latest filing that the amendments instituted by CREA change nothing. “CREA’s rules continue to prohibit real estate brokers from offering fully unbundled services to home sellers and continue to prevent entry and expansion of alternatives to the traditional, full service real estate model,” says her filing.

“Further, CREA and member boards have expressly protected the freedom to pass further rules at any time that may hinder or exclude or have the effect of hindering or excluding competitors from offering alternative services in the relevant market.”

This is going to be an interesting story to follow. You can find out more about this story here and here and here.