Homicide Rates in other countries

September 15, 2011

My friend Charlie sent me these stats that he collected from Wikipedia. These are the annual homicide rates per 100,000 population for a few countries. What I found intriguing is how high Jamaica, another favorite vacation spot, is compared to Mexico; four times as high. When was the last time we saw anything in the news about Jamaica’s high homicide rate? I guess the homicide is more sensational in Mexico. A lot of Mexico’s homicide is drug related and that which is drug related is the cartel fighting against themselves or the police/army. The numbers involving Americans or Canadians, unless they were involved with the drug business, is virtually nothing. But from listening to mainstream media you’d think we were getting knocked off regularly. My rant for the day.

 

El Salvador: 71

Jamaica: 60

Venezuela: 48

Colombia: 39

Brazil: 22

Mexico: 15

Costa Rica: 11

U.S.A.: 5

Canada: 2

 

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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 Trends 2011 – Part I

June 24, 2011

Following is the first of a two part series on real estate trends for the Puerto Vallarta and Riviera Nayarit markets, which will be featured in the summer issue of Vallarta Lifestyles.

Last year when compiling our annual real estate trends article, we saw the year as a turning point in the market, that the bottom of the cycle seemed to have been reached and it should begin to swing upwards as we moved into 2011. This seems to have been proven to be true, at least for the re-sale market. The number of sales have increased and the number of listings on the market reduced. For new product or development properties, they still seem to be working through this. But that’s natural after a downturn cycle in the market – recovery is led first by the re-sale market and then followed by new product as developers start building again.

Most realtors we talked to believe we are over the worst but it’s going to be a slow recovery continuing well into next year. The Vallarta multiple listing service, Multi-List Vallarta, seems to confirm this with average inventory levels dropping slightly 1,100 to 1,000 re-sale property listings this past season, with new property inventory (development projects) dropping slightly as well.

Below are trends we see currently taking place with regards to the local real estate market.

Its all about “Price Point”

This is the trend I hear most often when talking to realtors about the local real estate market, its no longer about price per square foot or square meter as was the custom in years past. Today, buyers have a price in mind of what they can afford or a limit to what they are willing to invest and they want to see what’s available at that price point. If they wanted two bedrooms but there’s only one-bedroom units available at that price, that’s what they’ll look at – just don’t try and get them to move out of their price comfort zone.

This has led, coincidentally, to one-bedroom condominiums becoming popular once again. You couldn’t give them away in 2007. Back then buyers wanted an extra bedroom or two for friends to visit, TV room or an office, and were willing to pay for it. Developers stopped including one bedrooms in their inventory or drastically cut back and instead started building three bedroom units. But no longer. They are popular once again as they meet the price comfort level for many. The most popular price range in 2010 was between $100,000 to $200,000. That not something a developer can provide, except with one bedroom units.

The same goes for maintenance or carrying costs for the property. Buyers also have a number in mind with what they can afford to pay monthly for the condominiums. And with one-bedrooms about 60% the size of two-bedroom unit, that means maintenance fees are 40% less. Another very good reason to consider a one-bedroom unit. Read the rest of this entry »


Vallarta Developer Real Estate Inventory

May 19, 2011

We recently surveyed many of the real estate developments around the bay to ascertain what inventory they currently have on the market and how it compares to year’s past. The graph below shows inventory levels since 2007. In 2007 it was substantially above the other months as a number of projects came online (more than 50). Also at this time, units were selling so quickly that we included total inventory for the developments and didn’t take into consideration if they were releasing in phases or not. In 2008 we did take this into consideration, which brought the number down to just over 4,000 units. It dropped further in 2009 and 2010, from sales (although not a lot), projects canceling or being put on hold.

Although developers now have less inventory on the market, they do plan to release these future phases when the market demands it. When we add up how much there is of this “shadow” inventory on the sidelines, it totals 2,500 units, nearly equal to the inventory that is currently on the market, or doubling it. Fortunately, since its on the sidelines it doesn’t effect the market at this time, but it sure should make developers who may be thinking of developing something at this time, to think twice, or at least   take at look at what this shadow inventory consists of, so they are not building something that some other developer already has future plans for.


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!


Debunking Vallarta’s High Inventory Rumor

March 2, 2011

There’s been a lot of talk around town about how much inventory of homes and condominiums, primarily condominiums, is currently on the market. The most commonly heard number is somewhere between 7,000 to 8,000. Unfortunately I believe I’m responsible for this. For a few years, during the boom years of Vallarta real estate market (2003-2008), we did a survey of real estate developments to find out how much real estate they were producing and putting on the market and how much of it was selling. When we first began doing this we would take the gross number of units the project entailed, not considering that for many developments the project would be released in stages. But back in 2007 units were selling so fast that often the project was sold out before it was completed. Some sold out before construction began. So it was not a wrong assumption.

But that changed as the market started slowing down in 2008. We therefore decided to ask instead, how many units they currently have on the market that are actively for sale, not the total number of units once the project would be built out. To give a couple of examples, Punta Mita will have 1,000 homes when completely built out, but currently there are probably less than 100 actively on the market. Another involves the grandiose development that Homex was going to be built on the North Shore of the bay with 1,000 homes planned. In 2007 we counted all of those homes in the overall inventory of units available in the market. Well, that project never even got off the ground, so the inventory there is now “0”.

In 2007 we had established, using the “include everything” calculation method, there were 7,250 units currently on the market. However, in 2008 we decided to only count “on the market” units. As the market had started to slow down, many developments had decided to either scale back or release units in phases. Some, such as Homex, were cancelled outright.

This took the number down to 4,200 in 2008. When we did the count again at the beginning of 2010 (for the past year of 2009), there were even more cancellations of projects. Taking away these and also accounting for sales that had taken place, we estimated the inventory for new products to be 3,500. We did, however, find it difficult to get actual numbers from developers. Our only way of calculating for some (some just outright lied – they didn’t want to say they hadn’t sold much), was by comparing what their current inventory was and and comparing it to what they had said it was the previous year. Some actually showed a negative number as they experienced cancellations. Because we weren’t getting back what we considered were true numbers, we decided not to do the survey this year.

There continued, however, to be cancellations of developments, or that were scaled back from what was originally considered. I would think, including sales that took place (and some did take place!), there would be now less than 3,000 new units on the market available to purchase. To complete this you need to add the inventory of existing homes that are on the marketing, which currently is around 1,150 properties, which gives you about 4,000 units on the market.

In a previous post I talked about a “shadow” inventory. We have no idea what this may encompass, but it certainly isn’t anywhere near 4,000 to get the 8,000 units on the market, as goes the rumor. A guess may be upwards of 50% of the MLS, which would be less than 600 units, or then a total of less than 4,600 units. But, for what’s available right now, listed for sale, the number would most likely be 4,000.

Still a lot, but manageable. It will, however, take a number of years to go through this. In 2007, the top of the market, there were about 2,000 sales for new and re-sale properties. This dropped, however, by 50% in 2008.

Its going to be awhile before there’s a need for any new projects. And for those that do decide to go ahead, they better be suited for this market; under $250,000, minimal amenities and small unit sizes. Those projects offering 2007 product lines made up of over-size units, over the top amenities with an exorbitant price tag, are going to be with us for awhile.

Hope this helps dismiss the claims of the inventory rumor that’s making its way around town.


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.