Puerto Vallarta Real Estate | May 2009
|A Buyer's Market South of the Border - Real Estate Foreclosures in Puerto Vallarta, Mexico|
Jim Scherrer - PVNN
Because there are no foreclosures, there has been no significant depreciation of values in Puerto Vallarta. That's not to say that there's not been a leveling off in prices or that the developers are not more inclined to "negotiate" today than they were a year ago. To the contrary, prices on newly constructed condos have never been better than they are today and bargains can be found throughout the city.
|The founder of Puerto Vallarta Real Estate Buyers' Agents (PVREBA), Jim Scherrer is a retired entrepreneur who has owned property in Puerto Vallarta for 24 years.|
Foreclosure, by definition, is the legal procedure for satisfying claims against a mortgagor in default who has not redeemed the mortgage; satisfaction may be obtained from the proceeds of a forced sale of the property.
There are many reasons why mortgagors may fall into default, but historically it happens when the mortgagor loses his job, loses his health, or for some other reason is unable to make his mortgage payments in a timely manner.
Today, the majority of reasons for default are totally different. Many recent mortgagors were able to obtain loans with little or no credit history and little or nothing as a down payment. They received adjustable rate mortgages and if they were ever able to afford their monthly payments, they were no longer able as soon as the interest rate increased and consequently the mortgagee was forced to foreclose on the buyer.
As the foreclosure rate in a given region started to increase, so did the availability of distressed property sales. Of course, an increased volume of distressed properties in the neighborhood resulted in a rapid depreciation of the neighboring properties.
With the value of a given property well below its mortgage payoff balance, many mortgagors merely elect to abandon their property and walk away from their mortgage; thus the mortgagee is forced to foreclose on these borrowers as well.
This vicious circle of foreclosure events is currently occurring at an unprecedented rate in the US. Headlines such as US Foreclosures Up 24 Percent in 1st Quarter, US Banks Step Up Home Foreclosures, Las Vegas Tops Foreclosure List, Sun Belt States Lead Q1 U.S. Mortgage Foreclosures, and Foreclosures May Hit 1.5 Million in U.S. Housing Bust are seen in the news on a daily basis.
Okay, know that we fully understand the cause for, and frequency of, the recent foreclosures and knowing it's a buyer's market, perhaps, if you still have a little money left over after the recent stock market sell off, you might be considering shopping for a foreclosed property at a distressed sale price in a resort such as Puerto Vallarta, Mexico. If so, you might as well forget it; you'll not see a foreclosure sign in Mexico!
The following is taken verbatim from Condo.com, one of the major websites dealing in worldwide condo sales:
"Mexico Foreclosures – Condo.com is the best way to find free foreclosures listings in Mexico. Find foreclosed condos, foreclosed condos, foreclosure properties and other foreclosure investment opportunities in Mexico. Search bank foreclosures, REO properties, pre foreclosures, HUD homes and more foreclosures in Mexico. Sorry! There are no search results found. No For-Sale listings available."
Well, that pretty well sums up your opportunity to "steal" a nice condo in PV! There are numerous reasons why foreclosures are essentially nonexistent in Vallarta, however, the primary reason is that up until just recently, all purchases were done strictly on a cash basis. Mortgages are now available in Mexico but only with a substantial down payment.
With a solid credit history and income stream, one might be able to purchase a property in Mexico with only 20% down, however most of the mortgages are with down payments approaching 50%. As you can imagine, it takes an awfully good reason to walk away from a property when you have that kind of investment in it! Consequently, with 98% of the properties owned outright and the remaining 2% with well-funded mortgages, there are virtually no foreclosures in Paradise!
This is to some degree due to over building during the past ten year boom period and partly due to the reduction in prices of steel and other construction materials as well as the decrease in construction labor rates as the Peso recently devalued by 30% relative to the US Dollar.
For the reasons regarding foreclosures outlined above, you should never see your investment value plummet in Vallarta as it has in many desirable locations throughout the US. Because the North Americans have been recently hit so hard financially combined with the fact that the local developers have overbuilt, Puerto Vallarta is a true buyer's market.
There are 1000's of new condos currently on the market in PV and with interest rates at an all time low, the time to buy will never be better. So, why wait; come on down and explore the possibilities; just don't look for any foreclosure signs!
Any North Americans still holding cash will never find a better time or place to invest it; besides, where else can you live in a climate better than Hawaii, 2-4 hours from home, all the amenities of home, as many or more activities than at home, and at a fraction of the price?
The founder of Puerto Vallarta Real Estate Buyers' Agents (PVREBA), Jim Scherrer is a retired entrepreneur who has owned property in Puerto Vallarta for 24 years. Utilizing his experience and extensive knowledge of the area, Jim has written a series of informative articles about travel to and retirement in Puerto Vallarta, which you can read on his website at PVREBA.com.
Click HERE for more articles by Jim Scherrer.