Puerto Vallarta, Mexico - We have seen a significant increase in buyer interest and sales activity this year as compared to 2010. In fact, the real estate agency Tropicasa Realty has sold as much this year as they did all of last year.

Canadian buyers were very active in order to take advantage of their strong dollar and Mexican buyers also snapped up some great deals. Unfortunately, American buyers are still in the doldrums thanks to economic turmoil and overhyped media reports of drug violence and insecurity in Mexico.

The world economic turmoil undoubtedly trimmed the nest eggs of most new buyers entering this market. Therefore, a "return to affordability" was one of the primary drivers of the market this year. Properties priced from $150k to $300k were right in the sweet spot for most buyers and this market was extremely active.

Existing properties that were well priced and well located were in high demand; as buyer's really like to see, feel and experience the property first hand before buying. New developments with great location, excellent price, superb design and a proven track record from the developer also did well. A couple of new south side developments of 50 units were already over half sold out prior to breaking ground.

The $300k to $600k market remains slow as these upscale buyers hunker down and wait for better times. Until the American buyers return, this market will be slow. Luxury properties priced over $1 million USD have never been a large percentage of the overall market; however we saw numerous sales this year as motivated sellers reduced prices to levels that were irresistible to sophisticated and savvy buyers.

The government's huge investment in infrastructure with improved roads, sidewalks and bike lanes, second bypass tunnel, beautification of Restaurant Row,new Malecón boardwalk and Los Muertos Pier could really pay off in attracting more new and upscale buyers to our market.

This season it appeared that buyers began to realize that the Real Estate market in Puerto Vallarta is strong, stable and offering excellent bargains for retirement and mid to long term investing.

There was never "subprime lending" here in PV and consequently there is no mortgage crisis or foreclosure market here. With $US financing now readily available (typically with a down payment of 25-30% and interest rates as low as 6%) a vast new market is poised to emerge as rates become more competitive and qualifying and closing become more streamlined. One of our most experienced loan brokers reports that 2011 has already been his best year ever.

In summary, I am cautiously optimistic about the coming year; cautious because of the continuing concerns about drugs, violence and excessive inventory, but optimistic because of the strong recovery that has characterized 2011 so far. Plus the natural beauty that surrounds us and the resilience of the local residents is truly inspiring. Now, if we can just figure out how to make it through the summer season, we will be poised for a strong high season in 2012!