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 Puerto Vallarta Real Estate | October 2006 
Is US Real Estate Slump Affecting Puerto Vallarta?
 Brock Squire - PVNN
| | To see some of the real estate properties available in the Puerto Vallarta area, visit the Coldwell Banker La Costa website, CBLaCosta.com or the Punta Mita Discovery Center, Punta-MitaProperties.com. |
It seems from my conversations with many of my customers lately that a lot of people are asking me if the recent US real estate slump is affecting Mexico – and particularly Puerto Vallarta – so, I thought that it would be useful for me to let you know what is happening here, as I expect you may also be wondering the same thing.
In order to properly understand if there is any connection between the US and Puerto Vallarta real estate market, let me first give you a little insight as to what is actually driving our market here.
It’s not exactly a ‘News Flash’ that our market is primarily a ‘baby–boomer’ market. What is interesting, however, is the amount of money that this demographic group has available – and spending it they are. Why? And - Why Puerto Vallarta? Because they are in the process of fulfilling a major life-style change either now or in the near future called ‘retirement’ or at least in a lot of cases ‘semi-retirement.’
It is also because this group is very large and is at a point in their lives where they do have substantial sums available to them, either through savings or in many cases, inheritance. (The largest transfer of wealth in the history of the world is taking place over the next 5 to 10 years!) This means that the principal buyers of property in Puerto Vallarta have both cash - and motivation.
On the other hand, what we are reading and hearing about in the US press these days is that home builders have bloated inventories and that home sales are declining and that in some markets, prices are declining – mostly due to the increase in mortgage rates. The markets that are being most affected are the first and second time home-buyer market - and those markets which have become severely over-bought. (read ‘inflated’)
The problem is that if an already stretched consumer has a $1250 USD per month mortgage payment and interest rates rise so that the payment increases another $250, and that same consumer doesn’t have it, then something is going to happen – either he will be forced to sell or, if he hasn’t bought yet he won’t, because he won’t be able to afford the additional payment together with all the other payments he has to make.
The people we are discussing in the second paragraph have very little in common – economically – with the people in the third paragraph. If interest rates increase marginally as they have, that really is not going to have much of an affect on the individual who either already owns his home and has sufficient funds in order to purchase another.
It may have some affect on the person needing to sell his principal residence in order to purchase a retirement home, however, we really don’t seem to be seeing that as the issue in the market here in Puerto Vallarta to date.
While there are now several ‘prime’ lenders making mortgage loans to US citizens buying property in the Puerto Vallarta area, most people – probably 90–95% - do not need, or are not interested in, a mortgage loan. They've already paid their mortgage off!
So, Is the US Real Estate Slump Affecting Mexico? Not really. In fact, our office has experienced one of the strongest summer-fall seasons ever - and as of right now, we do not foresee any significant change.
I am personally as busy as I have ever been, and the same goes for most of my associates here. A couple of weeks ago we launched a boutique luxury-condominium project in Conchas Chinas (Bambu) and sold 4 of the 7 units on the Launch Day!
Right now we are very bullish on our market – we have a lot of buyers – the Mexican economy has never been better – the US stock market is attempting to break new territory, the golf is great, and the sun is shining! So if you are waiting for some dramatic shift in availability or pricing in the Puerto Vallarta market, I wouldn’t suggest holding your breath too long.
Best,
Brock Squire
For more information, call Brock Squire at 52 [329] 291-6500 or 1 [888] 647-0979 (toll free from US) To see some of the real estate properties available in the Puerto Vallarta area, visit the Coldwell Banker La Costa website, CBLaCosta.com or the Punta Mita Discovery Center, Punta-MitaProperties.com. |
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