Viewpoint 2008
realization that I am fortunate to be living and working in this area of Mexico.
Almost all of us are aware of the economic volatility in the world at present. Our financial economy is global. What affects some, affects us all.
After following the news media, and talking to clients and friends living in the US, Canada, and Mexico, I have come to the realization that I am fortunate to be living and working in this area of Mexico.
There is a very large base of real estate investments here owned by wealthy Mexicans, American, Canadian, Asian and European companies. 80% of property adjacent to the Mexican shore line is owned in fideicomiso trusts with foreigners as the beneficiaries. New construction in downtown Vallarta is a reflection of what I see throughout the bay: retail stores and condo units, mini storage units, super size grocery stores, shopping centers, showroom-warehouse developments, as well as office buildings. This mixture of types of real estate is an indication to me that there is a balance in the economic growth and needs of the area.
Glad to be in Puerto VallartaMore real estate construction and business is occurring in our area of Mexico than almost any other at the moment. Investors here are eager to protect their product and will include security measures for public safety, as part of their agenda. Knowledgeable locals, both nationals and foreigners, believe the huge investment and economic activity here will be an incentive to bring forces to bear to make our market safe and attractive for all citizens and visitors.
Are we building too many condominiums? Probably, but a number will not be started during this period of economical adjustment, and perhaps saved for later times. Bancomer Bank and Goldman Sachs are some of the lenders in partnerships with developers here who should be able to complete their products and offer them at a reasonable price. Sophisticated developers know they have to be creative and competitive, to capture the qualified buyers in the market. We have such developers in our market.
My website activity has doubled in the past few weeks. Town is full of foreigners on holiday. Serious buyers are here asking for appointments to discuss buying and renting here.
For a number of years, mortgages have been in the minority as most purchases have been all cash. Have some cash purchases here come from refinancing equity in US properties? Yes, but not as many as one would think. When mortgages have been issued on property here, the minimum down payment has usually been 30% with a 20-25 year terms. We have not seen highly leveraged or high risk mortgages.
Rentals have remained strong in most areas of the Bay. We have enjoyed for so long a high occupancy, that even an adjustment of 20-30% less is not catastrophic. Late requests for the coming holidays and next year are hard to fill. Many condos and homes are already booked during our traditionally best weather with a major influx of “snow birds.”
Glad to be in Puerto Vallarta Our climate is one of the best in the world during our high season of November-April. The west coast of Mexico is unique with its beaches and shoreline of coves for protected water. Our Sierra Madre foothills are home to not only the Huichol and Cora Indigenous groups, but many rare bird and plant species. If the choice is between Hawaii and the West Coast of Mexico, we are a great value.
Peso speculation the last few weeks showed that the Mexican government will use their US dollar reserves to support their national currency. Profit has been made by those converting their US dollars to pesos to pay for new construction projects at a more favorable rate, or to save for living expenses the six months our “snow birds” are traditionally here. The US dollar goes further here.
President Calderon has gotten Senate approval to allow private companies to drill and explore for oil. The economic stimulus addition to the 2009 budget cut some spending and will put money into infracture projects, freeing up some credit for small business as well as helping employment by creating more jobs.
Mexican corporations know that they must keep their US dollar liquidity. North America, which consists of Canada, USA, and Mexico, is destined to be economically joined as a force to compete in the global economy.
The best advice given to me recently in the light of current events was from an American who has lived in Mexico, for many years. “Don’t listen to American economists talk about Mexico. Listen to our well educated, informed Mexican economists.”
Harriet Cochran Murray
This article is based upon legal opinions, current practices and my personal experiences in the Puerto Vallarta-Bahia de Banderas areas. I recommend that each potential buyer or seller conduct his own due diligence and review.
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