IMF (International Monetary Fund) 2018 Outlook:
The Mexican economy continues to grow, mainly due to its strong economic policies, even while the fate of the country’s trade deal with North America remains unclear. Mexico would still benefit from carrying out reforms for stronger and more inclusive growth. The main areas to tackle are inequality, corruption, obstacles holding back firms’ productivity, and tax collection to allow more room for public investment.
Goldman Sachs 2018 Outlook:
The Mexican Currency, Stocks, and Bonds in the second and third quarter into 2020
2018 Outlook ICREA:
Luxury market is supported by both foreign and domestic demand
- Mexico’s real estate market has been buoyed by strong demand in resort communities, according to the International Consortium of Real Estate Associations (ICREA). American and Canadian buyers are returning to Mexico, after a several-year slump, thanks to low oil prices and the strong US dollar pushing home values up.
- American buyers are very important owners of beachfront properties, which were badly affected by the slump of 2009-10 in areas like Baja California Sur, Nayarit, Baja California, Guerrero, and Sinaloa.
FLEX MLS Bay of Banderas Market Reporting for 2017:
- We have seen the largest increase in total sales volume since our reporting began 2010.
- For 2017 we have seen the average sales price of condos increase by 4% over 2016.
- Average sales price of houses decreased by 3%, and average sales prices of land increased by 6%.
- What we continue to deal with is a large amount of inventory. Our DOM (Days on the Market) is more than a year.
- In 2017, as the 3 years prior, we have seen new inventory of condos outselling resales of condos or homes.
- The new condos were built with the faith of the builders that we had a market we were not serving. Any traditional standards of evaluating absorption or need would not have been the way to determine who the “new” buyer would be.
- Our new buyer is choosing new, builder financing (even if it is for only the term of the construction), and multiple locations but primarily the South Centro, a.k.a. the Old Town Romantic Zone, and the South Shore of Puerto Vallarta.
- The amount of inventory in comparison to sales is hard to overcome. We do not have many foreclosures in this market. It is not a leverage market but a cash market. Even foreigners do not often have long term mortgages on their properties.
- Since it is more economical to maintain a property here compared to the rest of North America, owners keep their properties and are not generally highly motivated to sell. If they decide to sell, it is not usually a crisis of mounting costs to maintain and need to cash out.
- We have a large inventory left over from the pre-USA housing crisis when our market went into a nose dive 2009. We now see niches instead of the entire market, selling. Developments such as Molino de Agua and Sayan have their own market. New buildings in the Centro and South Shore have their own statistics and comparables.
- The overall inventory, however, is so large that it may be that for the foreseeable future, niches will be more relevant than overall inventory statistics. Niche markets could become a seller’s market much faster than the overall market. A traditional seller’s market has more buyers than available product. Right now, this only seems possible with niches.
This article is based upon Flex MLS reporting, legal opinions, current practices and my personal experiences in the Puerto Vallarta-Bahia de Banderas areas. I recommend that each potential buyer or seller of Mexican real estate conduct his own due diligence and review. If you have any other questions, contact me through my website.Harriet Murray