Everything you need to know about buying and selling real estate in Mexico, Puerto Vallarta, and the Banderas Bay region

Supply, Demand & Consequences

Mexican Real Estate

We need to revisit some basics affecting our Puerto Vallarta real estate market at this time. We need to pay attention to supply and demand.

For economic purposes, demand must occur before supply becomes important.

However, supply usually comes first. It’s uncommon to demand something we can’t imagine the possibility of what we want to buy.

Demand and Home Prices

When a weak economy and an oversupply of properties leads to low or no demand for housing, the prices of houses tend to fall.  So, with little or no demand, prices are lower. Even if there have not been any price drops, buyers believe the prices will be lower, even if they do not know how low; they assume so.

Supply and demand in real estate are not easy to balance. Creating more saleable properties takes time. It is a considerable amount of work and effort. It is not even possible in some cases. Even when it is possible, it might not be possible for supply to increase in time to meet consumer demand. Who is going to be the buyer for new condominium projects if it takes another year and half to complete?

Owners, buyers, agents need to think about how to make the property saleable, and what price can the seller live with to be competitive with the number of competitors he has?

Location Sensitive

We can expect a drop in prices when there is an over-supply of homes or land in a given area. We cannot move the over-supply to another area to keep prices stable.

Factors that Impact Supply and Demand

Factors which can greatly impact supply and demand, and our businesses, include disease, weather, an aging population, and investment trends. Trends that impact discretionary income have more of an influence on our market than a primary home market. The population of the Bay of Banderas swells traditionally in high season.

The mood and feelings of the buying public cannot be overlooked. Supply and demand is affected by these intrinsic, fragile things.

We will be affected by the US, Canadian and Mexican economies. Will we have the confidence of buyers who normally look at alternatives for vacations, second homes, or moving to Mexico while still staying in North American?

Supply can begin to surpass demand. If we have an oversupply and pay no attention to what type of properties are selling, and for what prices, we will have missed the opportunity to have the balance we need in supply to meet demand. We need to learn the types of properties which are really selling.

Sold Properties as of May 25, 2020

Let’s see where we are as of May 25, 2020 according to the FBS MLS reporting of AMPI members in the Bay:

  • As of today, we have sold 3 times more condos than homes in the Bay
  • Total YTD Volume is $97,019,270 USD
  • The average condo sales price YTD is $356,662 USD
  • Average sales price of a home YTD is $286,388 USD

We need to be careful about taking listings which do meet any of the current data; we have to see what is selling by price and location.

YTD Market Data for Bay of Banderas

We have this data to review:

  • Centro South, Nueva Vallarta West, South Shore were most popular for purchase of condos.
  • Homes sold more in Punta Mita and Bucerias. But there were also 6 more areas where homes sold for total of $2,000,000 USD each area, YTD.
  • Active Condo Listings as of today are 1,667 units,12% more than the same time last year.  204 have sold to date, compared to 335 last year same time.
  • Active House Listings as of today are 678 units, 2% more than last year.
  • 83 homes have sold compared to 94 in 2019 YTD

Our condo market is down 30% in sales volume compared to same time 2019.  Homes sales are down 48% as of May 25, 2019.

Where is the Strategy for Increasing Supply?

We cannot influence the demand at this point, but we need to pay attention to increasing supply for no reason, with no strategy.

When we have any demand, too many “candidates” for a sale, will force the prices down because there are too many choices. We also know too much supply causes people to not feel any urgency to buy, no hurry.  If supply is not so great, there can be more of a sense of urgency to get the “good one”. Thinking that the property will be there next month, or maybe in 6 months and the prices will come down, is a normal reaction of a buyer. We already know the prices here are in general not fire sales with mortgages on them, forcing the seller to give their property away.

We have to be conscious of the amount and quality of our inventory we are offering for sale.






Puerto Vallarta Real Estate Blog published every week
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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



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