The current combination of health and economic issues has affected all real estate markets. Here in Puerto Vallarta, we have the advantage of selling real estate within two currencies.
Pricing in US dollars is prevalent only in Mexico when these foreigner buyers are strongly interested in selected locations. Mexican beach areas have historically attracted not only locals as renters and buyers, but also American and Canadian citizens. When more foreign buyers are in one of these markets, the trend has been to accommodate them by pricing the real estate in their currency.
Mexico City, with pricing in pesos, began to have popular neighborhoods priced in US dollars when they became popular with Americans the last few years. Not all of Mexico has this demand, so Mexican pesos are the form of payment.
If an area has high demand from Canadians, then Canadian dollars are the other form or payment, along with a peso rate.
The Mexican peso is now among the 15 most traded currency units in the world, and is the most traded currency in Latin America.
Quick conversions from United States Dollar to Mexican Peso: 1 USD = 24.12037 MXN as of May 17, 2020
Here in the Bay of Banderas, some sellers are pricing their properties at a fixed peso rate. The peso rate can be for a limited amount of time and then changed with market changes or fixed for the term of the listing.
Real Estate Pricing Examples:
Listing agents realizing they have a property more popular with nationals, need to attract them as the buyer for their listing. So, the price is only in pesos and does not require a buyer to buy US dollars at the current rate. This strategy can open up the market to more buyers who function in the peso economy.
A young couple wrote with questions recently. They are buying land and building near Lake Chapala. They have converted all of their US dollars into pesos and are now concerned there are still sellers who are expecting US dollars in their market.
Clever builders have now opened up the option to buy in US dollars or pesos. The developer prices currently are in US dollars. The price offered to the buyer is discounted and then he has a choice to pay in either currency.
All developers of pre-construction are offering different discounts, depending on % paid toward the purchase price. Typically, payments are made to the developer on a schedule for him to receive the majority (or full) of the sales price when the time comes for the buyer to take possession of the property.
Why would an American want to buy in pesos? If the developer offers you a peso price (for a limited time or number of sales) at a fixed rate below the going exchange rate, you have received an additional discount. If you can purchase the property at 22 pesos when you receive 24 pesos for the sale of your US dollars, this is your additional discount. You have exchanged US dollars for more pesos, so you have an amount to use for your buyers closing costs, which are in pesos in Mexico. Or you can use fewer US dollars to buy the number of pesos you need for the purchase price or the deposit.
This is the first time since I have lived here (1997) when I have seen the flexibility of the two currencies with incentives to all buyers.
Buyers who have Mexican pesos find this more attractive than the cost of buying US dollars right now. Buyers with US dollars can cash them. If they can buy in pesos at a rate below the current exchange rate, they may be incentivized to buy one property over another one.
The goal of listing agents and their sellers is to sell the property in this current market. The difference in currencies can lead to some options not so apparent before 2020.
Note: Any buyer should use caution and perform his due diligence, with professional advice, to determine the credentials of the developer and access the risks.
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