Today’s Real Estate Report: Mexico

MexicoToday, in our ongoing series about local real estate markets, we’ll take a look at home sales and trends in Mexico:

First off, The New York Times has an article about Mexican tourist towns:

Mexico’s tourist towns are slowly recovering from the global economic crisis, said Larry Stebbins, a broker for San Miguel Sotheby’s International Realty. The Mexican market is highly dependent on the United States economy, and the financial crisis in 2008 took an immediate toll on Mexico’s second-home market. Prices in San Miguel, for instance, dropped 25 to 30 percent from their peak in 2007. “There’s a saying here,” said Mr. Stebbins: “If the United States gets a cold, Mexico sneezes.” Prices are still down in beach towns like Cancun and Puerto Vallarta, but Mr. Stebbins says the persistently low numbers are starting to attract bargain-hunters, so that more houses have been selling in recent months.

There’s a other issue holding back sales:

Another factor inhibiting sales, at least nationally, is drug violence, though this is not an issue in San Miguel. Many are hoping that the new president, Enrique Pena Nieto, who was inaugurated on Dec. 1, will make good on campaign pledges to reinvigorate the economy and recalibrate the country’s approach to drug traffickers.

Preview Stay points to a new trend in vacation home sales in Mexico:

Potential buyers have been trying out a home before they buy it on an ever increasing pace. They’re arranging to spend a few nights in the home to get a better feel for it. And this is usually very easy for sellers to accommodate, since many vacation homes in mexico are already being used as vacation rentals by the owners. This is especially true of vacation homes in popular tourist destinations like Cancun, Cabo San Lucas, and Puerto Vallarta.

Yucatan Living is bullish on Merida’s prospects in the coming years:

Since many of the eligible retirees will need to continue to work, maybe only 40% of the US Boomers will retire in 2013. Let’s say then that there will only be 10 million new retirees every year. Clearly, Mexico is not everyone’s cup of tea, so maybe only 10% of those retirees will consider Mexico to stretch their retirement fixed incomes, yielding a paltry one million new retirees. Continuing on a Thalesian path, Merida is one of Mexico’s top three cities for quality of living, and Merida and Yucatan’s Gulf Coast offer safety, relatively low real estate prices, excellent health care, modern services, and even a growing expat population, so newcomers don’t have to live like isolated pioneers. If only 5% of those one million consider visiting or living in Merida and Yucatan’s Gulf Coast, that would mean roughly 50,000 new expats coming to north Yucatan every year. Are you starting to see the Thalesian opportunities?

Ventana Magazine also looks at US Baby Boomers, this time coming to San Miguel de Allende:

San Miguel de Allende has been ranked as one of the top ten most desired cities in the world to retire in by several international publications. So, what’s happening with real estate in this colonial jewel? Here’s the latest from three experts’ points of view: Eric Chazaro, real estate developer of Rancho Los Labradores and an owner of Mexican Charm Group Real Estate; Larry Castriotta, an owner of Select Real Estate and a leading realtor in the city; and John Hendricks, the founder of SMARE, the newly-formed real estate association of San Miguel and an owner of Coldwell Banker Real Estate.

And Timothy Real Estate Group reports on the Puerto Vallarta real estate market:

The housing market will improve moderately in 2013, but nobody will mistake this for a boom. The gains in activity and prices will be a welcome relief, but will leave many homeowners still underwater. The usual way of discussing housing problems is misleading. Foreclosures, short sales, shadow inventory, upside-down mortgages are all symptoms. The fundamental problem that we have is an excess supply of housing units.

So the Mexican market looks mixed in the short-term, but if the drug violence dies down, US demographics may start to drive it more strongly over the coming decade.