Something is rotten in the state of Jalisco.
And I think it is real estate.
When I decided I was going to retire in Mexico, I subscribed to an internet service that would show me all of the new listings in Barra de Navidad, Villa Obregon, Melaque, and La Manzanilla. I even worked closely with one realtor in Barra de Navidad before she decided Mexico was not for her.
The first year, I received notices almost every day of new listings and new construction. Some were very tempting -- even though almost all of the prices struck me as being far more expensive than I had been led to believe would be the price for small homes in Mexico.
About four months ago, the new listings started to fall off. I would see one or two notices each week. And then they just stopped.
Sunday morning I received a notice that pretty much sums up what has happened to the real estate market on the Mexico Pacific coast. Instead of a new listing, it was a notice that a listing had sold.
I have lived with realtors and builders for most of my life -- including, my mother and brother. But this is the first time I have ever seen realtors use an "it's sold" notice to help prop up what is obviously a dead market.
I am still going to look around when I get to Melaque in May. But the listings appear to have the smell of death about them.
And I think it is real estate.
When I decided I was going to retire in Mexico, I subscribed to an internet service that would show me all of the new listings in Barra de Navidad, Villa Obregon, Melaque, and La Manzanilla. I even worked closely with one realtor in Barra de Navidad before she decided Mexico was not for her.
The first year, I received notices almost every day of new listings and new construction. Some were very tempting -- even though almost all of the prices struck me as being far more expensive than I had been led to believe would be the price for small homes in Mexico.
About four months ago, the new listings started to fall off. I would see one or two notices each week. And then they just stopped.
Sunday morning I received a notice that pretty much sums up what has happened to the real estate market on the Mexico Pacific coast. Instead of a new listing, it was a notice that a listing had sold.
I have lived with realtors and builders for most of my life -- including, my mother and brother. But this is the first time I have ever seen realtors use an "it's sold" notice to help prop up what is obviously a dead market.
I am still going to look around when I get to Melaque in May. But the listings appear to have the smell of death about them.
20 comments:
I think part of the problem is that realtors have an overextended opinion of what gringos are willing to pay for a house here. Real estate prices used to be in line with the real property value here. Various realtors have convinced people here that they are all sitting on little gold mines. I shouldn't complain though. Using that basis, my homes are now worth 6X what I paid for them. But still, who is going to pay these prices? There are For Sale signs going up all over the island.
If the happy day comes when I retire in Mexico, I intend to rent. Sin duda! Christine
Islandgringo -- There are plenty of "for sale" signs around Melague and Barra -- some on the same houses I first saw almost two years ago. And there have been a few that have "sold," and then go right back on the market. It is not a very healthy environment.
Christine -- I may eventually buy, but, for now, I am happy to have the freedom of a non-owner. I wil get to see far more of Mexico that way.
onternet? Is that like "the google"?
Yikes! So much for proofreading. Maybe my phony French accent took over.
Well, I hate to be persistently doomy and gloomy (though I think I am realistic) but real estate is a wasting asset. And the same thing that keeps houses in Mexico from selling will also keep your own house from selling. Take the haircut now and sell your place in Orgeon. You CAN sell it. It's just a matter of what price you're willing to take. Wait as long as possible before buying in Mexico. And don't buy more than a month's worth of pesos at a time.
There is plenty more financial distress to come. Then the true bargains will come to those with ready cash.
I know. I work in the financial markets, and have expected this for some time. Read Nouriel Roubini's work if you don't believe me. He's the only one to have correctly predicted this crisis to its full extent. He thinks it's going to get worse.
I sincerely wish the best for you.
Regards,
Kim G
Boston, MA
Where our own economy's dependence on the financial markets virtually ensures lower real estate prices over time.
I am retired with a vacation home in Baja. I don't know where people got the idea that good real estate is or even should be cheap in Mexico. Sure, you can get a crappy place in an unsecured community for under $100k but you get what you pay for...
And nothing other than unskilled labor is cheaper in Mexico than in the USA.
There are two Walmarts and Home Depots within thirty minutes of where my place is and the Mexicans and Expats avoid them because the prices are so much higher than USA prices.
Electricity is more expensive, gas now costs more (again), water costs more because you can't drink from the tap so you need to buy any water you plan to drink, and Mexicans love to sue gringos because they seem to win every time! (Imagine that!)
All that being said, my point is that I could live cheaper in the USA. But my Baja home, anywhere in the USA in a similar setting (on a bluff overlooking the beach and a river) would be a million, at least.
I didn't pay a million but it wasn't cheap, either. I could have bought a house for less in San Diego. People who come to Mexico thinking it's cheap are in for a rude awakening.
Yes, you can live cheap in Mexico. but you can live cheap anywhere if your threshold is a small house on a small lot, never eating out, and recycling dryer lint by weaving it into blankets.
But if you choose to live that way, I believe you could locate somewhere in the USA and live just as cheaply as you could here in Mexico, if not more so.
Even the food in the American (USA) chain restaurants here is more expensive.
I came here because it is different and something of an adventure every day. But I didn't come here to save money.
Of course Mexican real estate is moribund right now. The world economy is on the brink, so why would anyone think that Mexico would possibly escape the world situation?
But neither are many people here giving prime property away. In the community below the bluff where my home is, 550 sm lots on the beach are asking $800,000 - $950,000!
Real Estate agents here use the same tactics as those there...heck, a large percentage of the agents here are from the USA and they are dropping like flies here just like there.
I would recommend that anyone coming to Mexico rent for a minimum of one year before buying...the problem is that finding a good rental situation is iffy.
Good luck. R/
If I was retire here, I think I would want to move about a bit. There is so much to see, do, experience.
Renting is my vote. At least to start.
Great comments from the three of you.
Kim -- I thought this post would smoke you out. Ben Stein fully agrees with your position. He sees a 7-year housing cycle to get back to a general expanding market. I originally thought he was pessimistic. I now put him in the optimist camp. I am not going to buy anything in Mexico, at least for two years -- if then.
K -- Like you, I am heading to Mexico for the adventure, not the great real estate deals. I plan on renting for two years, staying in various parts of Mexico to get a feel for where I want to settle. I may not want to settle, at all. As long as I can get around easily, I may as well keep on moving.
AMM -- Great idea. Why settle in when there is so much to see -- so much to experience? There will be plenty of time to settle in at the end of life.
Okay Steve, so here is the solution:
http://www.tumbleweedhouses.com
Cheap, nice looking, needs only a few square feet. Perfect, eh?
;-))))
(Seriously, I find these little houses fascinating)
Just paid our taxes on our 3-story house overlooking Xico, Veracruz with a view of Mount Orizaba that produces photos that people pay me to use (without request). The annual taxes which went up slightly this year $9.57 (U.S.) Our electric bill is never over $10.00 a month. When we are in the U.S. it is $2.50 (U.S.) every two months to leave the electric turned on.
We have no water bill there because we catch soft rainwater (we do pay 90 cents U.S. for 5 gallon of bottled drinking water).
We have no homeowners insurance - don't really need it.
There is no State or Federal income tax and the sales tax is built -in which often gives the illusion that prices are more at Home Depot and Costco (in some cases they are admittedly - but not overall).
Oranges are 70 cents for 22 pounds, bananas free (they grow everywhere including our yard as well as limes) Excellent coffee is under $2.00 a pound. Avocados are 6 good size for $1.50 U.S.
Recently had my clutch replaced in my 1-ton diesel truck - total labor cost was $75.00 U.S. and I have additional mechanic and construction labor stories with similar price comparisons (at least 10 to 1 cheaper in our part of Mexico).
We have another small house on a 10,000 sq.' lot where the property taxes are the same. Our annual water bill that we just paid was $12.85. Our most recent 2 month electric bill was $12.87 (U.S.)
I could go on and on - the bottom line is it is cheaper to live in Mexico (rent a great house here for $500.00 and less).
K doesn't live in Mexico - He/she lives in Baja, CALIFORNIA - really an extension of San Diego where the prices haven't made any sense since the 1970's.
Do your homework there are plenty of wonderful places to live on a lot less in Mexico - try and find those prices and healthy living to boot in the U.S. and get back to me on it.
Oh and by the way - We don't need security here and out houses and lifestyle are far from crappy.
Only labor is cheaper in Mexico?! My house is 3,500 square feet. It cost me $100,000 to build. It would bring in a fortune in the U.S.
My light bill is about $12 a month.
My property tax is so absurdly low I am not going to mention it because you would feel bad.
My water bill runs about $20 a month.
A cup of coffee on the plaza is a buck. Stack that up against Starbucks.
If Mexico ain´t much cheaper for you, it´s because the locals have you firmly by the short hairs. And it´s your fault.
Hollito -- Great site. I have often thought of building a small functional home like that. Of course, most Mexicans do it out of necessity. I suspect the "small house" guy is making a good living with his seminars on living smaller.
Calypso -- You have learned a lesson I need to learn. Living small does not mean not living well. I could probably save a lot of money by living in Powers with different expectations. But I want to try learning those lessons in Mexico. I am not moving there to save money, but I suspect I will.
Michael -- You have learned to navigate the waters of the Mexican economy. It is quite clear that many Americans and Canadians never learn that technique. I made the mistake of letting a realtor in Melaque know my profession. She immediately started to steer me to her $500,000+ listings -- when I would be satisfied with something well under $100,000. Of course, at that price, the house would be nowhere as nice as yours.
When I first lived in Melaque we almost bought a small lot for $6000 US. We had other things to spend our money on, however and ended up not buying it. 2 years later there's a Coldwell Banker where Ponchos used to be and all the prices we've heard about are ridiculous. AND no one's buying. The price of that lot is way over our heads now and I dont think its going to come down again for a couple years. Renting is the way to go for now. Hope to see you in a few months. Good luck! :-)
Vanya -- The Melaque real estate market baffles me. I know the influx of American and Canadian money over the past decade has skewed the market, but sellers do not now seem to be responding to the collapse of capital flow. Perhaps, expectations have been increased too high. And, I guess I fall into that category: I have taken my house off of the market rather than sell it at a fire-sale price. I just hope I can outwait the down turn.
The term RMLS in Mexico should be used very loosly. If you want a deal you have to come down to Mexico and look in the local ads and see what is really for sale, then you will know when you go to a realtor what price you should really pay. .. atleast that is my education on that.
PVGirl -- I learned about a year ago that real estate agents in Mexico have some very severe limitations -- especially, in resort areas like PV. When I get ready to buy, I am going to rely on some of my local resources.
If one is looking to buy property in Mexico, website offerings are the worst-priced. If the website is in English, forget about it.
Drive around, knock on doors, and if you can wait in the car while somebody who looks Mexican and speaks Spanish can be your front man or woman, all the better.
Good suggestion, Michael. I have a source in Melaque who can help me with that plan. For the moment, though, I am following the sage advice of Boston Kim -- no purchase in this current market.
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