Puerto Vallarta Real Estate Articles

How has our real estate market performed the first half of 2003? There are 485 active listings in the Vallarta Multi List, which includes inventory from 29 cooperating real estate agencies within Banderas Bay. Additionally, the Multi-Dev lists 20 developer projects, which advertise their properties, but do not report sales to the MLS agency database.

The geographic area for this report includes portions of the state of Jalisco and Nayarit from Boca de Tomatlan/Mismaloya on the south to Rincon de Guayabitos/San Blas in the north. Guadalajara/Lake Chapala-Ajiji in the state of Jalisco has its own MLS system. Not all properties listed for sale are included in the Vallata MLS. Not all sales within the bay are reported to this database.

For the period Jan-June, 2003, 76 properties are reported sold compared to 58 for the same period in 2002. Dollar volume of listed prices of properties sold increased by $2,600,000US in 2003 from 2002. Sold dollar volume of listed prices for this year increased $2,000,000US over the first half of 2001.

Condominium sales continue to be the majority of sales reported; with 24% more reported sales the first half of 2003 over 2002. Increase in condominium sales for January-June, 2003 was 5% more than the same period in 2001.

Reported homes sales for Jan-June 2003 were 29% more than 2002 and 25% more than the first half of 2001. The same number of homes listed for over a million dollars have been sold for the past two years. However, a large sale, unreported through the MLS, occurred in the first half of this year for over two and a half million dollars. This sale brings the number of million dollar sales to a level higher than previous years.

Indications are that with the closing of another multi-million dollar sale in July, the market will be ahead of previous years in the number of million dollar and higher individual sales.

The number of lot sales increased in first half of 2003 over 2002, by 60%. More lots were reported sold in the first half of 2001, however; than the same periods in 2002 and 2003. Lots reported sold remain the smallest percentage of inventory, behind condominiums and homes. Reported lot sales for the past three years have averaged less than 6 per year.

These figures reported for condominiums, villas and residential lots do not include developer reporting in most cases.

The range of listed prices of condominiums sold was from 66,000US for a studio to over one million dollars for a penthouse. The average listed price for a condominium sold during the first 6 months of this year is approximately $215,000US. The majority of condominium products available are two bedrooms. Fractional sales of condominiums are sold within the bay, but no statistics are available at this time to include in this report.

The average listed price of a home sold was approximately $346,500US for the first half of the year, about the same average for the same period in 2002. The average listed price of a lot sold was $81,000US, down approximately 3% from the 2002's first half.

PERSPECTIVE:

The real estate market has improved in the number of sales from the previous years and all indications are that the market will continue to have good activity.

Sellers have reduced the prices of some listings to become more in line with the market. More buyers began appearing in the bay in larger numbers in 2002. They were looking for opportunities to buy properties in Mexico and Banderas Bay, in particular.

Americans and Canadians have shown their interest in acquiring real estate in increasing numbers for the past 9 months. These buyers are continuing to shop. They want value and they are willing to pay cash for their purchases. These buyers use cash on hand or have cashed out from previous investments. They have also re-financed properties in the US to acquire capital to purchase in Mexico. Mortgages, while available through a few lenders, are not typical at this time in this market.

In the beginning, there were increased numbers of buyers in the lower price ranges. Gradually more high-end buyers came into the market. In a real sense, the "little guy" led the way in this market activity of the past 9 months.

Foreign buyers in this current market have decided placing money in Mexico is not an unsafe proposition. These buyers expect an increase in the value of their purchase as well as enjoyment for personal use.

Buyers are choosing properties over stock portfolios and instead of, or in addition to, other US real estate. Many of the cities in the US have seen increased real estate sales due to low mortgage interest rates, and a preference of real estate over stocks and bonds. The market in Banderas Bay offers an alternative. An increasing number of buyers are planning ahead for their retirement years and they want to reduce their cost of living.

This real estate market is in contrast to Europe, where homes are owned for generations within the same families and rarely available for sale. The amount of inventory for sale in Banderas Bay is large, in part because of the more frequent turnover in a second home market. The classic rule still is: price, location and amenities are the prime factors in the ability of a property to sell.

Developments continue to add needed new product to the inventory. These developers are producing a range of product from fractional sale condominiums to multi-million dollar villas. These companies have, for the most part, experience and money to complete their projects. Every buyer should conduct his or her own due diligence before making a purchase. Buying new construction or pre-construction is very different legally and financially in this market and in this country. Buyers need to take the time to understand the process, risks and rewards before buying.

The majority of reported sales in this report are of pre-owned properties. Even without the issue of pre-construction, all buyers should understand how to purchase within the restricted zone and understand responsibilities of ownership.

It is important to understand that this report is based on the reported number of sales from one database. This report does not include private sales or sales not included in the MLS. Agencies not affiliated with AMPI do not report. Agencies that are members of AMPI do list and sell property that is not in the Multi-List.

This report does not give the average sales price, but the average LISTED price. At this time, a report of actual sales prices is not available. The number of days on the market before a sale is not reported.

Each buyer needs to take the time to learn the sales price trend in the market in which he is interested in buying. Traditional comparative market analysis is not available at this time, except for the reports individual agencies or agents may provide of their own sales and their personal knowledge of other verified sales.

This article is based upon legal opinions, current practices and my personal experiences in the Puerto Vallarta-Bahia de Banderas areas. I recommend that each potential buyer conduct his own due diligence and review. The National Association of REALTORS has provided information for this article.