| | |  Puerto Vallarta Real Estate 
Mexico Study Shows Extent of Sales Drop
 Kevin Brass - International Property Journal
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February 12, 2010
 |  | Mexico is once again becoming a buyer’s market, as prices return to more reasonable levels. |  | | |
Everyone knew there had been a steep drop in Mexico second home sales last year. But a new study of the Puerto Vallarta coast line reveals just how far sales fell in new resort developments.
In 2010, developers along the stretch known as Costa Vallarta—including Puerto Vallarta, Punta Mita and the Riviera Nayarit—recorded sales of 315 new units, a 54 percent drop from 2008 and an 80 percent drop from 2007, according to a survey by the Vallarta Lifestyles Publishing Group.
Of the 112 developments surveyed, 43 reported no sales for 2009—zero, nada. Eighteen of the projects had been cancelled or taken off the market.
Of course, Mexico has been battered by forces of Biblical proportions that had nothing to do with the housing market. The H1N1 virus and drug-related violence were devastating blows to a market already crippled by the woes of the U.S. economy.
Nevertheless, the numbers are still shocking, illustrating a once-thriving market that almost ground to a halt last year.
“There have been reports that activity has improved during this high season,” Vallarta Publishing Group director general John Youden writes on his blog. “And this should be expected to continue to some degree, primarily through people who have been interested in buying in the past but have held off” due to the economic crisis.
As long as the economy continues to improve and “Mexico’s problems regarding security and drug violence do not get any worse,” there are signs that the market is beginning to normalize. At the beginning of 2008, there were 8,100 properties for sale in the area; now the number is closer to 3,400. And 40 percent of the projects have units that start below $300,000—a sweet spot for buyers, Youden notes.
“In markets such as these, people tend to go more for re-sales as they know exactly what they are getting,” Youden writes. “This will force many developments to continue to build out and will not be able to rely on pre-sales to pay their construction costs, putting another burden on developments.”
Translation: Mexico is once again becoming a buyer’s market, as prices return to more reasonable levels.
Kevin Brass is editor of the International Property Journal. For the past decade he's covered the quirks and trends of the global property industry for the International Herald Tribune and the New York Times. |
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