Real Estate Trends Update 2005 - 2006
The growth of the Vallarta real estate market continues to be very strong, with sales tripling for the local real estate association’s MLS (Multiple Listing Service) and doubling for developers compared to the 2003-2004 season. This type of growth is unprecedented for Puerto Vallarta and their doesn’t seem to be an end in sight. If anything, as many realtors and developers state, there are strong reasons to believe it’s here for awhile. “This is just the beginning of something really big. We haven’t even got going yet,”
In 2004 there were an estimated $300 million USD in new construction sales and nearly $100 million USD in sales for the MLS service. That total of $400 million is destined to be surpassed in 2005, with $250 million in sales already registered by developers and realtors as of the beginning of June. Roughly two-thirds of this new development is condominiums. Larger projects of 150 or more units are being built around the bay, with smaller boutique projects scheduled for the South Shore as space and availability allow.
Strong demand has created a weak supply of both homes and condominiums in the $300,000 - $400,000 USD price range. Most condominium developments’ starting point for view properties is now at or above $400,000. The increase has been driven by a demand for larger units and better quality construction and finishing. Units with more than 3,000 sq. ft. are now common, whereas 10 years ago it was a 1,500 sq. ft. cookie-cutter, two-bedroom standard unit. Buyers now expect full ensuites, Sub-Zero appliances, marble flooring, a third bedroom and perhaps a TV/study, as well.
Although the strong Mexican economy has created a market for national buyers once again, the buying that is taking place is predominantly by Americans, especially on the North Shore, Nuevo Vallarta and along the hillsides of the South Shore. The new condominium towers in Marina Vallarta and now in the Hotel Zone, however, are the preferred real estate choice for the national market.
Across the board, most realtors say the buyers they are working with today are more sophisticated, less intimidated by the trust/purchase system and ready to make a buying decision quickly. Today’s buyers come into the office with a good understanding of the market, so less time has to be spent explaining how purchasing real estate in Mexico takes place. They have a lot of confidence in the Puerto Vallarta real estate market and are ready to make a buying decision.
Why is the market so strong?
There are many reasons the market is so strong. It can be attributed to hurricanes in Florida and tsunamis in Indonesia. The 9/11 disaster is partly responsible for making people think about their future, about having a vacation home somewhere warm, where they could drive back home if need be. The burst of the Internet bubble and crash of the stock markets have people looking for alternative investments. The size of the US debt, social security issues and an out-of-control trade balance have people concerned about their financial future.
In Mexico the economy is surprisingly robust. The budget deficit has been reduced each of the past four years, and a balanced budget is expected in 2006. Economic growth is well on track, expected to exceed 3.88%, and inflation should drop below 4%. So far this year, the peso has proven itself to be stronger than the US dollar.
Why Puerto Vallarta? The variety of real estate available by price, type, area and location make Vallarta very desirable when compared to other destinations, such as Los Cabos and Cancun. But the primary reason is the people. Carl Timothy of Timothy Fuller & Associates explained this very well, “When you are in large cities, such as Los Angeles or New York, you feel that people just want something from you, the people are takers. In Puerto Vallarta it’s the opposite; the people are giving, and you can feel that throughout the community.” Therefore, it is primarily the people of Puerto Vallarta that make it such a wonderful destination for tourists and second-home buyers.