Sunday, January 9, 2011
2011 Puerto Vallarta Update
As we projected values are starting to fall in Puerto Vallarta. Last year was their year of denial. This was just like our 2006 year when Real Estate sales were very few. We believe that the market is two to three years behind the United States regarding the downturn in values. We also believe that their recovery will come back faster than in the United States.
We have several Real Estate contacts in the Puerto Vallarta area and all were feeling optimistic for this coming year. The next few months is their hot time of the season and this should be an interesting one. We have heard several reports that there are offers being made. Unfortunately we can't see the evidence of sales or have we seen market changes. All the properties that we are watching are still available. Some of the larger developments have had a few sales. Most are offering the vacant and unsold furnished suites as vacation properties on the internet. Good way to survive!
We are seeing more and more people putting their properties up for sale in Puerto Vallarta. The inventory has doubled since last year. The more motivated people, are starting to drop their prices.
Mexico Real Estate Sales are different than in the United States. It isn't under the same set of rules. They have a MLS but it isn't syndicated like we have it here. All the Brokers have to update their own sites. One broker might have a property listed for $199,000.00 US dollars and another will have the same property listed for $229,000.00 US dollars.
In Mexico you can't go on line to see what properties have sold for. This is why you need a good contact in Mexico because unless they are in the trenches, there is no other way to know what the true value of a property is.
Mexico is really big on bartering. It is second nature to them. Americans are uncomfortable with bartering. When you see an asking price of say $229,000.00 that property could easily sell for $140,000.00. There is nothing they like more than an American who left their brain at the border and buys real estate while on vacation!
We predict that there will be more sales this year in PV. The lack of real information may help them recover faster and might stop their prices from falling as fast.
The tourist business is way down from last year. The continued fear of violence is hurting the resorts. Many high end restaurants have already succumbed to the economic pressures. Businesses are shutting down and the survivors are adapting to the new environment. The demand is for less expensive goods and services.
It was amusing and sad to watch one particular restaurant day after day try to get business. This was in a good location and very clean. The other restaurants on either side were tacky or not as clean but they always had business! This was a classic example of language barrier because they were not getting across what they were selling! Was it breakfast lunch and dinner or ice cream or maybe health food. This is a tough business environment to break into and survive. Another business that is a favorite is a day spa where you can get a 75 minute massage and a pedicure for $35.00. Last year they were getting sloppy with quality service. Some of the other shops were getting their clientele including us. This year they are back out in front of all the other day spas giving the best service at the best price.
We were able to purchase some excellent boots and handmade shoes with various exotic snake and aquatic skins. These items were priced 90% below the going rates in the United States. High quality, excellent craftsmanship with great value.
All in all businesses are struggling to stay afloat which will inevitably hurt the value of real estate. This summer should be the back breaker for many businesses and real estate. I hope my favorites can survive. After this summer the deals should really start to be apparent.
Pictures are of Riveria Cuale Condominium from a suite on the 8th floor and the pool area that sits along the mountain river. The city street is in Sayulita.