Data derived from market activity in the first half of the year 2009
Text by: Carl Timothy • Photos: Danilo Rottigni from Homes & Living
Even though this article is from 2012, considering we have the opportunity to look back in time, it's quite useful for decisions and ideas for the real estate market in Puerto Vallarta Year 2012.
Everyone wants to purchase their new property at the very bottom of a real estate market. Most of us believe a perfect buyer’s market to be when the market hits rock bottom. This theory has three problems:
- Number one, once people believe the bottom of the market has been reached seller usually starts to lose their flexibility and start raising prices attempting to recuperate their lost equity.
- Number two, more buyers start bidding, which can lead to multiple offers.
- Number three, by the time you think the bottom of the market has been hit it is usually six months too late and market values have started to increase. Believe it or not, this is really what defines a “Perfect Buyer’s Market”.
When the market is a buyer’s market demand is low for the available inventory. Translated this means that there is a wonderful array of inventory to choose from. It is an opportunity to purchase a property that otherwise you could not afford or may not normally spend the money to purchase. It is a time for beachfront instead of a hillside, or a panoramic view instead of a nice garden view. It may even be an opportunity for more bedrooms, newer construction, or that private swimming pool with a palapa bar that you did not think you could have.
“We are seeing buyers purchasing properties that they never dreamed possible for them to own,” says Realtor Ron L. Morgan. “I just sold a 3,200 square foot beachfront condominium in downtown Puerto Vallarta to my clients that had been looking at a property half that size with one less bedroom and it was 5 minutes outside of town.”
For those buyers looking at borrowing opportunities, interest rates are low and even though lenders have tightened their requirements recently, for those buyers with good credit it is an excellent opportunity to find that perfect property at lower monthly payments using a new low rate mortgage.
Just coming out of the summer season in Puerto Vallarta, Sellers are motivated. Some Sellers may want to sell in order to take advantage of the buyer’s market in another market area. Maybe they have found another property that can be purchased below its replacement cost or maybe they need to sell just to make it through the recession. No matter what the reason, the motivated Seller’s are motivated. One of the developer clients we represent has recently reduced the pricing on the remaining inventory in one of their projects up to 35%. “We have been selling about one unit a day, which has not been the norm for many months.”
Most property values have decreased to 2004/2005 levels from their all-time highs in 2007. The Puerto Vallarta market has not seen this type of reduction in property values for many years. According to Linda Kennedy of Timothy Fuller & Associates “I believe that savvy real estate buyers are recognizing the available opportunities in this difficult economic climate by purchasing a property at historic lows while inventories are high. I believe that people will look back in 2009 and regret not having purchased real property.” Current economic factors are creating value positions for qualified buyers that will not come along again in a very long time.
For the first time homebuyer in Puerto Vallarta, there has never been such a perfect market for breaking into the Mexican real estate game. The incredible properties that have been recently built, borrowing options, and motivated Sellers all combine to make 2009 a great moment to invest. For Sellers, they must face reality as it is, not as they would like it to be, or even as it was. What could be better for a new homebuyer than that?
Current Market trends show a large demand for real estate by retiring baby boomers looking for a new lifestyle and who are not ready to stay home and watch TV. The grandchildren are in school and this age group is not looking to sit still. They want new activities and opportunities in a safe area where living costs are lower and good healthcare is accessible. With Puerto Vallarta’s renovated International airport it’s easier than ever to catch direct flights from major US cities, European, and Canadian destinations. This makes family and friends visit easy and affordable. With the wonderful opportunities in Puerto Vallarta real estate, now is the “Perfect Buyer’s Market” to invest in and to be able to enjoy the benefits of a strong investment and a quality lifestyle.
If you are interested in purchasing property in Puerto Vallarta or anywhere in Mexico look for an AMPI board of Realtors member. AMPI stands for the Mexican Association of Real Estate Professionals and those members abide by the national association’s code of ethics. They are also members of the United States National Association of Realtors (NAR) and have access to professional standards and training.
Carl Timothy is the owner of Timothy Fuller & Associates and serves on the board of directors for the Puerto Vallarta division of AMPI.