Puerto Vallarta Rentals Blog

As we enter the last quarter of 2009, there are growing reports that suggest the world economic crisis is over. Even here in Mexico, where 2009 will likely go down as the worst year since the Great Depression, there are signs of improvement.

Following years of strong growth, the recent downturn in the real estate market in Puerto Vallarta is leading some developers to delay future projects.
One example is a recent turn around in the housing real estate sector. While activity remains sluggish, Jalisco?s three largest markets ? Chapala, Puerto Vallarta and Guadalajara ? are all experiencing an increase in sales. Jaime Calderon Esparza, a broker at Re/Max Ajijic, is upbeat about the housing outlook in the Chapala area. Although business is still slow, he says the latest results from his office indicate the worst is over: ?Sales have begun to pick up. There?s a lot more activity.? Many of the calls his office has been fielding are from Americans and Canadians, who make up 80 percent of the Chapala market.

Calderon points to the rental market as yet another positive indicator. At Re/Max Ajijic, rental properties are already 80 percent booked for the upcoming high season, which Calderon believes bodes well for the sales market: ?This high season is going to be very good.? While sales are on the rise, Calderon says prices, which were ?punished by the economic crisis,? remain depressed.

Chris Gruenwald, a real estate agent with Casa Mexico Real Estate in Ajijic, has also seen more activity recently: ?We hit bottom in April, May, and June, but since July, we?ve seen an increase in sales.? He, too, thinks the turnaround in the rental market is a good sign; 80 to 90 percent of his company?s properties are already rented for the high season. Gruenwald cautions that even though sales are on the upswing, it?s going to take another year or two to see any kind of ?boom.?

Unlike Calderon, Gruenwald doesn?t think the crisis has hurt prices in Chapala that much. He attributes this to two reasons: First, Mexicans and Canadians, not just Americans (who experienced the worst housing crisis), make up a sizeable part of the total sector. Secondly, most residents in Chapala are retired and can wait things out. But, Gruenwald admits that people who do have to sell immediately, for whatever reason, are probably going to take a hit.

Puerto Vallarta, a major ?second-home? market, is also on the mend. Rodrigo Saracho, Office Director at Frava Real Estate Puerto Vallarta reports that his office is closing more sales now than this time last year. Saracho blames the depressed real estate market mostly on the global economic recession, but believes the flu scare last spring had an impact. Not only has he seen a decline in sales, but he says there?s been a drop in new construction in the area because developers have decided to wait things out.

One interesting trend Saracho has witnessed lately is a shift in buyers. Last year, sales were split about 50-50 between Mexicans and foreign buyers. But now he says that ratio is more like 80 percent Mexican, and 20 percent foreign. He expects to see a slight improvement this high season in terms of foreign buyers, but cautions that it will come ?little by little.?

Guadalajara, which is predominantly a national market (Mexican buyers), seems to have been better positioned to ride out the storm. While it did not escape the downturn in real estate, it hasn?t been as hard hit as other areas in Mexico that rely heavily on foreign buyers. A drive through the upscale neighborhood of Providencia paints a good picture: no fewer than five high-rise developments are currently under construction. Several are already more than 80 percent sold.

Francisco Cueto, sales consultant at Sierra Plus in Guadalajara, states that the national market is definitely stronger compared to last year, citing more confidence in the sector and the ease of securing mortgages. He says sales of new construction are brisk partly because developers are offering attractive ?pre-sale? deals. So, like with any crisis, there are opportunities to be found, if you know where to look.