A Ten Year Retrospective
A Ten Year Retrospective
The last decade of the millennium has brought a multitude of changes to the real estate market of Puerto Vallarta. The effects of this can be seen by the expansion of the market itself beyond the confines of the Bay of Banderas.
New phrases have been coined to describe the growing residential areas. It is no longer referred to as just Puerto Vallarta, but rather as Costa Vallarta, which defines the region between Cabo Corientes and San Francisco, Nayarit. Vacation condos have been joined by luxury dream homes. New laws and international agreements have made purchasing properties easier than ever before. Up markets and down markets have been weathered and industry professionals have established an association of conformity to keep up with the demands of an expanding marketplace.
Major Influences of Change
An important change has been the acceptance of the Mexican real estate trust system. Ten years ago it was not only difficult for realtors to explain the trust system for the acquisition of Mexican land rights to foreigners, it was difficult for foreigners to accept it. Today the trust is understood and more readily accepted.
This trust system, or Fideicomiso, was implemented in 1973 by the Mexican government and established a way in which foreigners could get the equivalent of an actual title. The law was codified in December of 1993 providing foreigners with the ability to acquire residential real estate through a bank trust. It requires any one of the privately held Mexican banks to act as trustee. The bank holds title to the property, in trust, to which the purchasers are the beneficiary. They have all the rights of ownership to the property and may sell, lease, mortgage, improve, and pass as inheritance, just as with a regular title.
This new Foreign Investment Law and the North American Fair Trade Agreement, NAFTA, in 1992, institutionalized how business is done between Mexico, the United States and Canada, and gave real estate purchasers investment protection and reduced distortions within the industry.
According to Silvia Elías, of PV Realty and President of AMPI, Mexico's association of professional realtors, the NAFTA agreement "was the major reason for the real estate boom in the coastal areas of Mexico. It gave security to buying real estate in Mexico. This, as well as the modernization of Mexican laws pertaining to the conversion of ejido-agrarian land to private status for investment, has increased real estate opportunities tremendously."
The agrarian law of 1992 opened up ejido beach and farmlands for foreign development. This is significant because approximately 50% of the entire land area of Mexico are ejido-agrarian lands and sale/purchase of these properties is banned. Converting ejido land for private use at one time required a presidential decree; but it is now within the jurisdiction of local municipal governments.
With the advent of increased property available for foreign investments, including rights to and deeds for, came long-term financing and title insurance. These American services enabled the real estate market to gain the faith of an ever-increasing North American market. Brock Squire of Brock Squire y Asociados states, "There was no financing 10 years ago, it was all cash or the vendor would take back short-term loans of two to three years."
Inland Mortgage started making loans here after three years of research and due diligence, allowing for US residents to borrow US funds with Mexican property as collateral. These special programs are designed for Mexican property purchase with FHA underwriting standards, with long term fixed interest rates of 9%-10%, plus points. "These factors along with a good US and Canadian economies have kept the market strong and have added to its forward growth.
Changes in the Property Market
Today's product is much more sophisticated than that of a decade ago. While properties have retained the "Vallarta style and charm," they have changed to meet demands.
Items such as Sub Zero refrigerators, mini-split air conditioning, and corian kitchen counters were unheard of and unavailable ten years ago. Another new advancement is the "turn-key" concept whereby condos and villas are now designed to include everything needed to move in the day of closing. These homes are completely outfitted from sheets to staff.
Also unheard of in 1989 was the million-dollar plus market. According to Multi-List Vallarta, the most expensive home on the market at that time was $900,000, which sold for considerably less. In 1999, the market is off to the races with seven properties currently listed in the one- to two-million-dollar price range.
The two-million-dollar plus marketplace exists - there are four now listed from $2,450,000 to $3,875,000 - but is the subject of controversy among industry professionals. Some say it is a case of over reaching the market while others say that it shows confidence in it.The number of new construction starts in the "spec" home, custom, and pre-sale market as well as the volume of re-sale properties in all price ranges have steadily increased over the last five years, another sign of consumer and lender confidence.
The most sought after property still contains the same ingredients: view, value, design, location, and price. The highest selling market remains the two-bedroom condominium and the three-bedroom single-family residence which have traditionally had the largest inventory.
In 1990 there were 98 two-bedroom condos with an average list price of $116,564. In the second quarter of this year the number is 74, with an average list price of $205,925. These numbers are somewhat inflated due to a small number of higher priced luxury units in the Conchas Chinas area. The average 1999 Marina Vallarta property list price of $122,663 is a truer reflection of the two-bedroom condo market. Interestingly, the number of three-bedroom homes on the market in 1990 is the same as today: 40. Ten years ago these three-bedroom houses had an average list price of $217,942. Today the same house would cost $241,215. The 1999 prices are within the $150,000 to $250,000 price range that the realtors agree is the main marketplace at this time.
However, houses with four and five bedrooms have doubled in asking price with very little inventory growth. That market had 17 homes available in 1990 compared with 23 today. Yet, in 1990, an average four-bedroom home was asking $257,000; now it is $492,626. The five-bedroom market has doubled in not only price but inventory as well. Ten years ago there were only eight such houses on the market at an average price of $553,750. Currently, there are 19 listed with the average asking price of $908,139. These statistics show steady upward market growth and return of investment for foreign investors of property in Puerto Vallarta.
Buyers Today vs. Yesterday
Realtors agree that buyers today are more sophisticated. They have educated themselves with market trends and thus are more market savvy than ever before.
Moray Applegate of Applegate Realtors defines them as "A highly successful, high-end type of clientele who force us to be cutting edge." He goes on to say "More East Coast Americans, Canadians and Europeans are purchasing here, yet 60% to 70% of the buyers are from the Mid West and West Coast of the US. They range from 45- to 70-years old, retired or semi-retired, who want to spend two to three months out of the year here."
Giovanna Mosqueda of Century 21 Giovanna concurs, adding, "We are seeing younger buyers today buying with cash - couples in their 30s and 40s who are buying condos. And, the alternative-lifestyle market is also growing substantially. She also notes that there is "a growing national market of businessmen and their families who are purchasing here."
Moray explains that along with homebuyers, "Foreign developers are also investing, as they know what the buyers want and can produce it." Giovanna agrees, stating, "The developers are answering the buyers' demands." Puerto Vallarta has been and remains an attractive market due its close proximity to the United States and Canada.
Buyers are also now being attracted to the properties here because of the state-of-the-art product these developers build. They know that their investment dollar will be spent on a home with all the conveniences they are use to and want.
The Expanding Residential Region
The current prosperity in real estate has driven the market beyond the borders of Puerto Vallarta. Today realtors represent properties south from Boca de Tomatlán and north to San Pancho. Local satellite offices are popping up to serve these outlying areas. Mega-resorts with residential communities including golf courses, spas, upscale club houses, and ultra-modern homes can be found in varying degrees of completion all along the coast of Nayarit.
Development trends between Nuevo Vallarta and Punta de Mita, according to realtor Brock Squire, "are being driven by the new four-lane highway and pulled by the 150-million dollar Punta de Mita Four Seasons resort and 1,500-acre planned development."
Moray Applegate further explains this trend: "Real estate is going where the land and nicer beaches are; Sayulita, Punta de Mita and San Pancho attract many with their sleepy village feeling. The new road is a major force and has exploded Nayarit. Soon, with the driving time reduced, Punta de Mita will only be a 15-minute longer drive (from Nuevo Vallarta) than it is to Conchas Chinas."
Statistics show gains in the north shore market as well. In 1989 a beachfront home with three lots in Nuevo Vallarta listed at $850,000. Currently there is a comparable property listed in the same area for three-million dollars. Furthermore, in today's market just a residential beachfront lot in the same area lists for $700.000 to $950.000.
However, Silvia Elías reports, "there are only spotty areas of double and triple gains; not all markets experience this." Not to be overlooked is the even further expansion of development up the Nayarit coast to Plantanitos. Along this shoreline two major ecologically conservative housing developments have taken the market to the pristine beaches of these outer reaches proving that to "get away from it all" may take a little more travel in the next century. Realtors agree this northward expansion shows the continued popularity and security that foreign investors find in Costa Vallarta.
Real Estate Industry Changes
Real Estate markets are cyclical. It is a matter of supply and demand. The last upswing began ten years ago with the development of Marina Vallarta. This took the stress off of the downtown area by providing a new type of residential product, the beachfront and/or golf course home. This saved the downtown core from hotel chains and condominium projects without sacrificing the colonial village image. Within six years the Marina was basically sold out, just as market demand was dwindling.
By 1994, there were essentially no new developments or projects starting and the Mexican economy soon put a stop to whatever market there was. Transactions then consisted purely of re-sales, which ultimately took care of the excess supply. Prices reflected this down swing and began to moderate and in some markets, show a loss. By 1997 there began to be more of a demand for product than what was available - supply and demand again.
Now at the dawn of a new millennium Puerto Vallarta is experiencing unprecedented growth. With growth come issues. The main one on the minds of realtors today is the need for more regulation within the real estate industry. AMPI was formed ten years ago to provide a professional structure for a uniform industry and to maintain a measure of congruity and ethical values.
Today, many realtors agree that real estate practices need to be more closely policed. Moray Applegate explains: "Real estate practices are not regulated by the government for licensing, and, as owner of the oldest real estate office in Puerto Vallarta, it irritates me that people come in here with no real estate background or training and try to sell. This leads to unethical and unknowledgeable people selling real estate, and needs to be addressed as it effects national and local interests." Giovanna Mosqueda further states: "The biggest concern within the industry is the need for AMPI to deal with professionals who get into trouble. Suspensions, fines, or other tactics need to be imposed; there is a real need for regulation. It does not cost more to do things right."All of these ingredients lead to an increasingly progressive and professional real estate sector, one that Puerto Vallarta can proudly march into the 21st century with.
A Look into the Future
Local realtors agree with Brock Squire in that, "If there continues to be perceived value in the market place, and if the US economy maintains itself and lasts for another two or three years, the future of real estate in Puerto Vallarta could be very positive."
Moray Applegate also says: "The market strongly depends on the economy of the United States, as well as the Mexican elections in the year 2000." Bill Taylor of Bill Taylor Real Estate declares: "The Y2K may have a local effect by people withdrawing profits from the stock market and reinvesting into resort areas. We have already seen this trend beginning. I predict because of this we will sell more real estate in the four months preceding the new millennium than we have in the last two years combined. Stock market profit takers want their money doing something, not just sitting in a bank, and see Puerto Vallarta as a more exciting investment opportunity."
The Internet is also contributing to the future of real estate in Costa Vallarta. Nearly all of the local realtors maintain web sites promoting this area and their businesses. Many prospective buyers have and will continue to use this invaluable tool to research the area when choosing a foreign investment.
Multi-List Vallarta, the oldest multiple listing service in Mexico, will soon be available for local realtors online. They will then be able to download specific listing information electronically to keep them informed of new property listings.
New frontiers in land, properties, and acquisition have contributed to the sophistication, advancements, as well as the difficulties of a progressive real estate industry in Puerto Vallarta. All of these have been accomplished in the last ten years without losing the charm and truly Mexican feel that has attracted people to this area, not only in past decades but for decades to come.
http://www.mlsvallarta.com/puerto-vallarta-real-estate/moreinformation/puerto-vallarta-real-estate-articles/a-ten-year-retrospective.shtml
The last decade of the millennium has brought a multitude of changes to the real estate market of Puerto Vallarta. The effects of this can be seen by the expansion of the market itself beyond the confines of the Bay of Banderas.
New phrases have been coined to describe the growing residential areas. It is no longer referred to as just Puerto Vallarta, but rather as Costa Vallarta, which defines the region between Cabo Corientes and San Francisco, Nayarit. Vacation condos have been joined by luxury dream homes. New laws and international agreements have made purchasing properties easier than ever before. Up markets and down markets have been weathered and industry professionals have established an association of conformity to keep up with the demands of an expanding marketplace.
Major Influences of Change
An important change has been the acceptance of the Mexican real estate trust system. Ten years ago it was not only difficult for realtors to explain the trust system for the acquisition of Mexican land rights to foreigners, it was difficult for foreigners to accept it. Today the trust is understood and more readily accepted.
This trust system, or Fideicomiso, was implemented in 1973 by the Mexican government and established a way in which foreigners could get the equivalent of an actual title. The law was codified in December of 1993 providing foreigners with the ability to acquire residential real estate through a bank trust. It requires any one of the privately held Mexican banks to act as trustee. The bank holds title to the property, in trust, to which the purchasers are the beneficiary. They have all the rights of ownership to the property and may sell, lease, mortgage, improve, and pass as inheritance, just as with a regular title.
This new Foreign Investment Law and the North American Fair Trade Agreement, NAFTA, in 1992, institutionalized how business is done between Mexico, the United States and Canada, and gave real estate purchasers investment protection and reduced distortions within the industry.
According to Silvia Elías, of PV Realty and President of AMPI, Mexico's association of professional realtors, the NAFTA agreement "was the major reason for the real estate boom in the coastal areas of Mexico. It gave security to buying real estate in Mexico. This, as well as the modernization of Mexican laws pertaining to the conversion of ejido-agrarian land to private status for investment, has increased real estate opportunities tremendously."
The agrarian law of 1992 opened up ejido beach and farmlands for foreign development. This is significant because approximately 50% of the entire land area of Mexico are ejido-agrarian lands and sale/purchase of these properties is banned. Converting ejido land for private use at one time required a presidential decree; but it is now within the jurisdiction of local municipal governments.
With the advent of increased property available for foreign investments, including rights to and deeds for, came long-term financing and title insurance. These American services enabled the real estate market to gain the faith of an ever-increasing North American market. Brock Squire of Brock Squire y Asociados states, "There was no financing 10 years ago, it was all cash or the vendor would take back short-term loans of two to three years."
Inland Mortgage started making loans here after three years of research and due diligence, allowing for US residents to borrow US funds with Mexican property as collateral. These special programs are designed for Mexican property purchase with FHA underwriting standards, with long term fixed interest rates of 9%-10%, plus points. "These factors along with a good US and Canadian economies have kept the market strong and have added to its forward growth.
Changes in the Property Market
Today's product is much more sophisticated than that of a decade ago. While properties have retained the "Vallarta style and charm," they have changed to meet demands.
Items such as Sub Zero refrigerators, mini-split air conditioning, and corian kitchen counters were unheard of and unavailable ten years ago. Another new advancement is the "turn-key" concept whereby condos and villas are now designed to include everything needed to move in the day of closing. These homes are completely outfitted from sheets to staff.
Also unheard of in 1989 was the million-dollar plus market. According to Multi-List Vallarta, the most expensive home on the market at that time was $900,000, which sold for considerably less. In 1999, the market is off to the races with seven properties currently listed in the one- to two-million-dollar price range.
The two-million-dollar plus marketplace exists - there are four now listed from $2,450,000 to $3,875,000 - but is the subject of controversy among industry professionals. Some say it is a case of over reaching the market while others say that it shows confidence in it.The number of new construction starts in the "spec" home, custom, and pre-sale market as well as the volume of re-sale properties in all price ranges have steadily increased over the last five years, another sign of consumer and lender confidence.
The most sought after property still contains the same ingredients: view, value, design, location, and price. The highest selling market remains the two-bedroom condominium and the three-bedroom single-family residence which have traditionally had the largest inventory.
In 1990 there were 98 two-bedroom condos with an average list price of $116,564. In the second quarter of this year the number is 74, with an average list price of $205,925. These numbers are somewhat inflated due to a small number of higher priced luxury units in the Conchas Chinas area. The average 1999 Marina Vallarta property list price of $122,663 is a truer reflection of the two-bedroom condo market. Interestingly, the number of three-bedroom homes on the market in 1990 is the same as today: 40. Ten years ago these three-bedroom houses had an average list price of $217,942. Today the same house would cost $241,215. The 1999 prices are within the $150,000 to $250,000 price range that the realtors agree is the main marketplace at this time.
However, houses with four and five bedrooms have doubled in asking price with very little inventory growth. That market had 17 homes available in 1990 compared with 23 today. Yet, in 1990, an average four-bedroom home was asking $257,000; now it is $492,626. The five-bedroom market has doubled in not only price but inventory as well. Ten years ago there were only eight such houses on the market at an average price of $553,750. Currently, there are 19 listed with the average asking price of $908,139. These statistics show steady upward market growth and return of investment for foreign investors of property in Puerto Vallarta.
Buyers Today vs. Yesterday
Realtors agree that buyers today are more sophisticated. They have educated themselves with market trends and thus are more market savvy than ever before.
Moray Applegate of Applegate Realtors defines them as "A highly successful, high-end type of clientele who force us to be cutting edge." He goes on to say "More East Coast Americans, Canadians and Europeans are purchasing here, yet 60% to 70% of the buyers are from the Mid West and West Coast of the US. They range from 45- to 70-years old, retired or semi-retired, who want to spend two to three months out of the year here."
Giovanna Mosqueda of Century 21 Giovanna concurs, adding, "We are seeing younger buyers today buying with cash - couples in their 30s and 40s who are buying condos. And, the alternative-lifestyle market is also growing substantially. She also notes that there is "a growing national market of businessmen and their families who are purchasing here."
Moray explains that along with homebuyers, "Foreign developers are also investing, as they know what the buyers want and can produce it." Giovanna agrees, stating, "The developers are answering the buyers' demands." Puerto Vallarta has been and remains an attractive market due its close proximity to the United States and Canada.
Buyers are also now being attracted to the properties here because of the state-of-the-art product these developers build. They know that their investment dollar will be spent on a home with all the conveniences they are use to and want.
The Expanding Residential Region
The current prosperity in real estate has driven the market beyond the borders of Puerto Vallarta. Today realtors represent properties south from Boca de Tomatlán and north to San Pancho. Local satellite offices are popping up to serve these outlying areas. Mega-resorts with residential communities including golf courses, spas, upscale club houses, and ultra-modern homes can be found in varying degrees of completion all along the coast of Nayarit.
Development trends between Nuevo Vallarta and Punta de Mita, according to realtor Brock Squire, "are being driven by the new four-lane highway and pulled by the 150-million dollar Punta de Mita Four Seasons resort and 1,500-acre planned development."
Moray Applegate further explains this trend: "Real estate is going where the land and nicer beaches are; Sayulita, Punta de Mita and San Pancho attract many with their sleepy village feeling. The new road is a major force and has exploded Nayarit. Soon, with the driving time reduced, Punta de Mita will only be a 15-minute longer drive (from Nuevo Vallarta) than it is to Conchas Chinas."
Statistics show gains in the north shore market as well. In 1989 a beachfront home with three lots in Nuevo Vallarta listed at $850,000. Currently there is a comparable property listed in the same area for three-million dollars. Furthermore, in today's market just a residential beachfront lot in the same area lists for $700.000 to $950.000.
However, Silvia Elías reports, "there are only spotty areas of double and triple gains; not all markets experience this." Not to be overlooked is the even further expansion of development up the Nayarit coast to Plantanitos. Along this shoreline two major ecologically conservative housing developments have taken the market to the pristine beaches of these outer reaches proving that to "get away from it all" may take a little more travel in the next century. Realtors agree this northward expansion shows the continued popularity and security that foreign investors find in Costa Vallarta.
Real Estate Industry Changes
Real Estate markets are cyclical. It is a matter of supply and demand. The last upswing began ten years ago with the development of Marina Vallarta. This took the stress off of the downtown area by providing a new type of residential product, the beachfront and/or golf course home. This saved the downtown core from hotel chains and condominium projects without sacrificing the colonial village image. Within six years the Marina was basically sold out, just as market demand was dwindling.
By 1994, there were essentially no new developments or projects starting and the Mexican economy soon put a stop to whatever market there was. Transactions then consisted purely of re-sales, which ultimately took care of the excess supply. Prices reflected this down swing and began to moderate and in some markets, show a loss. By 1997 there began to be more of a demand for product than what was available - supply and demand again.
Now at the dawn of a new millennium Puerto Vallarta is experiencing unprecedented growth. With growth come issues. The main one on the minds of realtors today is the need for more regulation within the real estate industry. AMPI was formed ten years ago to provide a professional structure for a uniform industry and to maintain a measure of congruity and ethical values.
Today, many realtors agree that real estate practices need to be more closely policed. Moray Applegate explains: "Real estate practices are not regulated by the government for licensing, and, as owner of the oldest real estate office in Puerto Vallarta, it irritates me that people come in here with no real estate background or training and try to sell. This leads to unethical and unknowledgeable people selling real estate, and needs to be addressed as it effects national and local interests." Giovanna Mosqueda further states: "The biggest concern within the industry is the need for AMPI to deal with professionals who get into trouble. Suspensions, fines, or other tactics need to be imposed; there is a real need for regulation. It does not cost more to do things right."All of these ingredients lead to an increasingly progressive and professional real estate sector, one that Puerto Vallarta can proudly march into the 21st century with.
A Look into the Future
Local realtors agree with Brock Squire in that, "If there continues to be perceived value in the market place, and if the US economy maintains itself and lasts for another two or three years, the future of real estate in Puerto Vallarta could be very positive."
Moray Applegate also says: "The market strongly depends on the economy of the United States, as well as the Mexican elections in the year 2000." Bill Taylor of Bill Taylor Real Estate declares: "The Y2K may have a local effect by people withdrawing profits from the stock market and reinvesting into resort areas. We have already seen this trend beginning. I predict because of this we will sell more real estate in the four months preceding the new millennium than we have in the last two years combined. Stock market profit takers want their money doing something, not just sitting in a bank, and see Puerto Vallarta as a more exciting investment opportunity."
The Internet is also contributing to the future of real estate in Costa Vallarta. Nearly all of the local realtors maintain web sites promoting this area and their businesses. Many prospective buyers have and will continue to use this invaluable tool to research the area when choosing a foreign investment.
Multi-List Vallarta, the oldest multiple listing service in Mexico, will soon be available for local realtors online. They will then be able to download specific listing information electronically to keep them informed of new property listings.
New frontiers in land, properties, and acquisition have contributed to the sophistication, advancements, as well as the difficulties of a progressive real estate industry in Puerto Vallarta. All of these have been accomplished in the last ten years without losing the charm and truly Mexican feel that has attracted people to this area, not only in past decades but for decades to come.
http://www.mlsvallarta.com/puerto-vallarta-real-estate/moreinformation/puerto-vallarta-real-estate-articles/a-ten-year-retrospective.shtml
posted by La Punta Realty at 1:43:00 PM
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