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Ajijic

A Factor In Real Estate Sales in Mexico

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Maybe yes, maybe no. But if you really want a cheap house these days, go to Phoenix or Las Vegas. Something in excess of 60 percent drop from the highs in those places.

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Maybe yes, maybe no. But if you really want a cheap house these days, go to Phoenix or Las Vegas. Something in excess of 60 percent drop from the highs in those places.

We have friends who live in Phoenix and they say that the real estate market has still not bottomed.

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My thoughts are: if you can not sell your home in the US and / or upside down as are literally millions of homeowners, your chance of coming to Mexico in the next 5 years are slim. And, combine home values with loss of equity, loss of 401K value etc and it sucks big time.

A friend is a property appraiser in Ft Myers. He bought in 2005 at 155K and it went to approx 215K in value and now worth maybe 40K. He is more than upside down if there is such a thing. Fortunately, property taxes have dropped based on value to $600 but no easy way out.

In SMA, according to realtors, amost nothing is selling in any price range. The new $250 million hotel when originally planned was expecting half of their customers to be Americans and expats in general. The percentage is currently 15%. Occupancy on weekdays is 30%.

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The vast majority of the US is not Phoenix or Las Vegas. If 1000 people out of the 35 million baby boomers or .0000285% decided to move to Lake Chapala and SMA, it would go from a buyer's market to a seller's market.

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The US media has caused many retirees to be afraid to come to Mexico for their retirement years. How sad. My husband and I sailed down in 1994 when we were laid off. We could have kept working in a big city, but not being big city people we took the lay off and when you do not owe anyone money you can learn to live frugall especially in Mexico.. Most US folks are in debt. The recession has affected the world and the big financial people pretty much control you when you owe them money.

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There are baby boomers able to retire and going to be some every year, not as many as predicted 4 years ago but still a viable number of retirees.... but, we have to first replace those leaving before there will be a growing market for houses and with people heading north for security reasons and of course the unmentionable truth that we are an older population and people die every day we need quite a bit of 'new blood' every month. So IF there are enough baby boomers retiring to replace those leaving (dead and/or alive) there is a new issue, those 50,000 dollar houses in south Florida, Arizona and many parts of California are competition. I personally think Chapala is one of the best locations to retire in north America, but with the cost of housing so low in the sunbelt retirement areas our overall cost of living here is comparatively pretty high. Unless there is a really amazing real estate recovery up north either prices here will have to fall accordingly or most of the buyers for homes here will be Mexicans.

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There are baby boomers able to retire and going to be some every year, not as many as predicted 4 years ago but still a viable number of retirees.... but, we have to first replace those leaving before there will be a growing market for houses and with people heading north for security reasons and of course the unmentionable truth that we are an older population and people die every day we need quite a bit of 'new blood' every month. So IF there are enough baby boomers retiring to replace those leaving (dead and/or alive) there is a new issue, those 50,000 dollar houses in south Florida, Arizona and many parts of California are competition. I personally think Chapala is one of the best locations to retire in north America, but with the cost of housing so low in the sunbelt retirement areas our overall cost of living here is comparatively pretty high. Unless there is a really amazing real estate recovery up north either prices here will have to fall accordingly or most of the buyers for homes here will be Mexicans.

Not only are those $50K houses now available in many markets around the US, but they are located in an environment of 1st World services where nearly everyone speaks English. Add in a nice salting of stories about narcotrafficante killings south of the border and you have a very good set of reasons for millions of people to stay home rather than consider moving to sunny Mexico. People who are waiting for that flood of retirees from the US had better pack a lunch. It's going to be a long wait.

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On the other hand: Those "sunbelt" deals are in places which many people would not consider habitable in terms of climate.

Given a choice of Hell or Phoenix........it's a tough call.

On the other hand, places like coastal CA are another story. Fine climate, but high property values resulting in high property taxes.

So, once the lucrative job in Silicon Valley ends with retirement, the choices of what to do next becomes complicated. This may explain the CA license plates around here these days. :huh:

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Oh yes, Phoenix, home of the 700 dollar a month bill for air conditioning. California, now officially broke, will probably be forced to raise already astronomically high property taxes.

What the article does not take into consideration is the Canadian real estate market. Toronto, home to over 5,555,000 people even in 2006 now presumably much higher, has a property boom at the moment. Price wars, high property taxes and horrible weather etc. I might add that many U.S. markets have not been severely affected.

How about Europe? Lots of retirees from there are also arriving here.

People from Guadalajara are also retiring and looking for a more peaceful environment.

So, that said, let's consider 2 people with 1400 a month each in Social Security benefits, 2800 a month. Can one live comfortably on that here? You betcha.

I would also expect to see a lot more retirees moving here in the not so distant future.

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Good point Cracker. Another factor in favor of Mexico is that ex-pats can live in Mexico year round. In most countries of Europe, a non-resident cannot reside there for more than 6 months otherwise you would pay that country's taxes on all your worldwide income, which in most cases is at a higher rate than the US (I can't speak for Canadian income taxes) so even though any foreign taxes a US taxpayer pays is a credit towards your US tax obligation, if the foreign taxes exceed the US taxes, there is no means to recoup that over taxation. In Mexico, the lower property taxes, lower utilities due to milder weather and cheaper gas tilt the odds in favor of Mexico.

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So how much is real estate in the Lake Chapala area really worth right now? I have noticed that some listing prices have dropped ...not enough to sell aparently, because most of them are still there...at least the ones I have been watching. Actual selling prices are not public record here....are the current listing prices we see in the Real estate magazines realistic and close to what they will actually sell for ?

Someone mentioned that nothing is selling in san Miguel de Allende, could it be that asking prices are too far removed from current actual values? A property is only worth what someone will pay for it.... still, no $50,000 houses there. Properties just stay on the market forever.

I know that this is a difficult qiuestion but I hope to hear an opinion or two. It just seems to me that real estate prices here are unrealistic given the current circumstances.

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Betsy one can get selling prices from the city but you are right in that local mls stats are not transparent which I as a former broker in both Canada and the US would say is detrimental to sales. Typically sales were about 17 a month but not sure about recently. With approx 500 mls residential properties for sale plus developers and real estate companies which do not belong to mls. That is a huge supply.

At the right price anything will sell be it SMA or lakside or anywhere. In SMA not even the low end is selling which means they are all over priced. Being silly for a minute, if a home is $100 it will sell. So a matter of finding true market value.

The greater Toronto market and all of Canada is very good right now for one reason ... interest rates. A variable rate open mortgage is 2.2%!!!. Majority of Canadians and Americans have mortgages and they are approved and buy, based on monthly payment not the price of the house So, low interest rates means many are approved with lower income and are entering the market. When rates go up economists are concerned many Canadians will be very stretched.

The Mexican expat market has been down for about 4 years and there is no sign of improvement now or near future. I have been saying this for 4 years and suspect another 4 of dismal expat sales.

Right now a major number of Canadians who are buying outside Canada are buying in Florida as noted in Canadian papers weekly. Prices are extremely low, property taxes based on current value (friend pays $600 in Ft Myers) and his home all electric with his bills between $60 and $150 a month depending on heat, cooling, none. If one buys for say $50 to 100K and saves 100K vs buying over priced homes in Mexico, one can pay for a heck of a lot of extra taxes etc with the 100K and a little interest on that sum. Plus the home isd built to a code and will not have high walls, bars on windows, razor wire or broken glass on wall. lol

There is barely a town or city in the US that has not had a major decline in prices. Simply search Case-Shiller for information as prices in general are back to 2003 prices. If anyone says the expat buying market is going to change here soon, tell me what makes it different than the past 4 years.

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Well I am personally aware of more than a few properties which have sold here in the past year. Some to families from Guadalajara, and some to ex-pats. 500 residential properties doesn't sound like a lot to me.

Interest on 100,000 in the States or Canada would be next to nothing, and probably eaten up by bank fees.

Florida is prone to hurricanes and insurance is difficult if not impossible to get.

Has anyone considered the cost of health insurance in this monetary savings department?

I'm not aware of horrible market conditions over the last 4 years, maybe one or two with an apparent revival in recent months.

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To quote a long ago quip from a post responding to someone who was singing the praises of a seniors' development in McAllen, Texas:

"The only trouble is that when you open your door, you are in McAllen, Texas".

Ditto, IMHO, for the sunbelt and Florida. I also noticed that in the desirable areas of the states, there are no 60% off sales. Not even close.

As every realtor will tell you........it's all about location.

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Well, maybe they are coming soon but at the moment it does not apear that flocks of new retirees are ready to cut their losses on their homes NOB then fork over an extra $100 K to buy an over priced house in Mexico because the weather is nice. As far as I can tell, thanks to the news media too many people up norh think we spend our days dodging bullets and trying to avoid the clutches of kidnappers anyway....still, there will always be Mexican retirees and families buying here , but they are not the ones that drove real estate prices into the wild blue yonder in the first place and they won't be the ones keeping the prices there either.

I don't think too many people would argue that at Lakeside , it is a buyers market...only not too many are buying which is why there are so many houses on the market here. As Ajijic said in an earlier post..."anything will sell at the right price". ...If properties are not moving it is because they are priced too high.

It's funny that in the Mexican culture...and it took me a while to get used to this... it is perfectly alright to ask someone how much they paid for their house (or horse or car or whatever). But just try to find out what the house next door actually sold for...impossible.

So what are the real numbers? How do actual selling prices compare to 2006 prices? Someone talk some %%%% percentages and such...give up the 411! ...please?

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To quote a long ago quip from a post responding to someone who was singing the praises of a seniors' development in McAllen, Texas:

"The only trouble is that when you open your door, you are in McAllen, Texas".

Ditto, IMHO, for the sunbelt and Florida. I also noticed that in the desirable areas of the states, there are no 60% off sales. Not even close.

As every realtor will tell you........it's all about location.

I dunno, I was shocked to see just how far prices have fallen in San Clemente, CA, which certainly qualifies as a desirable area. Climate nearly as good as ours, a gorgeous community. Where my brother had his house, the highly desirable Coast development, his particularly house style has dropped from the 900K price range to the upper 400K. You can now buy a large townhome with oceal view from the second floor balcony in the mid three hundreds there. Never thought I'd see that.

But when I think REALLY overpriced, I think San Miguel which doesn't have our climate, super-convenient location near to all the amenities including great air service. Not to mention three hourse from the beach.

And houses seem to be still selling in Ajijic village. Having been in real estate in past down markets, I remember that even when things were really slow, the best located and prepared houses sold, albeit at reduced prices. Most of the open houses we've ventured into locally often have good location but are real dogs when it comes to preparation and pricing IMO.

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Having lived in San Miguel for over three years before moving here, I found that the magic dust falling on people who come to town resulted in prices in the "Centro" area being insanely high for not much of a casa. Some of the downtown realtors would even tell people that they wouldn't find a house for under half a mil, and then, not much. Well, this simply was a shuck and jive. If you want the skinny on San Miguel, you go to a realtor who's into telling the truth about SMA housing. For the curious: Go to the Select Real Estate website and see the list of properties for sale, complete with virtual tours and plenty of details. You can buy a nearly new house in one of the close-in barrios with a view and all the amenities for around $195K or even less. Overhyped and overpriced are still listed and aren't moving.

I don't know if the low end is moving right now.

Personally, I like living in Centro in Ajijic much better, though SMA has a certain cachet for some.

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One other aspect to all this is the cost of building here. Several years ago an architect from Guadalajara came to visit and told us exactly what it would cost to duplicate our house, including landscaping. Mind you that was probably closer to 4 years ago, and since then the cost of materials, and cost of labor has gone up significantly. Homes in Canada and the U.S. are built with pretty flimsy materials IMO. Apples to apples. A house with 10 inch thick solid masonry walls and terracotta roof tiles is not comparable to sheetrock with brick or siding veneer and asphalt roof tiles.

Would our house be overpriced if we put it on the market at its replacement value of four years ago? I doubt it.

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Some facts ... most expat areas are over priced and little is selling.

To suggest almost impossible to get home insurance in Florida is nonsense.

The ultimate day time highs in SMA are almost the same as the Guadalajara airport and ultimately match those at lakeside albeit it later in the day as nights in winter are cooler just like nights at the Guadalajara airport.

500 homes on mls with a sales rate likely less than 20 a month means a huge imbalance. It is not the number of listing but the ratio of sales to listings. So for a poster to say 500 is not high is not taking sales into account. Then add in the listings of developers, the many companies not part of mls etc. SMA is no different and like lakeside there is no transparency in sales, sale prices, days on market, record of price reductions and selling price is only available at city hall.

For every house at a specific price at lakeside I can find the same amenities in a house for same price in SMA. Example a very nice 2 bedroom house, built in 2007 on a nice lot, in the city was reduced to 89,000 as advertised on my web board. There are many other bargains but again like lakeside one has to search.

My last rental in SMA was a 10 minute walk to central, detached, furnished, 2 bedroom, 2 bath, new kitchen, bath, flooring and was $500 a month.

Most homes in Mexico are not solid concrete. Most are the small red bricks with a layer of cal mixed with concrete for a finish, wiring with taped connections, no vents on plumbing hence sewer gas smells and slow draining, no ground fault on receptacles in "wet" areas, often lacks grounding, no heating, no cooling, single pane windows, sometimes mould, slab floors, no building code etc. As Mainecoons reported a while back after looking at many homes with friends many homes were overpriced, tired, poor quality. This is typical of Mexico be it lakeside, SMA etc

One can build a typical home in Mexico for approx $50 to $60 a sq ft. I am sititng in a new home in SMA with 2100 sq ft of covered area. Most every room is boveda ceiling, construction is sillar which is a better building block that the little red soft bricks and far more insulation value, total roof water collection, 3 bedrooms, 2 baths on 11000 sq ft fenced lot and it was under $135K.

If any one thinks sales were even reasonable let alone good in past 4 years in any expat destination in Mexico they have little knowledge of the real estate market before 2007 and especially 2003 to 2006. In 2005 for example it was difficult to find a home and prices rose almost monthly.

So, be it SMA, lakeside, Barra de Navidad, or similar expat enclaves the market sucks and will for at least 4 more years. There are good buys available but as some have done including me, it takes a long time to know the market and understand the construction and realise how cheap one can build.

My original OP and following post were indicators of the economy which affects expat sales here. If anyone knows why the market will improve in next 4 years please share as the economic predictions for the US is more of the same, Canada a little less rosy than todays ecdonomic situation with the latest unemployment numbers worse in 2 years and many European countries standing on the verge of collapse.

The OP was not to be a "pi$$ing" contest about Ajijic vs SMA nor to discuss weather or inferior construction, insurance in Florida, etc but rather to discuss and point out that economic conditions esp. in the US are affecting real estate sales and little sign of short term improvement. Some of the other less than informed comments simply crack me up. lol

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Well presented. However these are not "facts" but rather your opinions. You're welcome to your own opinion but not your own facts.

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Ajijic, we're just not comparing apples to apples here. Is the economy down the drain, yes. That does not mean that some people don't still have money. Let's take Toronto as an example. A 3 bedroom house on an 11,000 sq. foot lot would be very expensive indeed. For, let's say 700,000 in the city you could buy a starter bungalow at best, an a typical 30X100 foot lot. Taxes, astronomical. Cost of living, hitting the stratosphere. So, I don't really think that economic predictions totally account for what people can afford.

Many Europeans have homes which are also extremely pricey.

Why not retire here, sell that expensive house in a foul climate and have a ton of cash left over for a very comfortable retirement cushion? Makes sense to me.

I still maintain that finding a top quality home here which is well constructed, not those little cookie cutter houses in some developments, is not all that easy.

Square footage bears no reference to quality. Yes, a typical home may be built for $60 a square foot, for a really good home you're looking at a whole lot more.

Then there's the matter of location, location. location. Plus amenities.

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There does seem to be a huge amount of denial about the current state of affairs here and not just on the subject of real estate. I am a little puzzled about the posters that don't see that the real estate market is in serious trouble here but I suppose that has something do do with people wanting to believe that their property is still worth what they paid for it.

I don't think that sales are based entrely on what people can afford, what they are willing to pay is the deciding factor and no matter what you paid your house is not worth more than that. Sheesh, no one is going to buy your over priced house just because they can afford to do so....and for lots of people, Mexico is pretty far down on the list when they think of location location location.

Maybe real estate prices in Mexico are holding despite low sales figures because retirees living in Mexico are just dealing with a different set of circumstances than the average NOB family. But that can't go on forever and surely real estate prices will have to fall considerably and when they do return to earth people will start buying.

i also wonder who is largly responsable for prices being where they are now? Some would say that real estate agents are manipulating the market but it seems to me that a low commission is still better than no commission . ultimately I suppose that the listing price is the sellers call ,, as is the actual sale price which may be very far removed from the listing prices of the homes that actually sell.

I would really like to hear from the well informed, Ajijic and others in the same position....In your opinion, what does the future look like for real estate prices in the expat communities? I am curious about SMA and beach areas , but really interested in Lakeside.

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Since construction methods in Mexico are very different from those in the U.S., comparisons are difficult if not impossible.

Some Mexican contractors do wiring and plumbing that leaves much to be desired......but that's not the topic at hand.

As I recall ........it was about how the real estate market is going and what the chances are of things improving around here, and if so, when.

Many of us lived in an era NOB when real estate went in only one direction....UP.. Some people brought that belief with them and the shock and awe is hitting hard here, as it is everywhere else. We need to get used to the notion that things can get worse and even stay that way. Nobody can do more than guess about the future.

The good news is that our real estate taxes aren't wiping our our retirement funds here as they are doing in some locations NOB. (Those are also the places where they aren't getting hit with a 60% downturn, either.)

WWII saved the NOB economy after the Great Depression, but since we've been on "wartime" footing ever since..........that's not an option this time around. We exported the industrial "farm" to lower the bottom line and we're seeing the results. Hevvin help the new generation. Us old farts who bailed and moved here a while back are the lucky ones, no matter where we live. So our casa isn't worth what we paid for it a while back. Such is economics.

Win some, lose some.

If I can locate a working crystal ball any time soon, I'll post the hourly rental rates here. Heh heh. ^_^

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