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Ajijic

A Factor In Real Estate Sales in Mexico

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Yeah really, who of us examined the quality of construction of our NOB house, compared it to the one we could buy in mexico and made the jump? Not a factor.

That crystal ball is looking like the best shot at an answer....

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Although housing prices have dropped dramatically in many areas of the USA, it is still much more expensive to live here. You may get a bargain home but you will need a good income to live decently

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I don't think you can really compare the real estate situation in Mexico with that NOB. Most homes in the US and Canada are bought with mortgages. In Mexico a good many homes are purchases in cash. The owners know how much they have invested in their properties, and they are not inclined to take losses. Since they are not paying a mortgage, they are not under a lot of pressure to sell. They can just wait it out.

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The housing market here lakeside is primed to fall dramatically.... way too much inventory compared to sales, every month there are new listings if only from owners passing away. For gringo retirees, we are competing with the US sun belt where comfortable 1500 to 2500 square foot houses are available for a third to half of the cost here. The fact that mortgages are available up north is to their advantage not ours. Ease of purchase, security/safety etc are all in the favor of the sunbelt. We do have the 'best climate in north america' on our side but most retirees trek back to see grandkids etc in the summers anyway so 12 month a year climate isn't as big a factor as one would think. That is why we see an ever building surplus of houses for sale here, more people dying every month than coming down and buying. We are benefit of 'refugees' from Guadalajara moving here for security an quality of life issues but once the middle class here in Mexico begins to feel the crunch of recession/depression as has happened in the US prices will have no choice but to fall...

We've lived in Mexico going on 20 years now and here lakeside for 7, we love it here but have to look at the situation honestly.... We expect to have a LOT more into the house we own here than we or our descendants will be able to sell it for but at least we don't have a mortgage to be upside down on. We just hope that security and the drug wars don't get so bad we feel we have to leave and take that loss.

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I don't get why anyone would buy a home in Mexico when you can rent long term so cheaply. Why put your $$ into an unstable economy/market/location? I've never really understood the need for ownership. Renting is cheap, you don't have to worry about the upkeep, you can pull up stakes when and if things get too scary and you don't have to worry about losing your shirt on a re-sale. I would love to hear the benefits vs. the downside of renting (long term) vs. buying.

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Real simply, if you can buy cheap and resell high it makes total sense, no? Some of us were able to do that back when and it may be getting time that it can be done again, but who really knows. Plenty of people thought we were nuts to pay $45,000 for a house in San Antonio in 2001 but I can tell you we made a nice profit. Usually if everyone else wants to sell it's a good time to buy and vice versa.

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To Rufus: You will only know the bottom when viewed in the future. Just like the bottom in a stock.

To Canookie: Net worth is achieved by owning things, real estate, stocks, businesses, etc, not renting something. No risk, no reward.

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Fact. There are dozens if not hundreds of folks from Guad buying those 70/80,000usd houses being built in El Chante..and I assume many are used as 2nd homes.

I am told, this year, more Mexicans bought home at Lakeside than did folks from Canada!!

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I don't get why anyone would buy a home in Mexico when you can rent long term so cheaply. Why put your $$ into an unstable economy/market/location? I've never really understood the need for ownership. Renting is cheap, you don't have to worry about the upkeep, you can pull up stakes when and if things get too scary and you don't have to worry about losing your shirt on a re-sale. I would love to hear the benefits vs. the downside of renting (long term) vs. buying.

True, and moving is SO much fun.

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"To Canookie: Net worth is achieved by owning things, real estate, stocks, businesses, etc, not renting something. No risk, no reward."

I get that but "that was then and this is now"...not sure if the prudent way to build your net worth is by investing in Mexico...even if real estate is at an all time low right now, is there enough time for us baby boomers to ever realize a profit when selling, or for that matter, how likely can we sell when we need to (ill health, death, etc.)? I guess there are always the two philosophies regarding buying vs renting. But I think there is a stronger case for renting in Mexico in particular than buying there. Just MHO!!

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Betsy in particular wanted figures and I do understand her frustration so here are mine. We recently looked for a new rental. We did not find what we wanted but our needs are rather specific and we have options available for our time next year for travelling so we found a month-to-month rental house which is on the market. It is smaller than we need but with a pool and location in the village as a short term solution it works until we decide otherwise or if it does sell we have generous time to pack everything into storage and go visiting. I personally do not believe the bottom has arrived in Ajijic. Three realtors have said they have houses that have been on the market for more than a year and the clients have said if those houses do not sell over this winter season they will be available for longterm rental because the owners must generate income. Of the more than 40 houses we looked at we were told that 3 had mortgages on them and the rent was not negotiable because the mortgage and costs had to be covered. The one mortgaged property we were serious about was willing to take a 3 1/2 year lease at a static rent.

The very nice house on a nice Ajijic street we just vacated after almost 7 years sold for about $30K more than the 2004/5 purchase price. This same house was offered to us 3 times during our tenancy, first in early 2006 for $490K, again in late 2008 for $380K, and in late 2009 for $350K. It sold last April for around $275K with only 6 days on the market and two bidders. It is a nice house with a large lot and big rooms and a pool. The owner chose to make no major outlays for maintenance during 7 years, although the water bill was high, about $9000 and the taxes were around $2000 and it averaged $6000 a year for maintenance or replacements. For the almost 7 years there we paid him $63K in rent.

It was difficult not to buy that house. However we had decided in 2010 we'd finish the lease through 2011 and move to another location for a new experience. When we knew the price before it was listed it was very difficult to not buy it, and we had many discussions and swings of thought however one thing never changed. The pool was in the back of the house and we had found that we did not enjoy it because it was an 'out of sight out of mind' pool.

Either way we are off on a new phase of our Mexican experience. Atlas is right, moving is a major hassle.

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Solajijic great post.

Canookie I agree for the vast majority what you say is true.

Many in the US will now tell you owning real estate was not all it was cracked up to be and tens of millions are upside down and millions facing foreclosure. In the US relatively few have pensions and many were counting on their home equity and mortgages being paid off at time of retirement.

And, expats who bought in Mexico from approx 2005 to 2009 likely would sell at a loss if on the market today. Another factor may be exchange rates which can affect what you truly may gain or loose in a sale if one is returning NOB.

Some expat renters love the idea of being able to move quickly and somewhat often. They can up and leave to explore new places or return to their home country or off to another. Some have a gypsy attitude and thrive.

For a few in Mexico their personality is one of wanting roots; plus, some enjoy improving their home as it is personally satisfying and and a few like me have made this their "forever" home. In my case my wife is Mexican as is my step-daughter. We are creating a home, close to an excellent school that will be left to one or both depending on circumstances.

For the majority though, from a financial perspective renting in my opinion is best. I am sure some of those expats with homes for sale today may be regretting their purchase.

It should also be noted one can sell quickly when price is right as Solajijic acknowledged. For those who say the market is not down or very little I suggest you read the post above, again... 490K original list to selling at 275K is huge and truly reflects the market. That home ended up with 2 bidders so again right price and they will sell. If the proposed casino opens I suspect prices will drop more.

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Odd isn't it that construction is way up since 2008? Perhaps the current crop of buyers do not want to take on a major renovation project and would prefer to build their dream home in Mexico. There are a lot of single home construction projects.

More than a few have had unpleasant surprises when the final total came in way over budget. Building today costs money and lots of it.

Copper, labor, materials, etc. can put things way out of reach. Let the buyer beware.

So can IMSS payments and finiquitos. These are little surprises that nobody wants.

What's more, good lots are now very hard to find, and expensive. Land prices have tripled in recent years, at least, if not a lot more.

There are many things to take into consideration in your decision making.

1. Do you speak Spanish?

2. Are you aware of local laws and ordinances?

3. Do you understand construction methods here?

4. How's your knowledge about various areas lakeside?

5. Will you be on site the majority of the time?

6. Cost of materials, do your homework.

Selling low, unless absolutely necessary, is just another bad financial move IMO. Haste makes waste.

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Odd isn't it that construction is way up since 2008? Perhaps the current crop of buyers do not want to take on a major renovation project and would prefer to build their dream home in Mexico. There are a lot of single home construction projects.

More than a few have had unpleasant surprises when the final total came in way over budget. Building today costs money and lots of it.

Copper, labor, materials, etc. can put things way out of reach. Let the buyer beware.

So can IMSS payments and finiquitos. These are little surprises that nobody wants.

What's more, good lots are now very hard to find, and expensive. Land prices have tripled in recent years, at least, if not a lot more.

There are many things to take into consideration in your decision making.

1. Do you speak Spanish?

2. Are you aware of local laws and ordinances?

3. Do you understand construction methods here?

4. How's your knowledge about various areas lakeside?

5. Will you be on site the majority of the time?

6. Cost of materials, do your homework.

Selling low, unless absolutely necessary, is just another bad financial move IMO. Haste makes waste.

If new construction really is way up I wonder if it is because they are building "dream homes" or those little cracker boxes that have been going up....

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If new construction really is way up I wonder if it is because they are building "dream homes" or those little cracker boxes that have been going up....

Nope Betsy, not in my experience. Lots of high end building going on right left and center. I was not referring to the rabbit warrens.

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Asking when the real estate market will bottom out is probably pretty much pointless, unless someone has some inside information.

Unfortunately, it seems as if most new construction in the Guadalajara area are those cookie cutter homes that look like they stamped them out with a machine. Worse, it seems as if there is no yard to speak of, and what little there is, is taken up with parked cars. The whole neighborhood looks like a used car lot.

There has to be something better than that.

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I don't get why anyone would buy a home in Mexico when you can rent long term so cheaply. Why put your $$ into an unstable economy/market/location? I've never really understood the need for ownership. Renting is cheap, you don't have to worry about the upkeep, you can pull up stakes when and if things get too scary and you don't have to worry about losing your shirt on a re-sale. I would love to hear the benefits vs. the downside of renting (long term) vs. buying.

For me, it's a philosophical issue. I don't like having a landlord with authority over how I live and what I do in and to my home. It's the same for leasing an auto, there have been times it made more sense to lease than buy but knowing a car 'wasn't really mine' is a price I won't pay, life is too short.

Life is not a business balance sheet, quality of life isn't measured in dollars or pesos.

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There's the philosophical issue, and a few practical ones as well. Aside from some of the horror stories by people whose landlords have treated them badly.........there's the landlords who simply refuse to repair things. There's the uncertainty of what happens when the lease ends. Who knows where rents will go? Up, down, sideways? My crystal ball doesn't answer that question.

At least I know what my overhead is going to be in my owned casa. When the roof springs a leak, I know when it will be fixed. LOL.

And another thing: I'm not going to increase the value of a rental by spending my time and cash fixing it "my way". I learned that lesson the hard way when I was a mere puppy with my first apartment. The month to month rent was reasonable, but the place was dreary......so silly me, I worked my foolish fingers to the bone painting and jazzing. When the landlady saw my proud handiwork, she said "Now that the place is so much nicer, I'll be raising the rent". I won't tell the "rest of the story". Sadder but much wiser, I moved. Later, I owned a lot of houses , and even lost money on one.......but that was the exception.

I realize this market is not ripe for speculation. Timing is all, as is keeping that crystal ball polished.

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Another interesting factor in Real Estate sales here is the recent upsurge in the U.S. dollar. This means that materials are going to cost more, at least in the short run, while the Eurozone gets hammered. Which means........

That dream home is going to cost you more, not less.

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Another interesting factor in Real Estate sales here is the recent upsurge in the U.S. dollar. This means that materials are going to cost more, at least in the short run, while the Eurozone gets hammered. Which means........

That dream home is going to cost you more, not less.

I don't understand. Why would a strong dollar purchase fewer Mexican-made construction materials in Mexico?

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