Property Values / Houses

[sirgadabout]

I am wondering what is happening with the property values / houses in the lake area and especially Riberas Del Pilar, is it worthwhile making an investment in a house at this time. Are the values still declining or have they started recovering?

[daisy2013]

I think every location will have pluses and minuses you must pick what is best for you and what you need, some areas are also known as where people get their drugs. Unfortunately many Northerners are not aware of this, talk to locals, hairdressers, gardeners that you become friendly with will tell you volumes. You will know then where to stay away from.

Some always have water problems, some always have trouble with their internet, sometimes decisions are difficult to make but not impossible to make.

good luck

[cookj5]

I am wondering what is happening with the property values / houses in the lake area and especially Riberas Del Pilar, is it worthwhile making an investment in a house at this time. Are the values still declining or have they started recovering?

I think you are always better off, when thinking about buying a house, to consider it first as a place to live rather than as an investment. This doesn't mean ignoring what is going on in the market, or what the resale possibilities might be, just that there are much better and safer investments than houses. Speculation is risky by its very nature, but with housing in Mexico, especially so.

The investment is very illiquid. Houses often sit on the market for years. There is no mortgage market like what exists north of the border, so most folks have to plunk down the whole amount, up front, which may tie up a very large percentage of their net worth. There are no zoning laws here so who knows what might end up next to your property in the future, maybe an evento site, or a carpenter shop with saws whining all day? There are no disclosure laws, so what you don't see may be what you get and it can turn out to be a nasty surprise.

In addition, in my opinion, a great deal of the houses on the market are still very overpriced and need to drop a considerable amount to be worth considering. Yes, you can find a nice place at a decent price, but be prepared to look a long time because there are a lot of frogs out there waiting to be kissed and few of them will turn out to be princes.

You didn't say whether you live here already, but if you don't I would advise (and most folks who do live here will too) to rent for a year or two (at least) before even considering buying so that you know what is out there. After that time, you will have some basis to judge the market and know something of how the system down here really works. Making big moves quickly is a recipe for disaster.

Just my humble opinion. Others may differ.

[Mainecoons]

Several houses in my area that have sat for a long time have sold in the last 3 months. My realtor friends tell me that around or under $200K sells a lot better than over $300K. I've also noticed that construction has picked up in places like La Floresta and Riberas. My overall impression is that the overall market has leveled off at least in the more convenient locations.

In a slow market, location is even more important so keep that in mind.

Although houses here are almost always constructed of sturdy masonry materials, things like glazing, electrical, plumbing and roofs usually have serious deficiencies. Some of the newer construction on the hillside has foundation deficiencies.

My realtor friends also tell me that we are getting more and more GDL buyers. A house down the street from me that has been on the market on and off for over 7 years sold at a price I'd never consider it for, to affluent Tapatios.

It's a pretty good bet that if an area you're interested in has a lot of houses for sale, there's some concerns you'll want to look for.

[RCman]

To sirgadabout .... I lived in Ajijic for several years and although I am no longer there I follow this web site daily. I see many opinions expressed about all topics. When it comes to Real Estate, opinions vary wildly but I must say that jnc and Mainecoons have given you the best advice I've seen in quite some time. As someone who has nothing invested, I think they are both dead-on....

[nana]

It's a pretty good bet that if an area you're interested in has a lot of houses for sale, there's some concerns you'll want to look for.

I was also wondering for a while why so many houses were for sale in our neighborhood. I've asked many neighbors at a community party why they were selling their house (not because I'm selling mine--I'm not, but I was curious), Here are their answers, and I believe them:

Three -- health issues.

Two - missing grandkids.

Two -- found interest in another area of Mexico (the beach).

One - want a smaller place.

Another (but not from our area) joined in and said that he had done his time in Mexico. He had intended to live here 5 years but made 8.

And then I came across a frustrated man who passed the message that he was fed up with the way things were working here IN MEXICO, blah, blah, blah. No positive arguments could change his mind. After a while, when he's had a few more drinks, the truth surfaced. He declared in all innocence: "We just can't wait to go back home. We miss our family soooo much. Ooops! Was this the real reason behind the whole frustration thing?

I'm not saying nobody wants to sell for not liking their neighbohood. I'm sure a certain (smaller) percentage feels sorry they live where they bought, but not all of them do. Now I believe in coincidences. I've learned (with age) not to draw any conclusions on what seems to be. I always like to hear from the horse's mouth.

[bwhite1948]

I was also wondering for a while why so many houses were for sale in our neighborhood. I've asked many neighbors at a community party why they were selling their house (not because I'm selling mine--I'm not, but I was curious), Here are their answers, and I believe them:

Three -- health issues.

Two - missing grandkids.

Two -- found interest in another area of Mexico (the beach).

One - want a smaller place.

Another (but not from our area) joined in and said that he had done his time in Mexico. He had intended to live here 5 years but made 8.

And then I came across a frustrated man who passed the message that he was fed up with the way things were working here IN MEXICO, blah, blah, blah. No positive arguments could change his mind. After a while, when he's had a few more drinks, the truth surfaced. He declared in all innocence: "We just can't wait to go back home. We miss our family soooo much. Ooops! Was this the real reason behind the whole frustration thing?

I'm not saying nobody wants to sell for not liking their neighbohood. I'm sure a certain (smaller) percentage feels sorry they live where they bought, but not all of them do. Now I believe in coincidences. I've learned (with age) not to draw any conclusions on what seems to be. I always like to hear from the horse's mouth.

I don't disagree that people lie about why they are leaving Lakeside. It may be easier for some to say, "health" when they really mean they are tired of being an expat and want to go back to their homeland. Or, for others, it's easier to say, "crime" when it's really because they miss their grand kids. Frankly, no one owes anyone an explanation as to why they are moving, but everyone always asks.

The OP was asking about the real estate market. Regardless of the 'whys,' the bottom line is there are many more sellers than there are buyers.

PS: You said there are 8 homes for sale in your neighborhood; that sounds like a very high number of homes on the market for almost any single neighborhood around here, especially in the off-season since many wait until fall/winter to list their places.

[HarryB]

I think the saying is act in haste , regret in leisure. No question the area is catering to the guad squad and not the foreigners. In many cases both vie for the title most obnoxious, so it must be a money thing

[Mainecoons]

There are still more sellers than buyers and that argues for being very aggressive when making offers. However, it does appear that things are starting to shift back towards more balance though no one should expect the heyday of the seller's market to return here or NOB for that matter.

I just helped friends negotiate a deal for $75 per foot on a spacious lot complete with pool and a quality built newer house of over 3300 square feet of living space. The price started out at over $110 per foot. Basically, the sellers had left the area and got tired of waiting and capitulated to the new reality of the market here

Bargains can be found but it takes a lot of work. In this case, over 6 months. Be prepared to make multiple offers and walk away from unrealistic or unmotivated sellers. The ones who have already left or who are chomping at the bit to go are better prospects for hard bargaining.

The friends had been renting for years and noted how sick they are of moving every few years as situations changed on rentals. Personally, as I turn 70 this year the last thing I want to do is to be moving homes.

Remember that a lot of rentals here are houses the owners really want to sell and when they see that possibility, it is goodbye rental. So I'd take my time on rentals as well and find out as much as possible about the situation of the owner to try and minimize the problem of having the place sold out from under you.

I would expect more of this as the market continues to improve.

You are doing well if you can find an owner of a good property at a reasonable rent that is happy to keep renting it for a very long period of time. Take your time and look for it.

[lakeside7]

Whilst you helped friends negotiate a deal for $70 per foot..I this maybe a "fair" price for some person wanting to get out from underneath their home..However land has in most places increased..Riberas area is a case in point.Many people would have made more money if they had just bought a lot..again there have been changes in capital gains for land and the real estate commission is 10%..so at the end of the day who the heck knows

[cedros]

Back to the original question. Generally, prices are still declining. Some are dropping their prices a huge percentage in order to sell. If you are at the right place at the right time you may find what seems like a real bargain. It may not turn out to be such a bargain in a few years.

[Mainecoons]

That was the point. We looked specifically for not only houses but also motivated sellers. More than a few of the homes in the current inventory are not being offered by motivated or realistic sellers. When you apply that criteria, the market size shrinks drastically.

IMO, this particular house, lot size and location could not be duplicated for $70 per foot, it would cost $120 or more to duplicate it. That made it a good deal IMO.

[Mainecoons]

Back to the original question. Generally, prices are still declining. Some are dropping their prices a huge percentage in order to sell.

On what basis do you think prices are still declining? Certainly this is true of the over priced properties that have sat long enough for the sellers to get motivated but there are still plenty of hold outs IMO.

[lakeside7]

I get a bit confused when people talk about "over priced property"

If you built a house and the land and construction cost you 100,000usd. Is it over priced if you try to sell it for 110,000usd?

Lastly, regardless of what the house cost you, the value of a property is only worth as much as the buyer/market will offer

[RickS]

If you built a house and the land and construction cost you 100,000usd. Is it "over priced" if you try to sell it for 110,000usd?

Only if everything else comparable is around $90k and nothing sets the house apart from the others. Then what one paid is of no consequence.

[RickS]

"...no one should expect the heyday of the seller's market to return here or NOB for that matter."

Can't speak to the Lakeside situation but there are plenty of places NOB that are not only coming back, but have come bacl! Maybe not Detroit but where I live in Colorado it's a seller's market, properties don't stay on the market long and my home is worth more than it ever was (based on sales of similar property right in my neighborhood). Rentals are very high and there is construction everywhere.

[Mainecoons]

Well, no, there aren't "plenty" of places. There are a few places. And the data show the housing market "recovery" which was driven by cash buyers (40 percent of sales) is fading fast.

Google up "housing market cooling" there's plenty of information there.

Colorado is one of those few places that is doing well. Look south one state and tell me what you see.

[Mainecoons]

I get a bit confused when people talk about "over priced property"

If you built a house and the land and construction cost you 100,000usd. Is it over priced if you try to sell it for 110,000usd?

Lastly, regardless of what the house cost you, the value of a property is only worth as much as the buyer/market will offer

It's not overpriced if someone will pay you that price.

Existing home sales in many lakeside areas are going for less than new construction land and building prices. However, more than a few of these require work.

[cookj5]

I get a bit confused when people talk about "over priced property"

If you built a house and the land and construction cost you 100,000usd. Is it over priced if you try to sell it for 110,000usd?

Lastly, regardless of what the house cost you, the value of a property is only worth as much as the buyer/market will offer

"...the value of the property is only worth as much as the buyer/market will offer." You have hit the nail squarely on the head! You have also identified why there are so many properties here that sit on the market for so many years. Many of the owners bought when the market was going up rapidly and peaking from 2000-2006. They may have compared prices here with the grossly inflated US market at the time and thought they were getting a great deal, rather than comparing with prices of other houses down here. Apples to apples, you know.

On top of this, the stars in their eyes led them to pour tens of thousands of dollars into "upgrades" to create their personal dream home. It was all going to be worth it because of course the place would sell easily for much more than that as the market continued to rise. Oops! Now they say "my place is worth (fill in a number) because of all the money I sank into it, and I won't take a dime less!" There is a house around the corner from me that some NOB speculators bought and fixed up. This was in 2007 when we arrived. It has been on the market pretty much constantly since then. The only thing that changes is the name of the realtor on the sign. They swap realtors every so often, apparently so they can then become a "new listing". As of 2014, it still hasn't sold.

Because people bought for cash, and are not carrying a mortgage whose payment they must meet every month, they feel they can sit on the property until "the market comes back". After all the money they poured into their places, if that's how much they want back (or even more?) they might as well be saying "until hell freezes over."

[Mainecoons]

You bring up some good points here. I think the lack of mortgages and the low property taxes tend to create a disincentive to thinking realistically about pricing property and actually selling it in a reasonable time frame. We had an absolutely classic example on my block, a Mexican owned home that was marketed for years. They started out with a ridiculous asking price and kept lagging well behind the market in price adjustments.

Had they priced it realistically from the beginning, they would have had a couple hundred thousand (dollar equivalent) more for it and they would have had it years sooner.

People who are writing a big monthly mortgage check and who get big property tax bills tend to be more motivated. Many, many people just look at a number and don't figure the time value of money. You can easily make 4 percent on money here and inflation is about the same, so you're actually losing about 8 percent every year you sit on a house waiting for "your" price.

We used to have a pricing system for a poor market that worked very well for our sellers. We would identify the closest 10 competing properties and price to be in the cheapest 1-3 "comparable" properties. In a market where there's one buyer for every 10 homes, we priced to be the cheapest. One house was going to sell and the rest were going to sit.

We also were very tough on our sellers regarding preparation. The goal was to get as much of that "model home" feel as possible. We would not take a listing that the seller was not willing to prepare adequately.

Our best years were during the worst markets. If I were selling property here now, I'd be following the same strategy and wouldn't bother with the over priced and under prepared.

[sirgadabout]

Thank you All, each has been helpful in your own way. I have been living in Mexico for 16 years, most of that time in Guadalajara. Seems in all those years the property values in GDL have continuously gone up. I’m very happy and comfortable where I live and have been thinking of buying for a long time but the high cost of homes here has foiled those considerations. It looks like I can get more house for my dollar in Riberas Del Pilar and I’m wondering why. Also questioning if I’ll be as happy there, I’ve always felt perfectly safe here, all I need is so convenient and nobody seems to mind my poor Spanish.

[sirgadabout]

Thank you all so much for all your comments; I have some questions those of you who own your house in Riberas del Pilar.

1. Is it absolutely necessary to install a water filter system and how much does it cost to install and maintain? I’m of course talking about the water for bathing and washing dishes etc., I buy Ciel for drinking.

2. How many in your family, what size is your septic tank and how often do you have to have a truck come and empty the septic tank?