Rainman Posted December 22, 2019 Report Share Posted December 22, 2019 Hi all, I just registered ! I've been lurking for a while now and haven't seen answers to some of my questions. I'm rainman because that's what it does here (Tacoma Wa.) Everyone seems to agree that home values are high now for that area. However, if the peso were to go back to 10 or 15 to u.s. dollar how would that affect the buying selling market. I mean buying power would decline. How does all this affect the housing market. What am I missing. Thanks Rainman Quote Link to comment Share on other sites More sharing options...
Jreboll Posted December 22, 2019 Report Share Posted December 22, 2019 There have been times when sudden exchange ratios catches everyone by surprise and if you’re at the right place and right time you can make some good deals. The changes that are happening now are more gradual and market values adjust to those changes. Quote Link to comment Share on other sites More sharing options...
AlanMexicali Posted December 22, 2019 Report Share Posted December 22, 2019 In Mexico pesos are the currency when getting a paycheck or recieving money for all services and goods. A very tiny portion of the 125,000,000 people living in Mexico give a thought to what the USD to Mexican peso current exchange rate is/was/will be as the national official currency and every transaction is in Mexican pesos. There are no adjustments done when the peso falls or rises except new vehicle prices seem to be affected. If a few house prices are affected in that area I presume it is a supply and demand situation not related to the USD to Mexican peso exchange rate. If some house prices do go up because of that then I presume the seller is not interested in attracting Mexican buyers as their income remains the same even when the peso dumps or skyrockets against the USD. They buy what the price is according to appraised value and the Mexicans are most of the owners, sellers and buyers in that area obviously, not foreigners with out of the country money streams. 2 Quote Link to comment Share on other sites More sharing options...
Rainman Posted December 22, 2019 Author Report Share Posted December 22, 2019 So I guess your saying buying a home is great at 20-1 using u.s. $ but should the peso go to 10-1 in 5 years your spending power in Mexico is cut in half on everything else. 1 Quote Link to comment Share on other sites More sharing options...
Ferret Posted December 22, 2019 Report Share Posted December 22, 2019 Shit happens. We were none too happy when 2008 happened just as we were trying to sell our home on the Mexican coast. No buyers because of the financial upset in the U.S. In other words, the unexpected financial disaster can happen in other countries and the effects are felt here. Or, as has been so bluntly stated in the past... "when the U.S. sneezes, Canada and Mexico get colds." There are some homes that are very expensive here and others that are not. If you want to stretch yourself thin enough to lose it all, that's your choice. 1 1 Quote Link to comment Share on other sites More sharing options...
Rainman Posted December 22, 2019 Author Report Share Posted December 22, 2019 Your right ferret shit does happen and it always rolls down hill. Nobody was happy up here in 2008 either, maybe the moneyed who picked over the financial carcass that was left. Who said anything about stretching myself thin enough to lose it all. Wouldn't dream of it, just trying to get my mind around the finances of it all and provide accordingly. By the way, It's feeling a little bubbly up here again 1 Quote Link to comment Share on other sites More sharing options...
Ferret Posted December 22, 2019 Report Share Posted December 22, 2019 LOL. I have positioned myself according to possible disasters. Murphy's Law. I love Mexico and intend to leave here in an urn. In the meantime, I enjoy fresh fruit and vegetables at a fraction of the cost in Canada. I don't need air conditioning and I rarely need heat. The sun shines nearly every single day and, because I have five solar panels, my electricity bill is zip. I put 500 pesos worth of gas in my car every six to eight weeks because most things are close by. My car is 12 years old and has no rust and runs well. Trade offs. It's all about trade offs and what's important to you personally. I'm content. 5 Quote Link to comment Share on other sites More sharing options...
ea93105 Posted December 22, 2019 Report Share Posted December 22, 2019 11 hours ago, Rainman said: Hi all, I just registered ! I've been lurking for a while now and haven't seen answers to some of my questions. I'm rainman because that's what it does here (Tacoma Wa.) Everyone seems to agree that home values are high now for that area. However, if the peso were to go back to 10 or 15 to u.s. dollar how would that affect the buying selling market. I mean buying power would decline. How does all this affect the housing market. What am I missing. Thanks Rainman Most homes here are priced in dollars and a strengthening peso will only make those properties a better buy than ones priced in pesos. Of course the opposite is true if the peso weakens again Quote Link to comment Share on other sites More sharing options...
HoneyBee Posted December 22, 2019 Report Share Posted December 22, 2019 Considering the number of Mexicans working in the US and sending money home, I believe that many do pay attention to the exchange rate AlanMexicali. Quote Link to comment Share on other sites More sharing options...
Natasha Posted December 22, 2019 Report Share Posted December 22, 2019 Or..... you could save yourself a lot of grief by just plain planning to rent! We have done so for 21+ years and would not dream of changing. Quote Link to comment Share on other sites More sharing options...
Ferret Posted December 22, 2019 Report Share Posted December 22, 2019 Each to his/her own. I prefer to own and have control... over decor, renovations, maintenance etc. The taxes and utilities for a home are very reasonable here but rent can vary wildly (especially if you're Canadian). Very few people consider the profit side of house owning as accumulating rent NOT paid. So, in ten years, if I don't have to pay rent, I will have "saved" 120,000 American dollars (assuming a stable rent of $1,000 dollars a month for the full ten years which is not likely). But I still own the house and could sell it for exactly the same price that I bought if for 10 years previously. This only works in Mexico where homes are bought with cash and mortgages are rare. 2 2 Quote Link to comment Share on other sites More sharing options...
happyjillin Posted December 22, 2019 Report Share Posted December 22, 2019 19 minutes ago, Ferret said: Each to his/her own. I prefer to own and have control... over decor, renovations, maintenance etc. The taxes and utilities for a home are very reasonable here but rent can vary wildly (especially if you're Canadian). Very few people consider the profit side of house owning as accumulating rent NOT paid. So, in ten years, if I don't have to pay rent, I will have "saved" 120,000 American dollars (assuming a stable rent of $1,000 dollars a month for the full ten years which is not likely). But I still own the house and could sell it for exactly the same price that I bought if for 10 years ago. This only works in Mexico where homes are bought with cash and mortgages are rare. We came to the same conclusions. We paid less when we bought in 2006 than we had budgeted for in 2000 based on the value of the Canbuck. 1 Quote Link to comment Share on other sites More sharing options...
traderspoc Posted December 22, 2019 Report Share Posted December 22, 2019 Peso will stay in a range of 18 to 20 Mexico is very stable peso if goes to 20 means mexico will export more good internationally as they made the peso weaker, good for mexico's economy. but at moment getting peso stronger due trade agreement being signing in January. buy pesos now Quote Link to comment Share on other sites More sharing options...
Ferret Posted December 22, 2019 Report Share Posted December 22, 2019 When we bought our two bed/two bath + den home in Atascadero, San Miguel de Allende in March of 1997, we paid $80,000 American dollars. So, not only didn't we pay rent for nine years, we were able to sell the house for $157,000 American dollars in 2005. That's a win/win in any book. 1 Quote Link to comment Share on other sites More sharing options...
bmh Posted December 22, 2019 Report Share Posted December 22, 2019 I think that here you need to look at a house as a place to live rather than a way to make money because the rate od exchange does whatever it does and then if yo do not sell at a higher price you will Ajijic , the one in CHiapas , I think we may recoop the money and that is about it.. We have ived in both for a long time so it is ok for us one way or the other. THe prices in pesos down ther have been gong up but unless you bought in a location in demand we would lose money.. The one in Ajijic , we would be fine.. It is more a question of location of the house and of the State than anything else.. If you are going to live here long term you will be ok If you plan to sell and make money, do not count on it, .. 1 Quote Link to comment Share on other sites More sharing options...
daisy2013 Posted December 22, 2019 Report Share Posted December 22, 2019 Most houses are priced in US dollars so the exchange rate does not matter much. If you are buying a car then it will matter. When we bought a car in Guadalajara the price seemed too low until we realized that the cars were priced at the beginning of the year when the rate was 10.50. When we’d buy ithe exchange rate was at 20.00. Great savings on our part. Quote Link to comment Share on other sites More sharing options...
lakeside7 Posted December 22, 2019 Report Share Posted December 22, 2019 3 hours ago, daisy2013 said: Most houses are priced in US dollars so the exchange rate does not matter much. If you are buying a car then it will matter. When we bought a car in Guadalajara the price seemed too low until we realized that the cars were priced at the beginning of the year when the rate was 10.50. When we’d buy ithe exchange rate was at 20.00. Great savings on our part. Which year did the ex rates move from 10.5 to 20?? Quote Link to comment Share on other sites More sharing options...
Mainecoons Posted December 22, 2019 Report Share Posted December 22, 2019 3 hours ago, daisy2013 said: Most houses are priced in US dollars so the exchange rate does not matter much. If you are buying a car then it will matter. When we bought a car in Guadalajara the price seemed too low until we realized that the cars were priced at the beginning of the year when the rate was 10.50. When we’d buy ithe exchange rate was at 20.00. Great savings on our part. It will matter a lot on sale because the tax liability is figured based on the Peso value of the original sale versus now. For a more expensive house that could be a real killer. Quote Link to comment Share on other sites More sharing options...
John Shrall Posted December 22, 2019 Report Share Posted December 22, 2019 25 minutes ago, lakeside7 said: Which year did the ex rates move from 10.5 to 20?? The peso hit bottom at 10 in July 2008 and spiked to 15 by February 2009. It dropped shortly after that peak and never reached 15 again until February 2015. After that it went up pretty rapidly to 21.60 in January 2017. Quote Link to comment Share on other sites More sharing options...
gringohombre Posted December 22, 2019 Report Share Posted December 22, 2019 6 hours ago, Natasha said: Or..... you could save yourself a lot of grief by just plain planning to rent! We have done so for 21+ years and would not dream of changing. Yes, and demand that the rent be in pesos not US$. When I moved here full time in 2008 I came for 2 weeks a few months prior to the move to scout and find a house to rent in my budget and for my needs. On the last day I found a beautiful lakefront house in SAT with large property and casita, which was ideal for a warehouse/ packing facility for my business. The rent was $800 a month. Perfect!. The first year went well and when the rent was up for renewal, I had had time to think. Why am I paying in US$ for a rental in Mexico? I informed the Landlord that I was insisting on paying in pesos or I would move (a rope-a-dope technique) and after they got the message that I was serious they sent me the contract in pesos with an increase but not bad. I accepted with the understanding the future increases would not be more than the official inflation rate with a cap of 5%. The conversion rate then pesos to US$ was 10:1. So if you do the math you will see that after 10 years I am paying almost exactly what I started with. If only all expats moving here to rent would demand rent in the currency of the country maybe landlords would see the light and stop this insane practice. Quote Link to comment Share on other sites More sharing options...
NoVaDamer Posted December 22, 2019 Report Share Posted December 22, 2019 Welcome, Rainman! As you noted, the exchange can make a difference, but it's at the margins. Prices for nice places here are very competitive with similar casas in midsize cities in the US, thus bargains for big city folks, and a little expensive for rural folks. So a change in the exchange rate can slightly affect those outcomes. Like any real marketplace, the primary drivers are supply and demand. When demand dried up after the great recession in the US, US buyers went away and mainly Canadians were buying. Prices were steady and sales slow for several years. Now, Americans are back and there looks to be little to stem the demand. Adding to that, about a third of sales are to Mexicans (mainly from Guad and CDMX), so again steady demand signals. The peso looks to be steady for the next year or so. International forecasts lean toward it devaluing to around 21 (it is strengthening right now due to the USMCA) because the Mexican economy is bordering on a recession and international investors are leery of Presidente AMLO's policies. But the fundamentals are still strong, so a great devaluation is unlikely. As others have mentioned, some sellers "Price their homes in dollars" so the exchange rate does not matter to their transactions. However, all official transactions are in pesos, so somewhere the peso price is annotated on your sales documents. This matters when you sell, as there is another tax (sometimes called by gringos a Capital gains tax, but it is really a sales tax on home sales) and it is assessed on the peso value of your sale compared to the price in pesos you paid. Large drops in Peso value can create a large tax, although there is an exemption, too, which is (I believe) $200,000 USD per person on the deed. Quote Link to comment Share on other sites More sharing options...
Natasha Posted December 22, 2019 Report Share Posted December 22, 2019 Mexican landlords often quote rental price in USD (more familiar to foreigners) but get PAID in pesos. That has always been the way for us. This can be structured right into your lease (which to be legal must also be in Spanish). Leases can also specify rent increases, if any, (we've never had one) over the period of the lease as well as exchange rate to be used (eg spot rate). Incidentally, we were never renters NOB. In the early years we met many who found they needed to return NOB .... family reasons, health reasons, or simply not happy here. But at that time some waited more than four YEARS to sell the houses they needed the money from in order to return. Renting while you discover those kinds of things PLUS how to live in Mexico is a far cheaper and more easily altered way, even if in the end you decide to buy. Quote Link to comment Share on other sites More sharing options...
RickS Posted December 23, 2019 Report Share Posted December 23, 2019 9 hours ago, Natasha said: Or..... you could save yourself a lot of grief by just plain planning to rent! We have done so for 21+ years and would not dream of changing. 1 place, 5 places? Assuming an avg of $800/mo that's around $200,000. Ever regret that part? 2 1 1 Quote Link to comment Share on other sites More sharing options...
lakeside7 Posted December 23, 2019 Report Share Posted December 23, 2019 8 hours ago, traderspoc said: Peso will stay in a range of 18 to 20 Mexico is very stable peso if goes to 20 means mexico will export more good internationally as they made the peso weaker, good for mexico's economy. but at moment getting peso stronger due trade agreement being signing in January. Dismal buy pesos now Buy pesos now..you must be joking..you do not have to be a financial planner to look back and see it's dismissal performance...most savvy Mexicans, central and South Americans are pouring money into usa..talk with anyone in the banking system in Miami Manybe if you want to be a day trader and have thousands to speculate...but I do not many Lakeside Gringos are in the box? Quote Link to comment Share on other sites More sharing options...
slainte39 Posted December 23, 2019 Report Share Posted December 23, 2019 11 hours ago, traderspoc said: Peso will stay in a range of 18 to 20 Mexico is very stable peso if goes to 20 means mexico will export more good internationally as they made the peso weaker, good for mexico's economy. but at moment getting peso stronger due trade agreement being signing in January. buy pesos now Totally agree with traderspoc. Quote Link to comment Share on other sites More sharing options...
Recommended Posts
Join the conversation
You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.