2017 Real Estate Review

 

Carol S. Billups

 

Twenty one percent. Twenty. One. Percent. That is the incredible growth of the real estate market in Los Cabos in 2017. What are the hot properties, and what kind of trends can we see? Let’s break it down to find out.

Here are some of the highlights of real estate ’17, but first let’s get past the usual disclaimers. The statistics I’m presenting here were taken from the FLEX MLS system, which is the official multiple listing service used by the real estate community in Baja Sur. Although it is used state-wide I limited the data to the cities of San Jose del Cabo, Cabo San Lucas, and the tourist corridor that connects them. The corridor is split into two sections, roughly in the middle with eastern half creatively entitled “San Jose Corridor” and its western counterpart known as the Cabo Corridor. Although the data is considered reliable, there may be some ommissions due to agent input error. For this report ‘sold’ will refer to closed sales in which the property has officially changed hands. We might also reference ‘pending’ deals in which an offer has been accepted but the sale process is not complete. All data was collected on December 29, 2017 and covered the calendar year 2017. So, disclaimers done let’s look at that data.

 

 

Zone Sold 2013 Sold 2014 Sold 2015 Sold 2016 Sold 2017 Change 2017/16
Cabo Corridor $51,992,326 $62,891,741 $66,778,335 $68,460,265 $78,848,559 +15%
Cabo San Lucas $45,659,093 $53,391,093 $30,175,091 $33,435,050 $58,880,200 +76%
SJ Corridor

 

$98,905,510 $115,150,510 $75,655,188 $116,097,105 $112,441,790 -4%
San Jose

 

$46,399,126 $59,171,626 $30,759,355 $53,785,156 $78,837,953 +46%
Total $242,956,055 $290,604,970 $203,367,969 $271,777,576 $329,008,502 +21%

 

 

As you can see, the volume of real estate sales has rebounded from the aftermath of Hurricane Odile in 2015. In addition to the sold properties at year end there were 140 properties valued at $84,041,010 waiting for the process of closing to take place. We do not know the exact value as the true sale price is not revealed until after closing, but we do know that in 2017 sellers accepted offers between 90-95% of asking price. So we can conclude that in 2017 the Los Cabos real estate community sold more than 400 million dollars’ worth of property!

 

One of the great flaws of this report is that I’ve been at it so long. I started tracking the four sub-areas before some new developments were underway. So although it tracks Puerto Los Cabos in San Jose it misses Quivera (considered in the system as Pacific South, not Cabo San Lucas). As Quivera is extremely popular right now with both their Copala and Coronado offerings we can assume the actual sales value is higher.

What exactly did they sell? In terms of property type, dealing in units, condos were more popular than single family homes. As in the previous year, sales of home sites lagged the sale of finished product. This reflects two factors. One is that developers have bought up most of the land and their margins are such that they only offer finished product. There are some older developments where custom home sites are still offered, and of course re-sales from individuals make up the rest of the inventory, but there are simply fewer available for sale. The other factor is the great ‘reset’ of the housing market a few years ago. When property values fell drastically about 8 years ago it became cheaper to buy a finished home than build a new one, even considering the cost of up-dating it.

 

Condos 239 43%
Houses 204 37%
Lots 109 20%

 

 

But the range of prices for these options varied greatly by area. Here are the median sold prices by type and region.

  Condos Houses Lots
Cabo Corridor $202,000 $280,000 $114,250
Cabo San Lucas $240,000 $450,000 $130,000
San Jose Corridor $1,382,500 $1,750,000 $375,500
San Jose del Cabo $204,500 $501,492 $120,500

 

Clearly there is a huge difference in property value depending on location. The San Jose Corridor is home to several extremely high-end developments such as Querencia, Palmilla, and Chileno Bay which is reflected in their very high median price point. The Cabo Corridor, however, has some very nice yet also very affordable options, primarily on the inland side of the highway. There are pricier offerings on the Cabo Corridor, such as the Twin Dolphins development but that project chooses not to report sales via the MLS. That said, when I am working with clients who are seeking a property in the $200-400,000 price range I immediately begin thinking of the inland Cabo Corridor. There are some fabulous yet affordable offerings there, and in fact the views from the inland side of the road are actually superior to the ocean side!

So these numbers paint the macro picture, what is the micro view? In the past year I’ve seen diminished inventory for affordable, retirement-type homes and in fact I’ve noticed property values for the inland Cabo Corridor beginning to rise. Properties in the $500,000 to one million price range continue to take a long time to sell but that may change with the anticipated re-introduction of commercial mortgage lending late in the first quarter of 2018. The number of U.S. and Canadian citizens moving to Mexico full time or as snow birds continues to increase, and the interest in investment rental properties is also growing. All in all, 2017 was a good year, and I’m anticipating 2018 to be even better.

Carol Billups is Broker/Owner of Cabo Realty Pros, a full service real estate agency in Cabo San Lucas. She has been working with buyers and sellers for over 17 years and still thinks hers is the best job on earth. She is the real estate columnist for Los Cabos Magazine and a frequent contributor to this site. Her website is www.caborealtypros.com. She can also be reached at carolbillups@hotmail.com or by phone at 044-624-147-7541 or (760) 481-7694 from the US or Canada.

©2018 Carol S. Billups

 

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Living in Los Cabos: How It’s Done

Last Sunday at the Caboholics convention Meet & Greet I had several people come up to me and ask the same question. That generally means there are others out there who would appreciate the same information. So, for those of you who want to know how I managed to make my dream of moving to Cabo work here is my story.

We knew we wanted to retire to Mexico (well he could have been humoring me) and started visiting various cities. On our first trip to Cabo I knew this was the place. We started looking at real estate during that first week, but there was a problem. I’d consider us comfortably middle-class; we both had good jobs but we were in no stretch of the imagination wealthy. We saw what was in our budget for a starter vacation home and it wasn’t pretty. Anything we could afford would have been too expensive to repair and then maintain. It wasn’t until our second visit to Cabo that we were successful. The real estate agent was showing us the same inventory we’d seen several months ago when the agent on one of them piped up and asked if we’d ever considered buying a lot. Actually, we had never thought of that. Since she worked for the developer of the neighborhood we liked (Pedregal) she started showing us lots that she considered good buys.

One building site in particular intrigued us. It seemed priced low compared to the others and we were fairly certain there would be a view of both the Pacific and the Sea of Cortez from the second floor. So we shocked ourselves by snapping it up. And did absolutely nothing with it for several years. Since property taxes are so low, and lots only pay ½  the homeowner’s dues it was inexpensive to maintain. In the meantime it was appreciating in value and we were paying down our first mortgage. When the housing market in California started to recover we were in a strong position to take a home equity loan and start building a little gem of a vacation home. And yes, it did have a double view! Alternatively we could have sold the land for at least twice what we’d paid, to be used against a finished property. When we were ready for Bob to retire we were all set for the move to Cabo.

So that’s how the game is played. And now is a good time to get into that game. It’s no secret that Cabo’s real estate market took a major hit during the recession and prices are down considerably.  Building lots in particular have been dead and prices have plummeted. Some sellers are financing, which is particularly attractive. For example, on the Cabo side of the corridor the median price for a house rose 18% in 2014. Lots didn’t budge. So buying a lot on the corridor would seem like a smart move: you know lots are going to catch up sooner or later. If you’re three to four years from retiring to Cabo it would behoove you to consider this strategy as the timing is impeccable. Who knows? Maybe a few years from now somebody will be asking you how you made your dream work.

Carol Billups is Broker/Owner of Cabo Realty Pros. She has enjoyed working with both buyers and sellers for over fourteen years and still thinks hers is the best job on earth. She is also the real estate columnist for Los Cabos Magazine and a member of the Board of Directors of our Multiple Listing Service MLSBCS. You can read more of her articles on the website blog www.caborealtypros.com. You can reach her from the U.S. or Canada at 1-760-481-7694, or in Cabo at 044-624-147-7541. You can listen to our 24/7 broadcast on http://www.livecabo.net for a mix of happy music, weather reports and local information.

© 2015 Carol S. Billups

pretty sunset in Cabo San Lucas
pretty sunset in Cabo San Lucas

Living in Los Cabos: Trust Me!

 

 

Several people have suggested I update the blog with more on the basics; as the blog grows it’s getting harder to find the very important information on how we own property in Mexico safely. And especially in light of the recent news I figure there is no better time to re-visit the topic of Fideicomisos, or trusts.

 

Let’s back into this starting with the recent news. Last summer the lower house of Mexico’s congress overwhelmingly pass a bill to amend the constitution to allow foreigners to own property in the restricted zone directly. Currently foreigners may only hold property in a special trust called a Fideicomiso (pronounced fee-DAY-koh-me-so). When that was announced the grassroots response was vehemently negative. I mean VEHEMENT. I believe this surprised the politicians, and so rather than risk any further furor the bill was allowed to die a slow and silent death. The bill reached the maximum time it could be in consideration without action, and so it simply faded into the sunset. The trust system will continue.

 

So why was everyone so up in arms about letting foreigners buy coastal or frontier property? California, Nevada, Colorado, New Mexico, Arizona and, of course, Texas. All of them have something in common: they used to be part of Mexico. And despite what the history books may say north of the border the United States did not ‘purchase’ them. They were spoils of a brutally barbaric war that was sparked by…you guessed it…a bunch of American settlers that moved into Mexico and then decided they’d prefer to be independent of the country that had welcomed them with open arms. Oh, Americans might have forgotten but Mexico definitely remembers how thousands of families were uprooted and their land confiscated. As a result, they don’t trust foreign land ownership. And particularly not in the border areas and close to the coasts where another encroachment might begin. That said; they also know the importance of foreign investment. Article 27 of our Constitution addresses this issue.

 

Foreigners are forbidden direct ownership in the ‘restricted zone’ which consists of any land within 50 kilometers of the ocean or 100 kilometers of the international borders. Obviously Los Cabos is within the restricted zone. However, the constitution provides for foreign ownership as long as the foreigner holds the property in trust with a Mexican bank. This trust is very similar to a land trust in the US or a living trust but with one critical difference. This trust is set up by permission of Congress to grant the foreigner all the rights, privileges and benefits of a Mexican citizen as pertain to owning the piece of property in question. But in return the foreigner pledges to consider themselves Mexican on any matters regarding the property and specifically promises not to ask their native country to interfere with Mexico’s internal affairs. Your home cannot be confiscated (unless you’re using it as a crack house, but they’d do that to a Mexican). You cannot be singled out for any special treatment: you are Mexican under the law. But you absolutely cannot ask your home country to intervene if you have a problem or complaint about something going on in Mexico. Now two very important points about the Fideicomiso:

 

  1. The constitution assures that you will be equal in the eyes of the law. Equal, not above. Many Americans and Canadians take the attitude of ‘what can they do to me’? They can do anything they’d do to a Mexican, that’s what. I mentioned using your property for drug trafficking but more likely the foreigner is breaking the law by evading taxes. If you are renting out your place you need to pay taxes on your income. Historically SAT (our version of the IRS or CRA) has looked the other way but as usual a few bad apples have spoiled it for everyone. Some folks are making vacation rental a commercial enterprise and reaping millions. SAT has already been calling on homeowner’s associations and I believe it’s only a matter of time before they put the hammer down on someone.
  2. While the amendment was still a possibility most real estate attorneys were recommending that, even if it passed, the best course of action was to continue using the trust system. The trust has the benefit of passing to your heirs without the need for probate. Without it the homeowner would need a Mexican will which would have to go through probate or worse, have a foreign will validated in Mexican court. Both options are costly and take forever. For estate planning purposes the Fideicomiso is the better choice.

 

Using a trust to hold title to your Cabo property is safe and has been tested over time for reliability. Yes, there are costs involved. But a wise buyer simply adds them to the budget. It only makes sense to do things the right way and thereby insure that your investment is a safe one.

 

OLYMPUS DIGITAL CAMERA

 

Carol Billups is Broker/Owner of Cabo Realty Pros. She has enjoyed working with both buyers and sellers for over thirteen years and still thinks hers is the best job on earth. She is also the real estate columnist for Los Cabos Magazine. You can read more of her articles on the website blog www.caborealtypros.com. You can reach her from the U.S. or Canada at 1-760-481-7694, or in Cabo at 044-624-147-7541. You can listen to our 24/7 broadcast on http://www.livecabo.net for a mix of happy music, weather reports and local information.

 

 

 

© 2014 Carol S. Billups

 

 

 

Living in Los Cabos: Casa Mas Cerveza

 

 

The real estate market in Cabo is moving and if you’re thinking of buying you’d better get to it. Here is Casa Mas Cerveza, currently the most affordable home in the gated community of Pedregal. Four bedrooms, three and a half baths, only a two block stroll to the marina.

 

 

Carol Billups is Broker/Owner of Cabo Realty Pros. She has enjoyed working with both buyers and sellers for over thirteen years and still thinks hers is the best job on earth. She is also the real estate columnist for Los Cabos Magazine. You can read more of her articles on the website blog www.caborealtypros.com. You can reach her from the U.S. or Canada at 1-760-481-7694, or in Cabo at 044-624-147-7541. You can listen to our 24/7 broadcast on http://www.livecabo.net for a mix of happy music, weather reports and local information.

 

 

 

© 2014 Carol S. Billups