Living in Los Cabos: 2015 Mid-year Real Estate Report

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Last December our MLS held a kick-off event to welcome a new tourist season. I recall the president being very motivational but he admitted that until the hotels all re-opened that we were likely to be experiencing an 18-month summer. Meaning that as glad as we all were to have survived Odile and how proud we were of our city’s recovery efforts that without hotels there are no tourists… and no buyers to speak of. Well, we’re now half-way through the year, and although many hotels have re-opened we’re still waiting on the stragglers. So, how bad is that 18-month summer? And what has the real estate industry managed to achieve with, for all intents and purposes, one hand tied behind our backs? Here is a snap-shot of the industry; the data was taken from our Multiple Listing System on July 1, 2015. And the snap-shot is really quite interesting.

Before I start boring you with all the statistics let me make a few good, old-fashioned disclaimers. Our MLS, FLEX MLS based in Fargo, North Dakota makes every effort to provide reliable information but there is a phenomenon known as “Agent Input Error”. So although we know the numbers aren’t completely accurate they’re the best we’ve got and in general are good enough to indicate trends.

The MLS is statewide. Because my area of interest is Los Cabos I eliminated any data outside the limits of Cabo San Lucas and San Jose proper and the corridor. And the categories I looked at excluded any commercial properties, limiting myself to single family homes, condominiums, and land. Lastly, when I mention price I’m talking about the actual sales price in U.S. dollars unless otherwise noted. So on to look at what happened in my real estate market in 2015 so far….

Here is the data on Dollar Volume of Sales:

Zone Sold 2013 Sold 2014 Sold Q1 & 2 ‘15
Cabo Corridor $51,992,326 $62,891,741 $36,321,415
Cabo San Lucas $45,659,093 $53,391,093 $12,726,885
SJ Corridor $98,905,510 $115,150,510 $33,832,500
San Jose $46,399,126 $59,171,626 $15,096,687
Total $242,956,055 $290,604,970 $97,977,487

And here is the data on Median Sold Cost:

Zone 2013 2014 % Change 2015 Q1&2 % Change
Cabo Corridor $224,038 $265,000 +18 278,000 +4
Cabo San Lucas $260,000 $250,000 – 4 175,000 -30
SJ Corridor $1,075,000 $1,037,500 – 4 460,000 -56
San Jose $230,000 $227,500 – 2 330,000 +45
Total $289,000 $289,308 +/- 0 288,500 -1

All the above numbers are aggregate, all types lumped together. But was there any difference between types? Are condos moving faster than single family? Is the market for building lots still dead?  To find out, I broke up the categories, again by zone.

Lots 2015 TYD
Zone # Sold Volume Sold Median Price Low Price High Price
Cabo Corridor 3 $1,705,000 $400,000 $55,000 $1,250,000
Cabo San Lucas 13 $1,875,925 $83,500 $27,000 $415,000
San Jose Corridor 5 $21,230,000 $480,000 $100,000 $13,100,000
San Jose del Cabo 5 $832,000 $120,000 $96,000 $376,000
Total 26 $25,642,925 $120,000 $27,000 $13,100,000
Condos 2015 TYD
Zone # Sold Volume Sold Median Price Low Price High Price
Cabo Corridor 35 $9,807,500 $239,000 $110,000 $1,150,000
Cabo San Lucas 15 $7,471,860 $267,500 $89,000 $2,300,000
San Jose Corridor 11 $4,276,500 $295,000 $145,000 $700,000
San Jose del Cabo 19 $6,269,000 $240,000 $295,000 $950,000
Total 80 $27,824,860 $255,000 $89,000 $2,300,000
|Houses 2015 TYD
Zone # Sold Volume Sold Median Price Low Price High Price
Cabo Corridor 60 $24,808,915 $321,250 $79,000 $1,618,000
Cabo San Lucas 9 $3,379,100 $250,000 $60,350 $995,000
San Jose Corridor 9 $8,326,000 $875,000 $89,000 $2,000,000
San Jose del Cabo 18 $7,995,687 $457,472 $44,500 $1,400,000
Total 96 $44,509,702 $350,000 $44,500 $2,000,000

It’s odd that San Jose has long had the reputation for being more affordable than Cabo San Lucas, yet the median home price there is nearly twice that of San Lucas. Clearly, just as in 2014, the Cabo Corridor is where the action is. While the Corridor has its share of high-end homes with more being built every day it is also home to some of the best affordable houses. This area is a favorite with retirees as well as full time working residents and far out-performed any other of the areas studied.

Another interesting number is closed sales to listing volume which is currently at 87%, which I believe to indicate a market moving toward equilibrium.

Last, for sellers. Even with the rising market it would be wise to allow at least a year to get it sold. The calculation for this is thrown off by certain developers (wouldn’t you know it, the most successful ones) who do not put their inventory on the system until the day the sale is closed. This throws off the calculations tremendously. And, provided you are priced even close to realistically, expect to get about 90% of your asking price.

There is much more data in the reports that I could share but then I’d be writing a book and not a blog. If you’d like more information on your community please just contact me and I’ll be glad to share.

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. You can read more of her articles on the website blog www.caborealestate.me.  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

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Living in Los Cabos: Getting Into Trouble

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I’ve said it before and will no doubt have to say it again: yes, it is possible to get into trouble in Mexican real estate. And in every case I know of, it was because someone thought they could out-smart the system. Guess what? They’re not that smart. Here’s today’s example. And unfortunately, it’s a true story.

Several years back I was the seller’s agent on a transaction; it was a real steal. Well, everything is relative in real estate, but this house should have been valued at about a million, and we were dumping it at $650,000. For a reason. This lesson is only part of the story but worth repeating. Some years ago my client purchased it directly from another individual who convinced him that he could save closing costs by just buying the shares of the corporation that owned the house. Now, closing costs are significant here, the cost to set up the trust is only part of it. The government charges the buyer a 2% acquisition tax, and the seller pays income tax on the profit they’ve made on the appreciation. So it was popular back around the turn of the century for some ‘smart’ people to put their homes into corporations. The trust owned the house, but the beneficiary of the trust was a foreign corporation. So far, this is all legal. Not smart, but legal.

Then, when it came time for the house to change hands instead of going through a normal closing the seller would simply sign over the shares of stock thus evading taxation. Worse were the ones involving ‘off shore’ corporations based in places like the Cayman Islands, known for their liberal fiscal policies. This was going quite well until someone finally figured out that in addition to passing on the house the seller was also passing on a liability for taxes. In fact, it was a huge liability as the Mexican Congress, recognizing the problem, passed into law a penalty rate for any home held in a corporation based in any one of 30-some countries considered tax havens. That rate was 45% of the gross sales price with no deductions of any kind. Ouch! So just like a game of Musical Chairs, the music stopped and someone was left holding the bag. In this case it was my client. When I met him he was so disgusted with the situation he ordered me to just dump it quickly; hence the low price. So we sold his million dollar home for 650,000 and he went home with about a quarter million in his pocket.

There are still unknown numbers of houses in off-shore corporations scattered around Los Cabos, and I’m sure there are people buying and selling them, thinking they are out-smarting the system. Yep, there really is one born every minute. And that’s only half the story.

A delightful young couple bought the home; she a Mexican citizen and he a foreigner. Now remember, for a foreigner to own property within 50 KM from the ocean it must be held in trust, known as the Fideicomiso, with a Mexican bank. There are costs to setting up that trust, and the bank gets an annual fee which is usually under $500. Mexicans can own the property outright, so their closing costs are slightly lower even though they still pay the acquisition tax, registration, etc. So they decided to outsmart the system by putting it in her name only and avoiding all the fuss with trust and bank. Which was great for a while. Recently I ran into a neighbor of theirs and as we were chatting it came out that everything is not happily ever after for that couple. In fact, they have split and he is livid. You see, he paid for the house 100% with his earnings. Yet he put it in her name to save money on closing costs. And now he’s learning the magnitude of that mistake: it’s her house. He has no legal claim on it. Including closing costs he invested almost $700,000 US and just a few years later has absolutely nothing to show for it. If he had not tried to outsmart the system the trust would have guaranteed him at least a 50% share as co-beneficiary. Again, ouch. Oh, and how much did he save by gaming the system? I just ran sample closing costs. If the purchase were made today it would have cost $26,266 to put the house into a trust versus $21, 726 to put it into the wife’s name. So to save $4,540 plus a few years annual fees he lost $650,000. Very smart.

The system is in place to protect you; buying real estate here is safe and secure as long as you do it the right way. And the next time you hear some horror story about some innocent person who lost everything, ask a few more questions. In every case you’ll find they’re not so innocent after all: they brought it on themselves by cutting corners to save money. No, they were not smarter than the system.  Be smart yourself: use the system.

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

Living in Los Cabos: The Marina

Actually, I’m working on a very serious blog about an important topic, but since it’s Saturday I thought a little levity was in order. Have a good one, all! And to the veterans out there: thank you.

http://caborealestate.me

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

Living in Los Cabos: 2014 End of Year Real Estate Report

Real Estate In Cabo

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Well, 2014 was nothing if not eventful for Los Cabos. While natural disasters and fairy tale endings have been discussed over and over the real estate market has been surprisingly quiet. What’s going on? Is the recession still hurting us? Quite the contrary.

The numbers show that real estate did very well last year. Before I start boring you with all the statistics let me make two good, old-fashioned disclaimers. Our MLS, FLEX MLS based in Fargo, North Dakota makes every effort to provide reliable information but remember what they used to say about “Garbage In Garbage Out”? Here in Cabo we refer to it as “Agent Input Error”. And [AHEM] we’ve got a lot of it. So although we know the numbers aren’t completely accurate they’re the best we’ve got and in general are good enough to indicate trends.

The other disclaimer is to explain that the MLS is…

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Living in Los Cabos: Punta Arena F-1

Real Estate In Cabo

Here’s a brief video of a new listing that would be perfect for someone moving to Cabo as well as a vacation home.

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

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Living in Los Cabos: Tis the Season…. For Chocolate

choc

 

People sometimes ask “Don’t you miss the changing of the seasons?” No, I don’t miss COLD at all! And besides, we have plenty of seasons here in Cabo San Lucas. Obviously we have high season, windy season, turtle season and whale season (we won’t mention hurricane season just yet). And we’ve got Chocolate Season. YUM, one of my favorites. Let me explain.

 

Chocolate was unquestionably the Aztec’s gift to the world. So you would think we’d have mastered it long ago. But sadly, no. To a confirmed chocoholic Mexican chocolate is a giant “why bother?” With the advent of Costco we can now buy American chocolate fairly reliably, but the stores stock chocolate that would appeal to someone who doesn’t really truly appreciate it. It’s very similar to a liquor store next to a university: they are more likely to stock Boone’s Farm wine than a fine vintage. Until Chocolate Season.

 

Food is a huge part of the traditional Mexican Christmas. And with Christmas lasting almost a month we need a lot of it. Starting in early November the stores start bringing out the special holiday merchandise. The stores are so full they’re bursting at the seams with yummy treats we don’t see the rest of the year (at least not here in Cabo). There are dried fruits and spices to make Ponche, delicacies such as pate for the cocktail party spread, wines and liquors, imported cheeses, traditional candies and…. chocolate. French Truffles. Belgian chocolates.  Italian bon-bons. A world of wonderful, top quality chocolate. And some us take full advantage of the opportunity, knowing that after the first week of January treats of this quality will disappear for another year.

 

November to January: party season, high season and most deliciously chocolate season.

 

 

 

 

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: 10 Reasons to Cabo NOW

 

Facebook is breaking my heart. On one hand I see wonderful postings about how every man, woman and child is working their buns off in the clean-up/recovery effort and what great strides they are making. There are near-constant reports of workers helping rebuild even though they lost their own homes. Even so they are very concerned about the return of the tourists.

And then there are the other threads: tourists discussing putting off their trips. NO!!!!!! These people rely on you, they are making huge sacrifices to get Cabo ready for high season, and they are winning the battle. So, don’t cancel your trip. Here is my TOP TEN LIST OF REASONS TO COME TO CABO RIGHT NOW.

  1. FISHING. Sport fishing is what put Cabo on the map in the first place, and fall is under normal circumstances when it is the best. But fall after a storm? The fishermen tell me that’s when it is spectacular. On the morning of the 19th at a neighborhood meeting Brian Solomon of Solomon’s Landing restaurant said that as soon as he could get his boat in the water he was going out to catch food for his employees. The next day he posted that he caught 16 dorado!!! A single fisherman with 16 dorado in a few hours???? Oh yeah, the fishing is fine right now. [As an aside Solomon’s Landing is now back open for business and even has live entertainment.]
  2. TOURNAMENTS!! Bob Bisbee Sr. has committed that his tournaments will continue as normal. While I don’t know about the other scheduled tournaments, the Bisbee Offshore will be held October 17-19 and the mother of all tournaments Bisbee Black & Blue will run from October 21-25. I don’t lump these into fishing because they really have nothing to with fishing: they are legal, extremely high stakes gambling and everyone gets in the act. At this level one is not a fisherman, but an angler. The B&B is the world’s richest fishing tournament with millions of dollars on the line. Everyone in town gets into the spirit of things, following which boats are hooked up, who’s caught what, going down to watch them come in for weighing, etc. There are booths set up on the marina and it’s basically just a big festival. From the shot-gun starts to the last weigh-in, tournament season is a hoot.
  3. FORE THE KIDS. On November 15 at Palmilla you will find one of the rarest events: the 100% fundraiser when Casa Hogar, which is the boy’s orphanage, holds their annual golf tournament. I’ve done fund-raising for years and it’s extremely rare for the charity to have zero out-lay. But in this case the venue, the meals, the beverages, the SWAG bags, prizes and every other element of the fundraiser has been donated by sponsors so 100% of your entry goes to the boys. Wow. So not only do you save money on golfing Palmilla you know that you are helping raise over 40 boys. And this year is very special. The original grant stipulated the money was to build a boy’s orphanage. But recently the board acquired the land to build a girl’s orphanage, too. I work with a board member and the executive director who told me that just from the sisters of the boys they are caring for they would have about 30 residents. Since I’m not in Cabo I don’t have the contact info if you want to participate, but if you call my office at 624-143-3011 you can ask for Chris or Ed and they’ll take care of you.
  4. LIFE’S A BEACH. When people talk about beaches in Cabo more often than not they’re talking about Medano beach. Beautiful, swimmable, diverse Medano. From the elegant to the rowdy and raunchy there are restaurants, bars, ambulatory vendors, music, certainly lots of laughter, and oh-by-the-way an ocean. Every day I’m getting more reports of those bars and restaurants re-opening and the beach is clean. There are a number of live web-cams that came back online if you don’t believe.
  5. GOLF. Admitted, I’d have a hard time picking Tom Fazio, Arnold Palmer or Tiger Woods out in a line-up. I don’t know golf. But I do know golfers. One friend of mine who plays daily told me that he has to go to the States from time to time to play their “cow pastures” so that he appreciates what we’ve got in Cabo. Cabo is world class golf and this is your opportunity to try it out without the crowds.
  6. FOOD. Yum! I’ve said it before and it’s still true: Cabo is a city of Foodies. And our chefs don’t disappoint. But right now? The chefs, the wait staff, and management: everyone is anxious to make your Cabo dining experience over the top. Everything will be super-fresh, and it will be prepared and served with special care to impress our brave first tourists.
  7. WEATHER. Right about now God should be flipping the switch. Every year our weather ‘flips’ overnight from summer to gorgeous. Bright sunshine, warm days and cool nights: can you tell me you wouldn’t enjoy that?
  8. MOUNTAINS AND DESERT (oh and a few turtles). Cabo isn’t just about the beach. We’ve got gorgeous mountains and deserts to explore with hidden waterfalls, and lush vegetation. The desert in bloom after a storm is a sight to behold. Once seen, it will never be forgotten. Don’t miss your chance. And fall is when you might have a chance to help a just-hatched baby sea turtle find his way home to the sea.
  9. FUN. Back in the old days we were a ‘big box’ franchise. I remember being at a meeting during the recession when we were advised to switch our focus from tourism to ‘other industries’. Great, I thought, we HAVE no industry. Then I realized we do have a manufacturing sector. We manufacture fun. If you can’t have fun in Cabo there is no hope for you.

AND NOW>>> DRUMROLL PLEASE >>>>> NUMBER ONE REASON TO COME TO CABO RIGHT NOW IS >>>>>>>>>>>>

THE PEOPLE. It’s not just me. It’s not just the results of the International Community Foundation survey. It’s not just the United Nations survey that determined Mexico is the happiest country. The number one reason people move to Cabo, and the number one reason people visit Cabo repeatedly is the warmth and friendliness of our people. For centuries the Baja, and Cabo, were literally cut off from the world. What resulted was a culture of kindness, respect, manners and most of all caring for one another. That culture, that spirit, lives on today. You will never, ever experience such a loving and nurturing environment. This one you have to experience for yourself. And there is no better time than now. CABO STRONG.

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 http://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

The arch in Cabo San Lucas by Jen