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

calendar

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

Advertisements

Living in Los Cabos: Getting Into Trouble

danger

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: 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: 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: Are We Confused Yet?

 

Yikes what a day! I’ve been working the phones trying to find the earliest flight home and it’s a mad-house. None of the airlines seem to be taking reservations yet, but they all have a different idea of when the airport will re-open. It’s taken all day to compile this, and I figure there may be someone else who needs the info, too, so I might as well post it. I plan on checking daily… it will be interesting to see how it changes…..

Airline Customer Service Phone Estimated Date of First Flight
Volaris 866-988-3527 October 5
American 800-433-7300 October 19
United 800-864-8331 October 2
Southwest 800-435-9792 After September 30
Alaska 800-252-7522 November 1
AeroMexico 800-237-6639 October 9
Delta 800-221-1212 September 30 via DF, 24+ hrs
GAP – Owners of airport On or before Oct 5

Wonder about chartering a plane to the CSL field and how many we could jam into a little jet?

 

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

 

Living in Los Cabos: Stormy Weather Part 3

20140824_115207

 

There’s no doubt about it. Getting ready for and actually making it through the storm are a lot easier than living with the after-math. Now is when we need to address the damage.

 

Obviously the first priority is any injuries; that must be the first focus. The reason you got a first aid kit together before the storm is that it might be a while before the ambulance can get to you. Be ready. Hopefully you will never have to use it.

 

Barring any injuries, your first priority inside is going to be drying off. Once the storm passes the weather will heat back up and you want to get things dry before the mold can start growing. I’m a real estate broker: I’ve been in houses valued at $100,000 all the way up to $10,000,000. One thing they all have in common is that they will take water in a storm. Find the leaks and use your squeegee to dry the floor. Take any wet upholstery, etc out onto the patio and let the sun dry it. Open all the doors and windows to let air circulate. Consider mopping with chlorine bleach as a preventative measure.

 

This is a golden opportunity for you to experience life off the grid. Your power will remain off for some period of time. If you live in one of the nicer gated communities you will also lack water (no electricity to run the pump). If you’ve got a back-up generator you might be able to run the refrigerator, pump and a few lights but forget the A/C. The closer you live to downtown the better. Say what you will about our city government, they ‘get’ tourism. That area will be the first to have power restored if at all possible. The resorts have massive generators so they will have plenty of water and air conditioning; if need be you could check into one until your place is habitable.

 

Outdoors you will want to check for damage to your car, and of course the plants. You might notice places where the storm sand-blasted the paint right off your house. Time to clean up the mess, being diligent about clearing up any stagnant water that might breed mosquitoes. Dengue fever is a real concern after a storm.

 

The city will be cleaning up as soon as the storm clears, concentrating on the tourist zone. They’ll be cleaning up the mud and hauling it off. That’s the good news. The bad news is that some will remain behind, dry up and become dust. That dust becomes airborne. Remember what we said in the last blog about the water flooding the streets not being specifically clean? This dust isn’t ordinary dirt. You don’t want to even THINK about ingesting it in any way. If you’re driving through town keep your windows up and set the air conditioner to recycle interior air. This is not the time to dine at outdoor restaurants; stay home or find an inside venue.

 

From there on it’s only a matter of patience. Eventually CFE will get the power back on; the linemen are some of the hardest working people in Mexico. With time the water company will find the break in the aqueduct and patch it up (hint: it’s broken where it broke last time and the time before that and the time before that…..). We’re on the end of the supply chain and the storm may have torn up the roads so it will be a while before the stores can re-stock.

 

Two storms come to mind. Julietta in 2001. Julietta was a bitch. She wasn’t that strong but she arrived in Cabo and like some tourists, didn’t want to leave. Four days!!! The guys at CFE were kind and put power back on periodically during that ordeal. I can’t remember the exact year Marty visited us, seems like it was mid-last-decade. Marty was stronger, but he breezed through in record time in the middle of the night. All I remember of the storm is waking up with the rattling of windows, Bob & I each grabbing a couple of dogs, and heading down to our old downstairs bedroom where we slept through the whole thing. You would think Julietta was the worse of the two, right? Wrong. As quickly and painlessly as Marty dashed through Cabo he decided to take a quick detour to the Sea of Cortez, ripping across the peninsula. He downed power lines between Cabo and LaPaz that took ages to fix, destroyed large sections of the road and took out numerous bridges (I don’t recall the exact number). It took several weeks to recover from Marty. But, the message here is recovery. “Life will be normal again” is my mantra after a storm. And I know that come December I won’t have any complaints about the weather at all!

 

 

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