Forums > Areas > Jalisco's Lake Chapala Region

pat

May 5, 2006, 2:25 PM

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Ajijic Real Estate Market

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I posted this a few days ago in another thread, but received no response and the thread was locked soon afterward.. I Think I will try again with a slightly edited version of the original post....

What is the trend in the real estate market in Ajijic? Have you noticed any leveling of appreciation rates, or reduction in home prices?

I live in a popular retirement area on the East Coast of the USA. The high-flying appreciation days of the last two or three years are over. Sellers are now reluctantly reducing prices in order to attract a smaller number of buyers, a concession hardly imaginable 6 months ago. From what I read, this trend seems to be mirrored in other real estate markets in the USA, as well.

In one local community sales are down by 50% from what they were in July/August of 2005, and the total number of homes on the market is up by 70% or so. Realtors (I am one) are talking here of a sea change in the market from what it was 6 months or so ago. Changes in the market are well beyond the normal seasonal swings.

I attribute the slowing housing market here to higher interest rates, higher inventories, and appreciation rates, which over the past two or three years, have reached unsustainable levels.

Since the area I am in now, Hilton Head Island, SC, is similar to Ajijic in that many retirees cash out of homes in the more expensive areas of the country, and reinvest those monies in retirement areas, I would expect that lower prices here might influence what buyers were willing to pay there........ then again, maybe not.

I'd be interested in your thoughts.

Pat

1ajijic

May 5, 2006, 4:29 PM

Post #2 of 8 (906 views)

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Re: [pat] Ajijic Real Estate Market

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Pat let's just say that there is one retiree in Hilton Head that gets the Ajijic itch. Now multiply that by the number of retirement havens in the US, Canada, Europe, etc? Basically alot of people are eager to get out of the US. One recent arrival said that he and his wife were voting with their feet. For a little town we have maybe a dozen Real Estate Offices. Chapala has one that I know of and Joco none. I know of people who have been waiting for a number of years for the prices to break and now can no longer afford to buy as they have been priced out of the market. Not only are the baby boomers about to arrive, we're 59 and have been here five years, but, youngers who work on the Internet are settling in every day.
http://www.newbeginningsmexico.com

Grevo

May 5, 2006, 4:55 PM

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Re: [pat] Ajijic Real Estate Market and some background

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Actually I am a former broker in the area and am now a real estate consultant. I am out of the promotion business and are helping buyers and sellers in the process of buying and selling providing home inspection services and market analysis.

What has happen with sales during the first four months of the year is similar to the last two years however, it is indicating that the trend is still continuing of brisk sales

The first four months of the year are generally the highest point of sales for the year with the snowbird traffic and many new people investigating the area. For the last few years I have kept some data and researched other sources to come up with the following information. These numbers are approximate and to the best of my knowledge.

The sales have been like this for the first four months over the last few years ...

Year

Jan to Apr

Entire Year

% Entire Year

2006

142

2005

157

391

40%

2004

161

394

41%

2003

232

30%

2002

154

38%

The effects of 9/11 caused a lot of potential buyers to hold back from buying since the future was not certain (reasons too many to go into here). Hence for the years of 2002 and 2003 the buyers held back and overall sales were slow. However, at the end of 2003 and into 2004 there were a lot of buyers that finally made the move and sales zoomed. You can see this by the sluggish sales in the first four months of 2003 and then the sales started to pick up significantly by the end of 2003.

In 2004, it was a historic year for total number of sales. Prices started to increase and the developers started to take notice. Sales continued to be good in 2005 and as you can see, the first four months of 2006 they have been good however, have dipped slightly and I anticipate sales will continue to be brisk finishing the year with approximately 350 sales. Still near historic high levels in sales.

Inventories have remained relatively stable with approximately 450 homes for sale but what is interesting is in certain sections of the market depending on price and location, the inventories have been lowered. For instance, the demand remains high for village properties (Ajijic) and some of the prices remain high. Properties may receive multiple offers or only be on the market for less than two months. Also there are fewer homes in the below $150,000 USD than in previous years. This is also a factor which has caused the average price of sale to increase. Buyers are opting to pay the higher price rather than go into something smaller.

Lot sales were very good over the last two years and the contractors and builders are all very busy here at Lake Chapala. Many of these are homes built to live in rather than to speculate on the market as we saw in building boom of 1995-1997.

The market has changed and I believe the sales will continue to be healthy however, the rapid increase in prices has started to level off in my opinion. Like all real estate cycles there ebbs and flows (peaks and valleys if you like) and this appears the sales have slowed slightly but the bubble is not bursting and is allowing the market to catch up. Buyers are taking time to research and investigate their options (price, location, age of home, etc).

The number of people buying and selling privately has increased slightly as well. I have seen as a consultant and talking with the lawyers and notarios in the area, that there have been more deals without a real estate agent however, I estimate the real estate agents are involved in approximately 75% to 85% of the sales in the area. This is totally the opposite of the national average (Mexico) where 75% of the sales are done without a real estate agent. The level of services available and professionalism of the real estate agencies locally is better than the national average and perception by the consumer.

The summer should be interesting since this is when there is a higher percentage of serious buyers however, not as many buyers in total as the first four months of year.

Well I have run on a little too much, I am sure that there will be a lot of feedback to this posting.

Saludos,
-------------------------------------------------
Sin Compentencia tenamos Incompentencia!

1ajijic

May 7, 2006, 11:56 AM

Post #4 of 8 (787 views)

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Re: [Grevo] Ajijic Real Estate Market and some background

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I think that your numbers are slightly flawed by something you mentioned towards the end of your post. In Ajijic village many houses are being sold without ever going onto the market. Part of this is due to the hot market and part of it seems to be that there are more and more bottom feeders in the realty business and many don't want to get involved with them, even for a sale. Often sellers tell a trusted realtor about their wishes to sell and will deal with no one else. Sellers don't want a listing. I see many more houses being sold this way than those with signs displayed. generally these properties are sold before anyone knows about it.
http://www.newbeginningsmexico.com

pat

May 7, 2006, 1:27 PM

Post #5 of 8 (769 views)

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Re: [1ajijic] Ajijic Real Estate Market

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"Basically a lot of people are eager to get out of the US. One recent arrival said that he and his wife were voting with their feet."

I would be surprised if "political reasons" are really any more responsible for folks moving out of the country now than they were in the Clinton years. Greater numbers may be moving to Mexico now than then, yes. But these numbers, I suspect are due to the leading edge of the huge baby boomer bulge starting to retire. They are also moving in greater numbers to Hilton Head, Florida (for whatever reason, God only knows) and to other areas where T-shirts and short pants are the normal standard of dress.

Larger numbers of retirees than in any time in our history, with the means to move to better climes, being much more aware of the opportunities (thanks to the internet) to experience different cultures, and the desire to see their dollars go farther, I would be willing to bet, will rank higher than political reasons for their decision to move to Mexico.

Once you are there, you can pick whatever reason you want to suit whatever discussion you may be engaged in. If you want to hear some really great reasons, mix a little alcohol into the discussion. :)

All that not-with-standing, I am betting that the Ajijic real estate market will slow, as it has started to do in the US. I don't think you will see a "bubble break", with correspondingly large price reductions. Rather, more of a leveling of appreciation rates until the market catches up, mirroring somewhat how the market is reacting in the US. Then again, I may be totally wrong.

1ajijic

May 7, 2006, 6:16 PM

Post #6 of 8 (705 views)

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Re: [pat] Ajijic Real Estate Market

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Gee Pat, when the statement was made it seemed perfectly understandable to all those present and alcohol wasn't involved. Not all the drunks are this side of the border. Is there any chance the view outside looking in might be a little clearer than inside looking out?
http://www.newbeginningsmexico.com

pat

May 7, 2006, 8:40 PM

Post #7 of 8 (684 views)

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Re: [1ajijic] Ajijic Real Estate Market

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1ajijic, I had originally penned a disclaimer in my response above to make clear that I didn't mean any offense with my statement. I edited it out because it looked overly solicitous as I read back over it.. I guess I should have left it in. But, no offense was intended.

I still doubt, though, that political considerations are the primary reasons many folks move from the USA to Mexico, regardless of what they may say in casual conversation. Seems to me that it is much more likely that folks would retire to Mexico for better climes, cheaper cost of living, and if they are a little more adventurous, perhaps they want to experience a different culture.

Most of the folks I know who are upset with the present administration simply opt for "Bush Sucks" bumper stickers and wait for the pendulum to swing. Selling up and moving out because of dissatisfaction with the administration seems a little over-the-top, especially when the situation will probably be self-correcting in upcoming elections. If you are right, though, perhaps we should anticipate a massive migration of expats back to the USA when the democrats regain control of Congress and the White house? What do you think?

I'm just kidding. Perhaps we should agree to disagree on this one.

Pat

DavidJ

May 8, 2006, 7:23 AM

Post #8 of 8 (644 views)

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Re: [Grevo] Ajijic Real Estate Market and some background

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Grevo.

Thank you for your extensive research and in depth posting re the real estate market in the Lake area. Since I hope to move there relatively soon, I have been hoping for such an article.
I only wish that this posting would have had a better response.