Outlook for High End Real Estate and Mexico's Economy
The US housing market is seeing early signs of price stability and even
price increases for the first time in years.
However, prices for homes priced at $1 million or more have fallen a 20
percent this year. The average sale
price for top-tier real estate has fallen to just over $2 million, from $2.5
million in 2011. Some mega-mansions have seen price cuts of 30 percent or more
in recent months. Because of sale prices
at the top dropping, the number of transactions for homes priced at $1 million
or more has jumped 18 percent this year, one of the strongest increases since
2008. Brokers for luxury real estate are
already calling 2012 “The Year of Capitulation” for wealthy sellers.
As the saying goes here in Mexico, when the United States sneezes, Mexico
gets a cold. This adage applies on the
positive side as well. You can equate
prices in Los Cabos with the United States.
And now is a great time to be buying a home in Mexico, specifically Los
Cabos.
Not only are we seeing very good prices for real estate in Los Cabos,
the economy of Mexico is very strong.
Indeed, Mexico’s economy has a number of strengths. It is the 14th largest in the
world. If you take into account
purchasing power, it is the 11th largest economy-larger than Canada,
Turkey, and Indonesia. It is projected
to grow 4 percent this year and even faster in the coming decade.
Investors are taking a growing interest in this Latin-but-North American
country. In a special report on
investing in Mexico the Financial Times went as far as to call its macro
economy “virtually bulletproof”. Move
over BRICs – Brazil, Russia, India, China – it’s time for the MISTs – Mexico,
Indonesia, South Korea, and Turkey.
Mexican manufacturing is poised for a boom. And while in the past few years Mexico has
banked on its proximity to the U.S. (lower transport costs) and trade deals
like NAFTA to compete with China, it will now be able to manufacture and price
products at an advantage.
One thing is clear – Mexico is not the war-torn wasteland it is often
made out to be. Its people have a
glorious history, and a hopeful future.
This isn’t to say that Mexico is destined to be the next investment
hotspot – that’s far too simplistic a way of looking at this. Instead, the numbers suggest the truth is
somewhere in between. Mexico has enormous capacity to surprise on the economic
stage. In order to really shine, Mexico
is working on developing a vibrant middle class.
Price
adjustments and the strong economy in Mexico make this the perfect time to
invest in a vacation or retirement home in Los Cabos.