What will 2017 bring to Mexico real estate and the world in general? Economic and political changes most certainly affect real estate, so let me gaze into my crystal ball and offer a few predictions.
- The world is in a more noticeable shift of power, which will influence how we settle on republics, democracies, dictatorships or socialist countries.
- We will see more changes and adjustments in financial and global markets, in demographics and in aggression of countries toward each other. We will also see more open confrontation of racism and bigotry inside and among countries.
- Agreements among the three North American countries may be renegotiated and settle on different relationships than we have currently. Here is an opportunity to strengthen relationships and agreements for the benefit of all residents of Canada, the United State of America and The United States of Mexico.
- This uncharted future or dissension is not in itself unhealthy or negative. The time has come for us to have the opportunity to address deep fundamental issues and work to get back on track.
- Democracies or republics, if they are to survive, must have a balance of a large middle class, and a reduction of great wealth and great poverty.
- The report card for Britain and the U.S., where each person has a vote, shows both countries are losing their middle class and have overlooked a large number of citizens who have been left out of the economy and not had representation to bring them back in as a viable part of the society. We are lucky we have the transparency to see this.
Now, how might these changes affect real estate in Mexico?
- The real estate market in Mexico will be strongly influenced by the relationships between Canada, the U.S. and Mexico. Costs of homes or condos, affected by demand, are based on the strength or weakness of the U.S. dollar, political policies and economic factors within and between each country.
- In Puerto Vallarta, a dozen new projects are underway in Zona Romantica. About 500 new condos will be coming into the market to be sold as pre-construction.
- There is a risk to preconstruction purchasing, so each buyer should use caution, and in my opinion, consult with a qualified real estate attorney. He/she can explain the developer contract, explain the process of paying the buyer if there is no escrow involved and help you understand that if the market slows, projects may not sell out and prices may be further reduced, or projects may be left unfinished.
- We currently have sub-markets in Puerto Vallarta that are stronger than the market as a whole, but overall, there is too much inventory on the market, well over US$1 billion. The listed inventory needs to be culled to what is selling and the properties that have no demand, taken off the market. This would require a concerted effort from real estate agents, the public and civic leaders. Until we have a shortage of inventory, and continued demand, we will not see normal appreciation or a change to a seller’s market. We need a more balanced market in 2017.
This article is based upon legal opinions, current practices and my personal experiences in the Puerto Vallarta-Bahia de Banderas areas. I recommend that each potential buyer or seller of Mexican real estate conduct his own due diligence and review.