Given the current situation resulting from the COVID-19 pandemic, Vallarta Real Estate Guide took the opportunity to approach some of the destination’s top realtors to learn their opinions regarding a single question: Is it time to buy, sell or wait? In this special series of two articles, we will look at their answers and views regarding the current position of real estate in Vallarta · Nayarit.
In this first part, we share the comments of Sherri Narro, founder and president of Sherri Narro & Associates; Wayne Franklin, president of Tropicasa Realty; Brock Squire, CEO of Coldwell Banker La Costa Realty; and Greg Stanton, sales agent of SB Realtors.
“The answer all depends on the person buying or selling. Over my 25 years in Puerto Vallarta, in times of crisis, our market seems to ‘hit the pause button’ for a while. Sometimes this pause is brief, sometimes not, but it always passes.”
“For any buyer who sees this as an opportunity and wants to capitalize on the recent halt in business around the world while things are uncertain, that buyer will be expecting top value for their dollar and good prices. Conversely, for a buyer who is risk-adverse and demands a higher degree of certainty, that buyer will wait, even with the trade-off of possibly paying more at a later date.”
“While distressed sellers will be the hardest hit in the current upheaval, sellers who possibly do not need to sell for financial reasons, but who may wish to move on with their lives, might feel that taking a lower offer now rather than waiting is the best for them personally.”
“The silver lining in the luxury market: Regardless of what the hardship, after the initial pause, there is always someone who is retiring, has sold their company, comes into an inheritance or for any number of reasons wants their place in paradise, and, wants it now rather than later.”
“There are many variables for this, and frankly it depends on the client. That being said, overall, for buyers I’d say it’s a very good time to consider buying, especially if you have US or Canadian dollars. The reason is that, if they can find a seller who accepts pesos and especially at a previously set low rate, the buyer will benefit from the current exchange rate. In other words, there are some sellers in the market willing to accept 19 or 20 pesos per dollar against the current exchange rate of 24 pesos per dollar. If the buyer buys pesos at a favorable rate, this would mean 20 percent or more in savings. In general, sellers are not negotiating more or less due to COVID-19, but the peso exchange rate can work for both those who buy in US dollars and in Canadian dollars, as long as they locate a property with these parameters.”
“During the past month, there were fewer properties that came on the market. So, those that do come out get extra attention, and this can be an opportunity for sellers. Additionally, during this period, some real estate agents are refocusing their marketing efforts and doing more advertising, as well as communicating virtually with their prospects. While showings can be difficult, properties with professional photography or 3D tours can be ‘shown’ and used as a pre-qualifier and then shown live. And even though offers are not as plentiful as before, they are still happening, even if there are no massive sales. Customers who have already been in the market and have construction or location preferences already have a good idea of what they want and are looking for. Those buyers stay in the market and are making offers when they see something they like.”
“Is it a good time to sell? If you are a real seller, then you must understand that most rational buyers expect the value of their property to reflect the realistic value of other assets that come from the buyer. At the same time, everyone knows that the value of the currency in Mexico has devalued by approximately 25 percent. Given that most assets in global markets have fallen about the same as the peso, then it would be realistic for a buyer to expect the same relative values when trying to buy in this market. Again, if you are a real seller, you need to lower your price by 20 to 25 percent. This is strong medicine, but the reality is that when you sell, whatever you reinvest in will also be at a similar level.”
“Should I wait as a seller? No! If you are a real seller, you should lower your price now, because if you wait two things may happen: 1. You will lose both the opportunity to take the lead in the market and your competitive advantage when you are forced to lower your price later; and 2. You will be subjected to Chinese water torture by chasing the market, which is never a good idea.”
“Is it a good time to buy? If you are a true buyer and are ready to move fast, then this is an amazing time to buy because you will enter this market first and get the best selection of properties that real sellers offer at the best prices. Today, many properties give the buyer the opportunity for a virtual showing, and if not, their agent will send them a video in a very short time. Once the property is secured, the entire closing process can be managed with a coordinator, including escrow and final execution. Once you own the property, your operating expenses will also be substantially lower due to the weakness of the peso, something we do not see changing in the near future.”
“Should I wait as a buyer? No! If you wait, all the other buyers will enter this market before you and take advantage of the best opportunities. That way, you may be left with sellers who are not as ‘real’ as those who are at the forefront of the market at the moment.”
“It is an open question in all market conditions. It’s good, it’s bad, and it must be done, even in these unprecedented times. Each buyer and seller has their own needs, regardless of what the outside world is doing.”
“Is it a good time to sell? Probably not, due to market conditions. The exchange rate has left most of the domestic market out of the picture. The global crisis over COVID-19 has left virtually everyone else on hold. Many new developments that were starting are now stopped. If you own a property and want to sell it, it would be best to postpone it and rent it out. The resale market can be challenging even in the best of times, but it is extremely difficult now.”
“Is it a good time to buy? Probably yes, for the same reasons I mentioned above. Currently, the exchange rate favors foreign investment. There are sellers (private and developers) who need cash flow, and there are opportunities arising in different market segments. We are in a buyer’s market! As an investor, be open to considering different market segments to invest in. You want a property that can provide positive cash flow in rentals and increase its value. As a buyer for personal use, find and buy what you want at the best possible price. Unlike an investor, most of your return on investment will come from you and your family enjoying your home in paradise. If you are looking for both options, first find the property you want and make sure it offers you the opportunity for vacation rentals—as this is by far the surest way to get a return on investment.”
In the second part of this special, we will review in detail the opinions of Sarah Elengorn, director of Elengorn Realtors; Carl Timothy, president of Timothy Real Estate Group; and Michael Green, broker/partner of Boardwalk Realty.