Is It Time to Buy, Sell or Wait? – Part II

Some of the destination’s top realtors were interviewed by Vallarta Real Estate Guide to learn their opinions regarding a single question resulting from the COVID-19 pandemic: Is it time to buy, sell or wait? In this second and final part, we share the comments of Sarah Elengorn, director of Elengorn Realtors; Carl Timothy, president of Timothy Real Estate Group; and Michael Green, broker/partner of Boardwalk Realty.

Sarah Elengorn

“Although it is difficult to answer this question during these unprecedented times, I still believe that Vallarta · Nayarit has many strengths and we can still compete with investment opportunities in other countries and other cities in Mexico. Our destination has not yet been pinpointed as an area of contagion, and I believe much of that is due to the rapid response of our leaders. We can applaud the municipal and state governments for helping to prevent Puerto Vallarta and Riviera Nayarit from receiving tourists (and, therefore, possible further contagion) during the busy Easter holiday period.”

“The incredible natural attributes of our destination will continue to attract numerous travelers and investors, even though there aren’t many visitors at the moment. Medical services, excellent weather and the low cost of living in Vallarta · Nayarit will continue to be attractive to buyers when the pandemic passes.”

“So, why should you buy now? If you have dollars and can work with a developer or seller who is willing to set a price in pesos, this is a great time to buy. With the dollar at an all-time high against the peso (almost 25 pesos to the dollar) you can ‘lock in’ and settle for a price in pesos that is below the current exchange rate, which will give you a ‘gain’ on your dollars.”

“Certainly, we are now moving into a buyer’s market, and using the falling peso rate to our advantage could be a new and more creative way for real estate agents and sellers to do business in the coming months.”

Carl Timothy

“Right now, there are a number of great opportunities for buyers, especially those from the United States, who have an advantage with the exchange rate against the peso, as this makes closing costs much more attractive to them. My suggestion for anyone considering buying in Banderas Bay is that now is a great time to make a reasonable offer that they are comfortable with, as many sellers seem to be more understanding and willing to negotiate certain details. Just before COVID-19 caused the closing of businesses and staying at home, we were seeing multiple offers on a variety of property types. This was happening with new developments as well as in the luxury market. Since mortgages are now available in Mexico, more and more buyers are using those offered by Mexican banks. Now is a good time to get that second home on the coast. Of course, I suggest that any buyer consult with an AMPI-endorsed agent to represent and protect them during any transaction.”

“On the other hand, during the current volatility in the US stock market, investors are reviewing asset allocations in portfolios and are considering, from an asset standpoint, how real estate can fit in. More and more people are looking at real estate as their next investment because of the potential it represents for both appreciation and cash flow from rental income. It is also a real and tangible element that can provide more control than some other forms of investment. In fact, most homebuyers in Banderas Bay pay for their properties in cash. Last year’s survey shows that 79 percent of buyers paid cash, 7 percent received loans from Mexican banks, 5 percent used foreign loans, and 9 percent used financing offered by the developer.”

“Finally, a large number of the owners who acquired their property many years ago did so in cash, when mortgages in Mexico were not available. During the 2008 recession, many of these homeowners/sellers either kept their properties and rented them out for income or simply waited for everything to pass without discounting their properties. For this reason, we may not see much reduction in prices during this situation.”

Michael Green

“Although the Vallarta · Nayarit real estate market has slowed down, it has not stopped. Since mid-March, when we closed our physical office and started working from home, we have several new offers in process. A few days ago, Google’s search term ‘Puerto Vallarta Real Estate’ increased 82 percent. Clearly, many people feel ‘locked in’ and dream of a property in Puerto Vallarta when they can travel again!”

“For buyers, it is important to understand that the fundamentals of our market may be quite different from what they are used to at home. The vast majority of properties for sale (over 95 percent) do not have mortgages. Homeowner fees, utilities and tax rates are also much lower than they are in the United States and/or Canada. When they are not in the residence, many homeowners also rent them out successfully, which further offsets the expenses. Here, the average time for properties on the market, although it has decreased in recent years, is still around a year (not a few days or weeks, as it is north of the border). Also, the vast majority of sellers are retired or semi-retired, so they are comfortable and not necessarily desperate for money. During the time we have been confined, I have only received one call from a seller asking what is going on, if there are any showings, etc. The vast majority are willing to wait out this situation. I haven’t had any sellers lower their price in response to this pandemic. Sellers understand that while the virus has had devastating effects on human life, it is not affecting properties, as they will still be here in a week, a month, a year or as long as it takes to sell. In recent years, properties have sold in the range of 95-96 percent of the list price. Based on the offers we are currently working on, I see this trend continuing. There may be occasional sellers or highly motivated developers who lower prices or negotiate on select units, but those looking for a property with a 30 or 40 percent discount will not find it. This did not happen during the 2008-2010 economic crisis, and I don’t see that it will happen now.”

“Sellers must understand that, for many people, the idea of buying a property in another country is a daunting and very stressful task. For that reason, sellers (or their agents) must be prepared to answer a multitude of questions about the property, something they might not be used to in the United States or Canada. Furthermore, the typical buyer doesn’t buy here to move, but because it’s something they want to do. It is important for sellers to understand that they may have the idea that our market is a ‘buyers market,’ when in reality it is not, for the many reasons described above. Therefore, sellers must take every inquiry or offer seriously.”

“Both buyers and sellers must take the above into account and realize that the market here is strong, stable and will not disappear. They may feel frustrated now that they are likely to be losing money in the stock market or on currency exchanges, but it is important to keep in mind that when they want to sell in a stable market, their neighbors will not panic, nor will they lower prices, as happens in many other real estate markets. While those who buy now will have a great place to enjoy in the months ahead, those who don’t follow their dream may lose it. Although this pandemic has caused worldwide disruption, I believe that the Puerto Vallarta real estate market will survive perfectly.”