Monday, March 4, 2024

Foreign demand cited for driving up prices for homes, apartments

House and apartment prices have increased above the national average in states such as Quintana Roo and Baja California Sur partially due to high demand generated by foreigners, according to the director and cofounder of a real estate company.

Data from the Federal Mortgage Society, a government agency, shows that the average price for a dwelling in Mexico for which a mortgage was taken out was 1.47 million pesos (about US $72,000) in the first quarter of the year, an increase of 7.7% compared to the same period of last year.

Quintana Roo recorded the biggest year-over-year increase with a 12.4% jump, followed by Baja California Sur, where the average price for a dwelling rose 12.2%. Both states are heavily dependent on tourism and popular with home buyers from abroad, especially the United States. Houses and apartments in Nayarit, which includes the resort town of Nuevo Nayarit (formerly Nuevo Vallarta), also rose by 12.2%, while Michoacán, Morelos and Sinaloa saw increases above 10%.

The director and cofounder of Ancana, which sells vacation homes, said that low housing prices make Mexico attractive to buyers from the United States, especially because high inflation in the U.S. has caused property prices to go up.

Cabos San Lucas
Los Cabos, with a 13% spike, was the municipality with the biggest rise in home prices.

“During the pandemic, there was a boom in the vacation home sector, not just [because of demand] from local clients but also from foreigners,” Andrés Barrios added in an interview with the newspaper El Universal.

“At the start of 2022, in certain destinations more focused on Mexicans, we’ve seen a … reduction in terms of the number of sales compared to last year, but we’re still seeing a lot of interest from foreigners,” he said.

Favored destinations among foreigners include the Riviera Maya – where Cancún, Playa del Carmen and Tulum are situated – and Pacific coast resort towns such as Los Cabos, located on the southern tip of the Baja California peninsula.

At the municipal level, Los Cabos – made up of the twin resort towns of San José del Cabos and Cabo San Lucas – recorded the biggest increase in property prices between the first quarter of 2021 and the first three months of this year with a 13% spike. Solidaridad, a Quintana Roo municipality that includes Playa del Carmen, ranked second with a 12.7% increase, followed by Bahía de Banderas in the Riviera Nayarit (up 12.6%) and Benito Juárez (up 12.2%), which includes Cancún.

rendering of planned Tulum airport
Sales in Tulum this year have been strong, and the planned Tulum International Airport is likely to keep prices rising, said Ancana director Andrés Barrios.

Barrios said that almost all recently-built three-bedroom homes on the Baja California peninsula – with prices between US $700,000 and $2 million – have already been sold, while sales of yet-to-be-built houses of the same size have been strong.

There is a lot of construction happening in Tulum, and sales there have also been strong, he added. “And now, with the new airport, prices will continue rising,” Barrios said. “[The airport] will bring more tourists to the area.”

Barrios said that foreigners have also snapped up new housing stock in the Jalisco resort city of Puerto Vallarta and in San Miguel de Allende, a colonial city in Guanajuato that has long had a significant foreign population.

He said that foreigners who have bought properties in Tulum and on the Baja California peninsula haven’t displaced locals but noted that some Mexicans have sought cheaper housing farther away from the coast in Playa del Carmen.

Real estate analysts cited by El Universal said that within a context of high inflation in Mexico – 7.88% in the first half of June – housing prices will continue to increase this year.

With reports from El Universal 

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