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DALLAS MORNING NEWS
Real people can live in Mexico
By SCOTT BURNS
April 13, 2008
Dreaming about living in a place like Puerto Vallarta but don't have $3.5 million for a condo penthouse? Not to worry.
Your dreams can still come true, even though you'll need more than the $1,500 of monthly income required for a long-term visa. Within half a block of Marina Vallarta, you can buy older two-bedroom, two-bath condos for $125,000 in a complex with gardens and a pool and new homes for less than $200,000. Yes, there are abundant opportunities to pay more. But it isn't required.
The marina has ample restaurants and bars, laundries, dry cleaners, salons and a café for exchanging books. Internet access is common and easy. There are two supermarkets a few blocks away, not to mention a nearby Wal-Mart and a Costco. You wouldn't need a car to live here or take a long winter rental. Cab rides into the downtown boardwalk area are $5. Bus rides are 50 cents. The airport is only a mile away, with plenty of nonstop flights to Dallas, Phoenix and Denver.
The biggest worry most retirees have about living in Mexico is the loss of Medicare coverage. But medical services are available at the marina. At the AmeriMed clinic there, manager Antonio Arce told me that Americans with Medigap insurance from Blue Cross Blue Shield have no problem getting medical treatment, and AmeriMed has no problem getting paid. Treatment is not just for bruises and turista, either.
Don't want to live in sunny Mexico unless you have a water view? Live on a boat.
At a nearby boatyard, I inspected a 34-foot sloop. Maine-built in 1982, it was in primo condition, had a lovely all-teak interior, modern electronics, solar panels, etc. It had berths for five, but two could use it as a full-time live-aboard boat. Offered at $50,000, the boat has been listed for sale since summer, so it can probably be purchased for less. Then you can rent a slip at the Marina for about $500 a month.
Tired of sunshine? Then sail to Seattle.
No car. Water view every day. All the shopping you can stand. Two-for-one
margaritas at the end of every dock. Sounds like a plan.
DALLAS MORNING NEWS
Condo market in Mexico less likely to crash
By SCOTT BURNS
April 13, 2008
PUERTO VALLARTA, Mexico – Standing on our 10th-floor balcony at the Westin, my wife hands me her binoculars. "I think they added the verticals for another three floors while we were having lunch." She points to the framework for yet another skyscraper along the Banderas Bay shoreline.
This is not the usual use of her binoculars. For much of the last week, she's been watching pelicans and frigate birds that cruise the shoreline and the parade of sail and power yachts at Marina Vallarta.
But today she wants me to watch the steelworkers maneuver a girder into place. Beyond this building are three recently completed 20-story buildings. Up the beach a few steps are more condos with magical names – Shangri-La, Grand Venetian, Portofino and Bay Grand.
In fact, construction goes far beyond the confines of Puerto Vallarta. It is everywhere along this beautiful coast. In the places where it is not yet completed, billboards – in English – announce the imminent arrival of another opportunity to live in unsurpassed luxury and elegance. Even distant Sayulita, the charming, funky surfing town celebrated by Barry Golson in his book Gringos in Paradise, is booming with building.
In this part of Mexico, real estate is big business.
It's good to know, of course, that if a shortage of condos develops in Miami, there's a backup supply in Puerto Vallarta.
What that means for anyone who has contemplated a second home in Mexico or retirement in Mexico is simple: A buyer's market is here or on its way. The supply of condos and homes for sale exceeds demand.
But let's put it another way. While the number of millionaire households in America has shown stunning growth in the last few years, millionaires are still in short supply relative to the number of luxury opportunities that have been created.
Does this mean a crash is coming to Puerto Vallarta? I wouldn't bet on it. The market here isn't likely to suffer the steep declines we're seeing in places like San Diego, Las Vegas and Miami. Here's why.
According to Vallarta Lifestyles, whose current 265-page issue is bursting with real estate ads, the average condo resale price rose 79 percent from $196,000 to $351,000 between 2003 and 2007. That's a hefty premium over the 32 percent increase in the Office of Housing Enterprise Oversight TOP for the United States over the same period. Sounds ripe for a fall, doesn't it?
Not so fast.
The appreciation isn't so stiff if you pay in euros. The euro has appreciated about 25 percent against the dollar over the same period. Mexican oceanfront real estate priced in dollars looks a lot less expensive to Europeans than it does to us.
Another thing to remember is that Mexico isn't blessed with our creative financing. Indeed, home mortgages barely exist. Most homes are purchased for cash. So if speculators have bought houses and condos in Mexico, they're probably well-financed compared with the folks who used liar loans to borrow their way to bankruptcy in America. Here, property owners are likely to hang tough, waiting for a better market. There will be fewer distress sales.
Maybe.
But there's a reason all those billboards are in English. Americans are the primary buyers in Puerto Vallarta. And the majority are from California. I would not be surprised if many of the condos sold in the last few years were purchased with cash from refinancing a house in California. As a result, the supply of houses for sale in PV may increase significantly in the next year or so as Californians look for a source of cash and find it in Mexico.
Bottom line? It won't have the stark drama of places like Fort Myers, Fla., or Stockton, Calif. But Puerto Vallarta looks like a long-term opportunity for buyers and renters alike.
Scott Burns was an investment columnist for The Dallas Morning News for 21 years. Today he is a syndicated columnist and a principal of the Plano-based investment firm AssetBuilder Inc. E-mail questions to scott@scott burns.com.
EXPLORE Puerto Vallarta online and read about living and retiring in Mexico.
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