Hi All, Can anyone tell me how house prices work here - what are they linked to?? In the U.S and U.K prices seem to be on the slide - interest rates, harder to borrow etc. Yet here the price of new houses seems to keep rising- do you think there will be a knock on effect here and we might start seeing a slide. I guess when you are getting a mortgage in mexico and paying 13% plus interest rate you are already getting screwed however demand still seems to be strong for those "housing developments from hell" out the back of santa fe! I guess what I'm trying to know is who or what sets the price of property here in Mexico?
Greed, greed sets the price. Both Cancun and Playa del Carmen are beginning to get overbuilt. And now that the mortgage crisis in the US is upon us we are seeing a slowdown in the number of folks coming here and buying second homes. So prices for the properties that gringos want (beach front) should slip soon, there's too much offer and not enough demand. As for prices on new developments in the nosebleed section of Cancun (meaning way out there) I think that the prices are set by the developers, possibly in collusion with any banks they might be using to finance the properties. It does feel sometimes as if prices here aren't tied to anything real. And sometimes you see things that are truly ridiculous. In the end the price will be whatever someone will pay. There are a HUGE number of inexperienced first time home buyers in this market. The developers prey on that fact. They hide the interest rate and don't discuss the dangers of compound interest. Instead it's just "buy this house with $50,000 mxp down and $5,000 mxp per month". If people can make the payment that's good enough for them. If you ask the average mortgage holder in this town what they owe on their loan they will not know. If you ask them what their interest rate is they will not know. If you ask them what their total cost will be once they pay off all the interest they will not know. If you ask them if they've ever made an extra payment to pay down their mortgage they will wonder why you would ever want to do that... The developers can get away with higher prices because the buyers don't realize how much the property is really costing them. If you are considering getting a mortgage here be absolutely certain that there is no prepayment penalty. Make sure you can make extra payments or pay extra toward the principal each month. And then follow through and actually make those extra payments. You can effectively bring down your interest rate if you pay down the loan faster than the bank wants you to. My humble opinion is that usually, here, new development is overpriced. But not always, some projects get people excited and the values hold and rise for a long time. But you'll get more bang for your buck if you buy something with a great location and then fix it up, rather than buying something far away but that is brand new. Oh brother, have I ever gotten long-winded since I learned to touch type....
Thanks Kim, That's pretty much what I thought - I think borrowing here is a newer thing for the "masses" for want of a better word - before borrowing money was only for the rich, and nowadays credit has become easy to get, however they don't understand interest rates, variable mortgages etc. etc. they just understand the payment like you say. So in reality house prices for "us" who live in downtown not by the sea are dictated by how much the seller wants and "market value" is more of a big fuzzy line? So I guess the tmoral is "offer very low and hope someone is desperate to sell"
AMPI does have a chart they use to show price per square meter for different parts of Cancun. So they are trying to set a guideline. But the developers and individual sellers often ignore their advice I think.
areas to live? Rivergirl, First time on here. My wife lives in Acapulco but living conditions there are bad. Are there areas in or around Cancun that we can rent for around $450.00 u.s.? If so, where should we begin looking? We have never been there but anything has to be better then Acapulco. We want to stay away from Colonias and be in a safe area where we don't have to worry about crime/kidnappings etc. I am sure many of the questions have been answered but each answer is followed by 10 questions. There is no doubt that she and my kids will move there, we just don't know where to begin.
Hi, it´s very hard to find something for 450 US for rent in an acceptable zone. The rents are between 500-600 US in an acceptable zone (not center of Cancun) for a little house with 2 bedrooms and 1 bathroom. If you wish 3 bedrooms you will find something for 800-900 US. For 450 US or less you can find something near the colonias, but it is dangerous there. You can have a look at the Cancuns newspaper classifieds: www.novenet.com.mx
house I live in SM-25 (a short walk from Plaza Las Avenidas, Ave. Yaxchilan, and Mercado 28) and my apartment is $5,000MXP per month. It is actually the top floor of a house so it is pretty much like a duplex. I have 3BR/1BA, kitchen, living room, and a terrace that is about the size of one of the bedrooms. Bars are on all windows and doors. There is a cute little house for rent on my street and it's $6,000 pesos/month. It has 2BR/1BA, small kitchen, living room, big backyard, very small front yard, bars on all windows and doors, and a service area that would make a great laundry room. My first apartment here was 2BR/1BA and it was furnished. The price was $4,500 pesos/month, but that was nearly 5 years ago. The price went up when I moved out. There are some apartments in this area that are within your price range, but they might all be too small for your wife and children. So, yes, it is possible to get something in your price range, or slightly above it, in a central location. I live in a residential area and feel safe here. Well, as safe as one can feel in any city...especially one that seems to have a crime rate that rises by leaps and bounds each day. Good luck!
Another thing that house prices depends on is how desperate the people are that are selling it. Now is a good time to look becasue people that are moving now through August want to be done and out before the new school year starts. They want to be in their new residencs so their kids are already in school. The people we bought our house from were from Villahermosa and used it as a vacation home. The wife suddenly became ill and they just wanted to be rid of it. We got it for almost $40,000usd lower than the market value at that time. Then again, I recently saw a house near La Luna that was going for $500,000usd. It was hunongous and beautiful inside...everything new and quite big, including a 6 car garage....but who's going to pay that kind of money in this neighborhood? Prices are based on the buyers perception of what their house is worth, maybe with a little input from real estate agents and neighborhood sales. Drive around through the neighborhoods and call the real estate agents to ask about the houses. I found this to be a accurate way of price shopping and have helped several friends find houses this way. Good LUCK!
Oh my, 500-600us here in chicago will put you smack dab in the heart of the GHETTO with all the crackheads & crackho's! Oh....free parking on the street for the car that will no doubt get stolen within the first 2 weeks. Michelle
I think you can find stuff all day long for $450 US per month, and not out in the sticks. Safe areas, easy walk to parks, and convenient to places like Walmart, Soriana, Costco, etc. I found one and rented until I talked the landlord into selling it. Did I have to spend a bit to get it really slick. Yes, but it was a managable amount. As to what Kim was saying about down payments and interest rates, the how much down and how much a month mentality has been rampant with first time homebuyers in the states forever. In the run up of prices in Central Florida over the past few years I am surprised at how many of my own properties have been sold for 6 figures where the buyer does not put down a single penny of their own money. And guess whose homes are now in foreclosure because they were clueless as to what they were signing and were blinded by the glitz from their realtors and mortgage brokers. To me the fault lies with the mortgage brokers who underwrote what they had to know were worthless loans but they were making tons of money on commissions. Ultimately however, in my opinion, the real estate crisis now in the US is the fault of the sub-prime lenders who thought the bubble would never burst. As to what is happening in Cancun it is unexplainable as to who are buying all of this new construction. At some point the Field of Dreams logic will cease to function and then the market here will suffer too. I am a real estate investor so at the moment life is good.
