home | read | real estate articles | puerto vallarta real estate conference 2006

Puerto Vallarta Real Estate Conference 2006

Published May 30, 2008 - (Updated Sep 8, 2015)


Real Estate Conference 2007 Update

Preparations are underway for next year's Real Estate Conference. Information will be posted here as it becomes available. In the mean time, learn more about this year's successful conference:

In March of 2006, Producciones Viva held a real estate conference at the Sheraton Hotel for realtors, developers and the public interested in real estate investment in Mexico. Below is a summary of some of the sessions that took place.

During the morning session, David Connell and Maria O’Connor spoke to real estate agencies and brokers in closed-door sessions. David covered ethics and procedures in real estate, and Maria concentrated on the closing process, what can be done to ensure that the real estate transaction does indeed close. They were followed by a panel of veteran realtors, including Brock Squire, Silvia Elias, Carlos Osuna and Wayne Franklin, discussing issues that are confronting, or will be confronting, the real estate industry moving forward.

As these were mostly realtor issues, we will move on to what was discussed during the public sessions in the afternoon. In the afternoon, David Connell gave an introductory course on buying real estate in Mexico, which will be featured in a future article because of the amount of information that was covered.

Real Estate Statistics

John Youden, general director of Producciones Viva, opened the conference by presenting statistical information he had compiled from operating the multiple listing service (Multi-List Vallarta) for the Vallarta real estate associations over the past 17 years.

The MLS service, prior to 2004, had seen modest growth in total sales reported, with $35 million USD established in 2003. In 2004, however, the market took off, with $94 million in sales reported, nearly tripling from the previous year. The same happened with new real estate development. Before 2004, sales were estimated to be less than $150 million. But with many new projects coming online in 2004, this increased to nearly $300 million, and nearly $500 million in 2005.

New real estate development now supplies the majority of the product to the market, with the MLS comprising less than 15% of available real estate for sale, the remainder being provided by developers. This is down from 25% in 2003. To continue to have enough inventory for the strong demand they are experiencing, real estate agencies are now selling new development product more than ever, and many are also handling the marketing for small developers.

Since 1999, condominiums have appreciated annually by 12%, while homes have increased annually by 15%. Traditionally, two-bedroom condominiums have been most popular, comprising 60% of the market. In today’s market, however, the public seems to prefer three-bedroom units, which now comprise 45% of all condominiums presently under construction. Even the two-bedrooms are delivered with an entertainment room or office, which is often referred to as an additional “half bedroom,” offering 2.5 bedrooms.

In 2004 the difference between listing prices and selling prices was 8.6%. Last year that dropped to 6.7%.

All indications are that this very strong market will continue, especially with the availability of mortgage financing. To date, this robust market has grown on primarily a “cash-only” basis. As mortgages become readily available, sales will take off, as will appreciation.

MLS Service for Realtors and Developers

During the realtors-only session, John Youden discussed the latest services that are now being offered by Multi-List Vallarta and Multi-Dev Vallarta.

Multi-List Vallarta (MLV) is a division of Producciones Viva (publisher of this magazine), which provides MLS service for the local real estate associations in Vallarta. The service encompasses a monthly print catalogue and online service. Members can add or edit listings online at the members-only section of mlsvallarta.com. They can generate reports, check for new listings added to the system, and do comparative market analysis using the sold information archived. The information they enter is accessible to the public on the home page of mlsvallarta.com, as well as on a second site developed by Producciones Viva called vallartarealestate.info, which allows visitors to get to know the regions of Vallarta and the real estate available through maps, photography and a built-in database including the complete MLS service. A new service that was announced at the conference allows member agencies to also have the complete MLS featured on their own websites. They can choose to just show their listings or all the listings of the MLS service.

Multi-Dev Vallarta (MDV) was created to offer an MLS-type service for real estate developers. They have an online interface similar to what real estate agencies use, which allows them to easily add or edit their inventory. When they enter the information, it appears within the MLS of the realtors at mlsvallarta.com and within the real estate website vallartarealestate.info. It can also appear on the developer’s website, showing their available inventory; and real estate agencies can, if they choose, also show the inventory of these developments. By combining these two MLS systems, Puerto Vallarta now has the most sophisticated MLS system in Mexico, and one of the most unique in the world.

Vallarta Real Estate Overview

For the afternoon public sessions, John Youden opened with an overview of the Vallarta real estate market. He began with a presentation of aerial images showing the complete coastline of Costa Vallarta, beginning at Yelapa and continuing north all the way to Platanitos above Guayabitos. He then talked about the different regions, their particular characteristics and amenities, and the types of real estate available there.

Costa Vallarta is very diverse, offering many different types of real estate investment. People can choose from having a home on the beach, or on the hillsides of Amapas/Conchas Chinas or the South Shore with panoramic bay and city views. There are homes within town along the river, or on the mountains behind Vallarta overlooking the city. They can be in the Marina overlooking the boats, or on one of the many golf courses situated around the bay. If the city life is a little too busy for you, there are a number of small towns to the north, each with its own unique personality and characteristics. Opportunities are available for full-time homes or condominiums, fractional ownership for homes or condos, as well as timeshare. And pricing can vary from under $100,000 to over $10 million USD. As is often said about the Vallarta real estate market, there is something for everyone!

Mortgage Financing with GE

Rafael Ramirez de Alba of GE Consumer Finance spoke next at the mortgage financing track. GE has been one of the first to bring mortgage funds to Mexico, although there are now many other lenders in the marketplace. GE offers mortgages on a first or second home acquisition basis, lending up to 70% of the appraised value of the home. The term is for up to 20 years for as low as $100,000 USD or up to $1.5 million USD. Current interest rates are fixed for the first four years at 7.99%. To be eligible, you need to be a legal US resident, at least 25 years old, with a minimum 700 Fico score, a 40% maximum debt-to-income ratio, one year’s residence and two years’ employment, and fully documented, verifiable assets. The process time for being qualified is only three days; however, qualifying the property can take two to three weeks. For properties to be eligible, they need to be located in livable areas and be connected to all public utilities. They have to be completely finished at the time of closing, with all electrical, sanitary and water installations in good working order. Commercial, timeshare or uninsurable properties don’t qualify. With the availability of mortgage financing being quite limited up to this year, it is expected that 2006 will be the begin of a boom year in real estate for home financing in Mexico.

Mortgage Financing with Other Lenders

Bruce Greenberg, a well-respected US appraiser who has been working in Mexico for many years, also spoke during the mortgage financing session. He began by discussing why Mexico is an excellent option for a second home buyer. He covered many reasons, primarily the ease of access from the USA, the weather, the friendliness of the people, and the solid value for the dollar. And it is culturally interesting, a foreign setting with familiar amenities. Geographically, its coastline touches four oceans, with 6,000 miles of coastline. It is the fourth most biologically diverse nation, has 29,000 archaeological sites and a vibrant indigenous culture with a European/Spanish influence.

The risk of investing in Mexico has been dramatically reduced in the last few years. There is little political instability, the peso is strong, tax issues are sensible and title problems are not an issue in the majority of cases. For those cases where it is, there is title insurance, if you’ve been smart enough to purchase it.

It is estimated there are 100,000 Americans that currently own property in Mexico. If the average value is $300,000 USD, then there’s a total market value of $30 billion USD. About 50% are free and clear, and the other half have short-term developer financing. There is plenty of room, then, for long-term mortgage financing; and when it is easily available, the market will really take off.

Appreciation of real estate in Mexico since 2001 has been strong; even with financial disasters such as the Dot Com crash and 9/11, the market was barely affected. Today, there is a healthy demand for real estate in Mexico, and there are number of players who are ready or soon will be ready to lend funds. Along with GE, there is Collateral, M&I, Silvergate and Conficasa. Following them are Textron, IMI and Wachovia. And that’s probably just the beginning!

Title Insurance

Mitch Creekmore of Stewart Title International gave an overview of the history of title insurance and how it has become an important practice in closing most real estate transactions. Title insurance involves a contract of indemnity that pays up to the face amount of the policy for losses suffered by the insured due to undetected title defects, liens or encumbrances. It also assumes legal defense costs, even if the claim has no merit, in addition to the payment for losses.

A buyer may unknowingly acquire a property that is subject to title defects and claims such as fraud, forgeries, recording errors, impersonation and secret marital status. To protect the client, title insurance companies examine the titles prior to closing to eliminate risks and prevent claims and losses. It is available to US, Mexican or foreign purchasers. Along with providing title insurance, in most cases a title insurance company can also act as the escrow agent for the real estate transaction. As there are a number of issues that can arise when trying to close a real estate transaction, it is highly recommended that title insurance, along with escrow, play a part in any real estate deal. Most likely, the transaction is a large part of the purchaser’s overall worth; so, it is definitely worth the investment.

Escrow Accounts

In the afternoon, Lic. Hugo Cuesta of Cuesta Campos y Asociados spoke about the use of escrow in real estate transactions in Mexico. Despite its wide use in Mexico, the concept of escrow is not specifically regulated, which means that one has to be careful in selecting who they will use to hold their funds in escrow. Escrow is not a trust or a deposit or a guarantee, although it serves a similar purpose. Sellers, agents, brokers, attorneys and banks can all act as escrow agents, primarily to hold a deposit or down payment on a real estate deal or to guarantee a contingency in a real estate transaction. Its purpose is to provide predictability and certainty with the use of the funds in the transaction. In order for any funds to be disbursed, once deposited in escrow, all conditions specified in the disbursement instructions have to be met. It is strongly advisable to use an escrow in Mexico, and it is important to select a well-known, reputable and expert escrow agent. The most common holders for escrow in Mexico are Stewart Title and First American Trust.

Fonatur - Litibú

The final presentation of the day was given by Antonia Lavender and Alex Urrutia of Prudential Realty, who graciously filled in when representatives of Fonatur had to cancel at the last minute. They spoke about the new development projects being offering by Fonatur, a government body that promotes the sale of development properties in master-planned communities, and what the opportunities are. For the state of Nayarit, which encompasses the coastline north of Puerto Vallarta, there are three projects slated to be introduced in phases between now and 2025. They are Litibú, El Capomo and La Peñita. Litibú is closest to Puerto Vallarta, situated just outside of Banderas Bay, next to Punta de Mita. It comprises 167 hectares (412 acres) of land, with two kilometers of beachfront. There will be an 18-hole golf course designed by Greg Norman, five hotel sites, seven residential sites and five commercial sites. Lot sizes range from two to six hectares for the residential and hotel sites, with room capacity on each site 150 to 450 for hotels and 130 to 350 condominium units. In total, there will be a capacity for 4,100 hotel rooms, condominiums and homes. Interestingly, that’s three times the planned capacity at Punta Mita on a third of the land.

Subscribe to our Newsletter

Need more info? Click HERE

Once you subscribe, you will be directed to a page where you will be able to select which of the two newsletters you wish to receive. A confirmation message will be sent to your email address. Once you approve the subscription, you will begin receiving our newsletters, and you can change your subscription settings at any time. Stay in touch with Puerto Vallarta through our weekly news, and learn of new releases.

sitemap xml