U.S. Existing Home Sales Fall for 5th Straight Month. Will it Affect the Riviera Maya Real Estate Market in Mexico?8 Top Area Professionals Share their Points of View on the Future of Real Estate in the Riviera MayaAnnual existing U.S.A home prices declined in August for the first time in more than a decade as U.S. home sales fell for a fifth straight month. The year-over-year drop in median sales prices represented a dramatic turnaround in fortunes for the once high-flying housing market, which last year was posting double-digit price gains. “Pop goes the housing bubble,” said Joel Naroff, chief economist at Naroff Economic Advisors. He predicted prices will tumble farther as home sellers struggle with a record glut of unsold homes. The National Association of Realtors reported this past Monday that sales of existing single-family homes and condominiums dropped 0.5 percent last month to a seasonally adjusted annual rate of 6.30 million units. That was the fifth straight monthly decline and left sales 12.6 percent below the pace of a year ago.Okay, so how will a now confirmed U.S. slowdown affect the real estate market here in the lovely Riviera Maya?Well, to answer that question first we need to understand what’s really happening in the U.S. First, it appears that the slowdown in U.S. sales meant that the inventory of unsold homes rose to a record 3.92 million units at the end of August. At last month’s sales pace, it would take 7.5 months to clear out the backlog of unsold homes, the longest stretch since April 1993. The median price of a home sold last month fell to $225,000. That was down 2.2 percent from July and down 1.7 percent from August 2005. That marked the first year-over-year drop in home prices since a 0.1 percent fall in April 1995.Is this a temporary issue or is this the future of doom and gloom in the Riviera Maya? Find out what the areas 8 Top Pros say. Read on……mls4rivieramaya8Last year, when the five-year U.S. housing boom was reaching its peak, median prices posted a string of double-digit gains on a year-over-year basis. The median price is the point where half the homes sell for more and half for less. David Lereah, chief economist for the Realtors, predicted price declines would continue for the rest of this year as sellers adjust asking prices downward in light of the inventory glut. “This is the price correction we’ve been expecting,” Lereah said. “With sales stabilizing, we should go back to positive price growth early next year.”But some home sellers around the U.S.A. worried that cutting prices may not be enough, have been offering incentives to attract buyers, including in some cases new cars. Dave Armon, who lives in the New York City suburb of Pelham Manor, said he started out asking $1.6 million for his six-bedroom Tudor-style home three months ago — below the $1.82 million a neighbor received — but has slashed the price by $300,000 because he has attracted few interested buyers. “l am sitting here thinking maybe if I buy a car and park it out front with a bow on it, that will help,” he said.Could this happen here in the Riviera Maya? Will this type of potential buyer forgo buying here in the Riviera Maya now that his profits have disappeared?We asked the areas 8 Top Professionals to opine and share their thoughts about this market trend and how it affects our robust real estate market here in the Riviera Maya.RANDY BONDS – BRIC INTERNATIONAL “This decline in existing home prices was expected by everybody in the market.” say Randy Bonds from Bric International, a major developer who has several large projects in the Riviera Maya. “Real Estate is a cyclical market just like the stock market and there will always be ups and downs in the trends. This correction that we are experiencing is greatly needed to put some sort of normality in the appreciation. The Riviera Maya, as well as the rest of the world, is going to be directly related to what is occurring in the US. These are some of the savviest purchasers all around the world and when they are trying to figure out their next move in the states and where the market is leaning they are more likely to avoid the foreign market. The Riviera Maya over the last two years experienced some of the highest % returns out of any other region in the world. This doesn’t go without certain consequences following when most investors are priced out of the market. The next two years are going to be very important to see the reactions of the builders and owners of condominiums and houses in this region. Builders that are under funded and in the middle of a build are going to be running into financial disarray with the lack of funds for completion and therefore selling at a great discount or packing up and leaving the project incomplete. Investors that currently own with the intention of reselling for a great profit are going to be a little disappointed with the buying market. We will start seeing another buyers market when builders and current owners start the price war downward. Investors, builders, and owners need to realize that patience at a time like this is very important and this region is going nowhere and is still one of the most beautiful and highly desired areas for real estate in the world. Looking back at the stock market in the early 2000′s and where it is now is not much different than what we are going to see in the real estate market over the next 2 – 3 years. This is a time to relax and reevaluate the up and coming years.”GARY WENDT – PLAYA CITIZEN From downtown Playa del Carmen, Gary Wendt from Playa Citizen, a broker builder says “Most people know that the real estate market, especially home building, has carried the economic growth in the USA (after removing oil). This has been going on for years. The housing sector has also generated nothing short of an amazing run UP of VALUE. Thus, a little downturn should be expected and not feared. And there’s the rub. Oh, pesky human nature! We humans just can’t help but look for things to fear and fear is the fuel for self-fulfilling prophecies and politicians. So who knows for sure what’s next. I believe in cycles and location, location, location! Except for oil and real estate, the world economy has been positioned on the edge of a recession for 6 years. Recession is not good for business anywhere in the world. It is still true that as the USA goes, so goes the rest of the world. Here in Playa del Carmen? Well, I am not an economist. But I slept at a Holiday Inn recently (in Puebla – Central Mexico) and I believe that tourist properties situated along our most beautiful caribbean sea will suffer less than average in a recession. In fact, they will suffer much less than all the rest during a recession. It’s also true that a great location is the best hedge against cycles in real estate. So, personally, I look for sales to slow a bit. At the very worst, should a recession actually arrive on the scene, prices probably will flatten. Then, as experienced in mid-2002, less than a year after 9/11 when this area of the world rebounded with a frenzy of interest and record growth and sales, we’ll bounce again faster than the rest. Anyway, I suggest buyers and sellers plan for the long run in their investment horizons. Farsightedness made Warren Buffet rich. Remember he said,”when everyone else is selling, I’m buying”. To me, this levels a recession. Not EVERYONE panics and the calm people who plan for success profit.”NANCY EDWARDS – COZUMEL LIVING From the lovely island of Cozumel, Nancy Edwards who is the owner broker of Cozumel Living says “While real estate in Mexico is greatly affected by what is happening in the US, I don’t feel our prices will drop in Cozumel. They never do. We may have a stagnant market for awhile, but prices never drop in general in a resort area. It is true that we are still suffering a lower than low market due to the effects of Emily and Wilma last year, but prices have not fallen and while we were hoping for a price increase with the coming of this high season, it appears, we might have to buckle down and brace ourself for a mediocre high season this year. The clients that I have had come to the area recently are talking about the slowing US market, and have properties there for sale. As soon as they sell, they still plan on purchasing here. Their purchases probably will be delayed though. Clients with cash are still purchasing because it is a ‘buyers market’ now with many properties for sale at stagnant, last year prices.”RONNIE POOL – PLAYEXPERT.COM Caribbean Beach Properties Investments and PlayaExpert Ronnie Pool, a broker from Playa del Carmen says “Any major economic slowdown in the USA will have an effect here because it means those prospective buyers don’t have as strong a financial position, and may have fewer disposable assets to spend here. However, if real estate is not such a good investment there right now, by comparison our market can look even more attractive! So that can compensate. In the final tally I imagine that the sale of the lowest priced properties in our market will be hit harder than those at the upper end. The very wealthy usually ride out economic waves better than the marginally well off. But as a real estate broker I know that I create my own reality, so if I believe that my business will go down because of this ….no doubt it will. If I believe that despite challenges I am better able than anyone to get my share of the pie and still grow….no doubt I will. We reap what we sow, in life, at work, and in our own minds.”GABRIEL VILLARREAL GUERRA – CENTURY 21 MARCOS & ASSAD “In my opinion, a slowdown in the housing market in the States will be most definite beneficial for our market. A weaker market means less demand for new homes and therefore less homebuilding. People could have foreseen such a slowdown, as it is clearly stated by the National Association of Home Builders (NAHB) figures: forecast is for starts to drop to an annual rate of 1.55 million – Inventory/Sales ratio – by the end of 2007, or 27% below their peak level…. reflecting less buyer traffic and a bias towards building fewer homes in the future. Eventually people will start looking for better “deals”, will start keeping an open-mind in purchasing a second home in Mexico, will be on the look out for investment opportunities, and guaranteed they will follow a trend… put their money in a safe emerging market close to home where they have all the guarantees as foreign investors – e.i. Banktrusts – and a positive cash flow with higher ROI’s (rate of return), making it more appealing to invest than back home. Plus, we should never forget what we have in our market that nobody else has: a fabulous Caribbean Sea and gorgeous Mayan built pyramids! Just to name a few. If there are no major upcoming changes in economic events that could somehow affect the Riviera Maya, our market will be booming higher than what any professional can foresee… and the slowturn that has taken place in the States will shift our sales figures, in my personal opinion.”THOMAS LLOYD – PLAYA REALTY EXECUTIVES Thomas Lloyd of PlayaBuyerBroker.com says “Projecting the future economic and real estate market results is an incredibly difficult task. An entire collection of books are needed to demonstrate and learn the relations and influences upon pricing of homes, condos or upon the price per meter of raw land. Below please find a very general brief on this topic. First, many factors influence the local real estate market including that of the international economic indicators as mentioned in the question above. Twenty five years ago, a very soft correlation existed between USA market results and its influence on the Mexican market and vice versa. Ten years ago, as in the majority of most countries of the world, international market results have had and has continued to have a much stronger affect upon the Mexican national economic activities. Mexico´s strongest trade partner, USA, has increased their commercial relation with the Mexico with the passing of the NAFTA(North American Free Trade Agreement) which only makes our two countries influence even stronger. The trend therefore would indicate that as each decade passes, the international market results and indicators of every individual country will have stronger and direct affects upon the markets of neighboring and/or those countries with the closest economical ties. Second, the Real Estate market is driven more by local indicators than by national, and of course of international indicators. As stated above, pricing is established by many many factors. The majority of the factors are varying/constantly moving and each factor has a different weight of influence upon a final market price. Some factors that weight heavily are generally found in the regional/local economical indicators such as of Population growth, Costs of Doing Business, cost of capital (loans), Quality of Life, Employment and Income, Local Taxes, Property Taxes, ISR taxes vs. (competition). In Summary, Real Estate in California is different than real estate in Indiana, Real Estate in Canada is different than that from Mexico. Each regional market has its own strategies and influences, therefore its own proper real estate opportunities.JEN LYTLE – TIERRA YUCATAN Even in the Yucatan near Merida, they have a point of view on the U.S. recession. Take Jen Lytle, owner/broker of Tierra Yucatan Properties in Merida. She says “I have not yet seen any slow-down in business which could be attributed to the slow-down in the US real estate market, although one might predict several possible long term effects. It is possible that our investor clients will find our property in Yucatan an even more attractive option, as the market here continues strong with good appreciation. I would also expect that for those retiring on a fixed income, it might become more difficult to purchase a retirement property in Mexico if this purchase depends on obtaining equity from the sale of an existing property. Over-all, I am optimistic that our market will be only minimally affected by any slow-down in the US.”SHAWN BANDICK – ONE STOP REAL ESTATE Finally, Shawn Bandick, owner/broker of One Stop Real Estate says “In every shifting real estate market there are pocket markets. These are areas which with stand the shift with little or no effect. In British Columbia Canada the Okanagan Valley is one of those areas. I’m sure you can see areas like that in your state or province. So how will this shifting market effect us in the Riviera Maya? If there was ever a Pocket market this is it. The Mexican government recognizes that, and they are putting millions of dollars into the development of Q Roo. Most of our buyers are baby boomers who have paid off their homes, and have the cottage, and are now looking for the sunny hide away. Many of these same buyers have substantial inheritance money that they are investing as well.” Also these clients are not just from north America, they are from all over the world and this gives us an even more stable market. Mexico is a new area of investment and the buyers tend to be higher-income they are not the first time home buyers nor are they the first time investors. History shows us that the baby boomers will not be denied! This is no exception. Baby boomers have discovered the Riviera Maya and they are bringing their money here to invest and enjoy.” View MLS Listings for One Stop Real EstateWe invite you to come into our discussion by posting your comments into our Forum. Simply go to Riviera Maya Real Esate News at www.rivieramayarealestatenews.com and click on FORUM. Oh, don’t forget to View MLS 4 Riviera Maya and Search Listings.
The slump in the US housing market and an economic slow down has emerged as an ideal situation for many new homebuyers to enter the home market. With homes going at half the rates they fetched earlier, homebuyers are thanking their stars. Buying a home is not an easy chore as it requires extensive research. With so many homes up for sale, the task is extremely daunting for the first time homebuyer. The best possible option would be to get in touch with a real estate agent who would provide all the necessary help, advice and ways to go about securing that dream home. How does a buyer locate a real estate agent? Where does one look for information on real estate agents? Look no further. Everything you want can be found in the Real Estate Agents Directory. The complete resource for all real estate information at your finger tips.What is Real Estate Agents Directory?
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