This past week has been a busy one for me here in Loreto Bay, and so this week’s Blog is going to be a little different. It has been my practice with these postings to focus on the lifestyle and activities here and in the town of Loreto, and I have mainly avoided writing about my Real Estate business here – not wanting this Blog to become too “self-promotional” in tone.
However, as I mentioned this has been an unusually busy week for me – this is the first time in the over 6 years I have been selling property here in Loreto Bay that I have sold two homes in the same week. As a result, this past week I have been fully occupied with my Clients and my business and found myself at the end of the week without a Blog topic, so I decided to break with my tradition and write a bit about the Real Estate market here.
For the past several years February has marked the beginning of the busiest quarter of the Season and this year is following that same pattern, with a noticeable increase in the numbers of Visitors here, many of whom are renting homes in Loreto Bay. Perhaps more significantly, there is a growing number of people for whom this is a return visit, and for some it may be their third or fourth time coming to stay Loreto Bay.
Another related trend I am seeing is often these return visits are for longer periods of time, the first trip might have been for a week or two, and, before they leave, a growing number of people are making reservations for perhaps a month or longer the following year. This growth in the numbers of Visitors to Loreto and Loreto Bay is of course tied directly to the gradually increasing air access we have begun to see in the past couple of years, including the beginning of the new scheduled service from Calgary by Westjet which I wrote about in the previous posting.
Our Real Estate season here normally runs from October through May, and so last Fall we had a larger number of new Listings replacing the homes we had sold the previous Season. Generally speaking, among those new Listings were homes with more desirable features like exterior Garden space, Viewing Towers and preferred locations, and many of these new Listings were at somewhat higher prices than would have been the case a few years ago.
Another change in the market here over the past year is that at this time last year we had five listings for Homes priced under $200,000 US – this week we now have two. What that means is when we sell those two listings the lowest priced house in Loreto Bay will begin with a “2” and not a “1” for the first time in the 7 seasons I have been involved in Real Estate here. While that may not make a big difference in the purchase price of a home, I would suggest it does make for a significant psychological difference.
But before I give you the wrong impression of breakaway inflation in home prices in Loreto Bay, let me hasten to add that all of the homes that we have currently listed are still priced below their purchase prices, and depending on when the current Owners bought the home, it could be by up to half the price they paid “in the day”. During the approximately five year sales cycle of the original Developer between 2003 and 2008, home prices increased between 200 and 300% due to “Developer inflation” (at each sales event during that period the price of any unsold property that was carried over to the next event increased in price between 3 and 10%).
So now with the trend established towards gradually increasing prices, coupled with a growing number of homes with more desirable features and an increasing number of new and return Visitors the market conditions here are the strongest I have seen since the resale market began here with the departure of the original Developer. Having said that, supply and demand is still in balance and it will continues to be a Buyer’s market for the foreseeable future, with the expectation of a gradual increase in prices over time, which will likely draw a steady supply of new and improving Listings to the market.
However, if I were to gaze into my “crystal ball” and make a prediction a little further into the future, I can see one of our new neighbors playing a role that could cause a significant increase in Loreto Bay property values. Over the past year and a half I have frequently mentioned the investment Sr. Carlos Slim has made in and around Loreto Bay, but for any of you who may have missed that background, Sr. Slim, who is a Mexican citizen, is one of the top two or three wealthiest men in the world, up there with Bill Gates and Warren Buffet.
Among the various assets of the original Developer which Sr. Slim now owns is the parcel of land directly adjacent to the north end of Loreto Bay, for which there was a development plan for about 800 homes – about 30% more than the current number of homes now in Loreto Bay. While there has not been any public announcements yet as to what the development plans are, or when they may begin, the fact remains that it is not possible to build homes comparable with those in Loreto Bay for the current resale prices. And so it follows that whenever new construction begins the prices of those new homes will almost certainly be higher than comparable homes for resale in Loreto Bay and that is when I expect we will see a “spike” in our resale prices relative to those new comparables.
We have all lived somewhere that you could walk down the street and say “I remember when I could have bought that house for . . . .” - in my opinion that day is today in Loreto Bay!
So in conclusion, I would like to thank you for your indulgence in my taking this space for a bit of “shop talk” this week, and I trust that you have found it of some interest, but for myself, being in the somewhat uncommon position of a Foreigner working here, this is part of my reality of “Living Loreto”!