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It has now been ten years since the dramatic economic downturn of 2007, which dramatically affected real estate prices and values throughout the USA, but also in other parts of the world, including Mexico. But where the results were more immediate in the U.S., it took awhile for Puerto Vallarta to fully realize to what extent its market had been impacted.

At MLSVallarta, we thought it would be interesting to revisit our information regarding 2007 and compare it to how the market is today, how it’s recovered and then has begun to heat up again. Is it near 2007? That’s what we’ll be looking at.

It has always been difficult to obtain good statistical information on the local real estate market. Back then we relied on what was reported in the MLS system. But we also would survey, annually, the developments to procure what their inventory and pricing was, and what sales they had secured. This gave us enough data to work with to get a pretty good understanding of what was happening in the market. Today, MLS results are even more accurate, although there still is a lack good data coming from some developments that are not part or affiliated with a MLS system.

Up until and including 2007, Puerto Vallarta and Riviera Nayarit’s real estate market was in a buying frenzy. Realtors were working long days, developers couldn’t build fast enough, and no price seemed to be too high for motivated buyers, primarily Americans.

The market of 2007 and leading up to it were dominated by the products being offered by developers. Re-sales lagged primarily because buyers wanted new, more, bigger and better. Gross sales in 2007 were somewhere between $550-$700 million with about 75% of that produced by developers.

Today’s market, according to the MLS, shows $270 million for 2017, however that doesn’t not include all development projects. But even then, this number (number of developments today), is small, especially when compared to ten years ago. There are currently about 60 projects under development and a good portion of them are in the MLS system. In 2007 we counted more than twice as many developments and most weren’t in the MLS. In short, the market was probably double the size in gross sales in 2007 when compared to last year’s results.

It was a crazy market back then. At the time we were publishing Vallarta Lifestyles, an over-size luxury publication called Costa Vallarta and the Vallarta Real Estate Guide. Lifestyles reached 300 pages, Costa Vallarta was regularly close to 200 and the Real Estate Guide was over 100 pages, so thick the printer was having a difficult time stapling the publication and suggested we create two publications out of it. Today, Lifestyles and the Guide have half as many pages, and Costa Vallarta no longer exists. This isn’t taking anything away from the publications today as they are quite successful. It’s more a bellwether of the market back then, and where it’s at today.

The average “listing” price for a condominium was $600,000 in 2007. Compare that to today where the average “sales” price is less than half of that. There were more than 120 projects in varying stages of development around the bay back then, with 15 of them offering condominiums with starting prices above $1 million.

In 2007, the average buyer’s budget was close to $500,000 USD, driven first by those who could afford more and, secondly, by increasing prices. Today realtors report that up until recently the typical buyer’s budget was around $250,000 – half that of 2007.

They have reported, however, upward movement on this as we’ve moved into 2018. Some buyers are, once again, looking and willing to spend in the $600,000-$800,00 range. But the most common buyer’s price point is still quite below what it was in 2007.

In 2007 buyers were looking for condominiums that were stylish, luxurious and spacious. The first condo sale over $1 million took place and it was like when the four-minute mile was broken – more then began doing it. Million-dollar priced condos were common with the $2 million sale price barrier broken as well for a condominium that year. Three-bedroom condos with 3,000-6,000 f2 were being built, and sold. A project in Conchas Chinas, which involved demolishing an older oceanfront home and building six condominiums, saw the first initial sales go for $1.5 and $2.5 million USD.

New condos were still available for as low as $300,000, but this was becoming increasingly rare. With so many new developments there were never so many options and choices available. It became very competitive, with each developer needing an edge over the competition or they weren’t going to sell, or at least not as quickly as they would like. Developers were offering extended short-term financing and special property amenities such as gyms and spas, clubhouses, even a new vehicle with the purchase of a home or condo.

Not today, or at least not up until now. People are looking for smaller, more practical units with less amenities, as these just drive up the price and HOA costs for common areas. Buyers are willing to give up views, once quite essential, to get something that fits their budget. One realtor, who lived through (and survived) 2007, told us that just it’s just been this past season that he’s once again begun showing million-dollar condos, a first in many years.

Today developers try to keep costs down by limiting extravagances in the units themselves and instead invest more in the common areas. We can especially see this in the downtown market. The new cool trend a few years ago was a roof-top pool. Today that is a standard feature for most new projects. Developers now try to out-do one another with inset seating in rooftop pools, bars, gyms, massage rooms, etc. As the market has heated up, though, developers are being forced to be more creative. A few years ago units were rather standard, lacking of amenities of 2007 as it was all about price points. That is changing as people have a little more to spend and there’s more competition.

What follows are some statistics that compare the two markets separated by a decade:

• In 2007 the average sales price for a condominium was $400,000 and the average size was 192 m2. In 2017 the average sales price for a condominiums was $275,000 and the average size was 142 m2. Sales prices were 45% higher and units were 35% larger in 2007 compared to in 2017.
• In 2007 the average sales price for a house was $723,000 and the average size was 318 m2 whereas in 2017 the average sales price for a house was $362,000 and the average size was 253 m2. Houses sold for double the price and units were 25% larger in 2007 when compared to 2017.
• In 2007 the Hotel Zone and Marina Vallarta accounted for nearly 46% of the sales, and it was nearly all new product. In 2017 they accounted for just 15% of all sales (and most were re-sales). In 2007 the downtown area had a few developments, with sales led primarily by Molina de Agua, but that still only accounted for 5% of all sales. In 2017 this area, primarily the south side, accounted for nearly 30% of total market sales. On the South Shore sales doubled over 2007, but were down 65% for the North Shore. (Lack of reporting in MLS is partially responsible for this). Bucerias, La Cruz, Nuevo Vallarta and Flamingos came in with similar percentages over both years.
• In 2007 there were 19 sales for homes and 8 sales for condominiums over US$1 million whereas in 2017 there were 10 sales for homes and 7 sales for condominiums over US$1 million (but four of these just made it with a sales price of exactly $1 million). In 2007 the highest sales price for a home was $4,455,000 and $2,730,000 for a condominium. while in 2017 the highest sales price for a home was $4,100,000 and $1,765,000 for a condominium.

During 2007 more than 50 new real estate projects came on line, totaling more than 120 in all, (compared to today where there are about 50-60), that added nearly 5,400 new properties to the market, or about 8,900 units in total. There were 1,032 reported sales, that left a balance going into 2008 of approximately 7,200 new development units. In other words, development inventory from one year to the next had doubled. Close to 2,000 of these units would not come to fruition as projects were cancelled. Even more came off the market as developers scaled back, or announced they would release only in stages. And there was concern that the market was now extremely over-built.

Of the 1,032 units sold in 2007 by non-MLS developers, nearly 10% of these deals would eventually not go through because buyers could not longer afford them. In 2008, developer sales dropped to just under 600 and by 2009 only 340 sales were reported, down 60% from the top in 2007.

By 2008 it was obvious to everyone that something seriously troubling was going on with the market. Inventory consisted primarily of new real estate with approximately $5 billion of it distributed amongst 5,400 units around the bay at varying stages of development.

Of the 138 developments we surveyed that year, 18 had had no sales, and those still on the market reported that:

• 42 were 25% sold out
• 45 were 25-50% sold out
• 18 were 51-75% sold out
• 15 were 76-99% sold out
• 10 were 100% sold out and off the market
• 75% still had at least 50% of their inventory unsold and there weren’t a lot of people looking at them.

By 2009, we were ready to stop asking for information. Developers were embarrassed to talk about it and we were embarrassed to ask. But we did. We surveyed 122 projects, of which 18 were off the market, (cancelled) leaving 104. Of these:

• 40 projects had inventory pricing start at under $300,000.
• 18 had pricing starting at over $1 million (Imagine that. Today, there is not a project around the bay, except in Punta Mita, that is that emboldened).
• 43 developments reported no sales whatsoever. One third of all projects had no sales all year long.
• Only 7 reported double-digit numbers in sales.
• I’d like to repeat that in case you missed it: in 2009, out of 122 projects surveyed, 43 reported no sales. The faucet had been turned off.

And so began a long, slow, recovery process from 2011 to 2016.

The market today is nowhere near the level of frenzy that encapsulated the market in 2007. Average condo prices are still down over 30% from the peak. But they were, in our opinion, over-inflated back then and are more realistic today to what people can afford.

Condominiums were 35% larger in 2007, but today’s average of 150 m2 offers a more realistic size that can very easily fulfill the needs of most condominium buyers. Builders are still building “affordable, more practical” units – rarely do you hear “luxury boutique” like you did in 2007. Buyers have gravitated back to the downtown core areas rather than outlaying regions, primarily for ease of socializing, access to restaurants and venues, lack of need for a car, and better security.

There doesn’t seem to be anything looming on the horizon that could change the current direction of the market (although, I also remember writing that in our 2006 Trends article).

There are some concerns, however, on the horizon. Mexico’s presidential elections will be held this year and a left-leading candidate is leading in the polls that has the business communities concerned. President Trump’s disregard for the value of Mexico as a neighbor and partner in economic trade & development and security, is also a concern. And, as always, security in Mexico, although Puerto Vallarta is currently referred to as one of the safest regions in the country.

In conclusion, there still seems to be some upside to this market, it is nowhere near the overbuilt levels of 2007, and prices are still quite a bit lower than the highs they once reached.

I’d like to thank Wayne Franklin at Tropicasa Realty, Carl Timothy at the Timothy Real Estate Group, Wally Lopez & Jonathon Smart at Riviera Partners Realty and Marc Sinanian at La Punta Realty, for their valuable feedback and information in generating this report.

In May of 2011 Mexico’s Immigration law was reformed. Some of the reform entered into effect immediately while other parts did not enter into effect until the corresponding Rules to the Law were published, which did not happen until the 28th of September 2012. In short, we are just now starting to see the Immigration authorities push for the full application of the new law.

Before getting into explaining Mexico’s immigration law visa policies, you may want to first ask yourself the question; “Do I really need one or can you just use the Visitor Visa?”. Unless there is a reason to go through the process of getting a Temporary or Permanent Visa, we recommend that you just use the Visitor Visa.

Mexico’s immigration law recognizes three manners in which foreigners can be legally in Mexico, these being:

Visitor

There are six types of visitors. Of the six, the tourist visa you get on the plane is a “Visitor” visa. These visas are limited to short terms stays (usually no more than 180 days) and are granted in the understanding that you are coming to “visit”.

Visitor’s permits are issued when you arrive in Mexico (by air, or travel inland by road beyond the ‘free border zone’) by completing a Forma Migratoria Multiple (FMM) at ports of entry. Upon its expiry you will need to leave the country.

Temporary Residents

This is for foreigners that want to remain in the country for a term of up to four years. Under this permit you can acquire the ability to work for pay (remuneration) and you have the right to “Family Unity”, (which will be explained further on). Under the old FM-2 and FM-3 you had to renew the visa each year and they were good for up to five years. Now if you have any FM-3 or FM-2 they will most likely turn it into a Temporary Resident Visa for the time that is left up to the four years allowed. If you go beyond that, you will be asked if you want a Permanent Resident permit. Note: There is also a Temporary Resident permit for students that allows the person to remain for the time it takes them to finish their studies.

Permanent Resident

This is a visa granted for an indefinite term. This is very similar to the old “immigrant” status. The following people can solicit a Permanent Resident permit: Family members of Mexicans or other Permanent Residents under the “Family Unity” dispositions—see further on.

A retired person, with sufficient income to “live in the country”. Right now they want you to show a monthly account balance of $1,619,000 pesos (25,000 times minimum wage). Note: there is no obligation here for you first to have the Temporary Resident permit for 4 years.
Because you have had the Temporary Residence for four years.
For having children of Mexican nationality by birth.
For being family of Mexican nationals by birth, up to the second grade or tier.

Family Unity

This is a new concept that was not in the previous law. It is based on the international treaties that look to preserve the family as a unit. Under this new law the concept of Family Unity is strongly protected and recognizes that Mexican nationals by birth, as well as Temporary and Permanent Residents have the right to preserve the Family Unity and acquire the necessary documents so that their family members can be with them legally in Mexico.

Procedure to Acquire Visas

The procedure to acquire a visa has changed. The following is the general rule as well as some of the exceptions to this rule.

General Rule

You first need a VISA to enter Mexico and if you want to stay longer than the time allowed to Visitors, you need to acquire a Residence status.

All visas are granted by the Mexican Consulates outside of Mexico (Visitors, Temporary Resident and Permanent Resident). This means that all visas (Visitor, Temporary Resident and Permanent Resident) must be applied for in the consoler office and not at the immigration office in Mexico (Note: we all use to get our visas changed over here in Mexico). If you get a Temporary or Permanent Resident visa, you must then get the local immigration office in Mexico where you live to give you your resident card. There are a few exceptions where you are not required to first acquire a VISA from the consulate, and these are as follows:

Exceptions to the General Rule

For Visitor Visas (for tourists) If you are from a country that Mexico has “suppressed” the requirement of a pre-approved visa, you do not have to go to the Mexican Consulate to get a Visitor’s Visa. Both Canada and the US are countries that do not required pre-authorized Visitors Visa from the consulate, you simply get them on the plane on the way down or at the border.

If you have a Visitor Visa you can no longer change it over to another type of visa (Temporary Resident or Permanent Resident) while in Mexico, except if:

• Article 41 – it is to preserve “Family Unity”, for an offer of work or for humanitarian reasons.
• Article 53 – “you have a relation with a Mexican or foreigner with residence in Mexico”. We are not sure how open the concept of “relation” is.
• Temporary Residents can change to Permanent Resident while in Mexico. If you presently have an “immigrant” card that was granted under the old law, the local immigration offices in Mexico should change it over to a Permanent Resident card without having to go out of the country.

General Issues of Interest

Here are some points of interest regarding the new law:

• Under the old FM-2 you had to be in the country 182 days a year or it was automatically revoked. This disposition does not exist for either Temporary or Permanent Residents. This was a problem before for people that wanted the tax exemptions on the sale of their Primary Residence because they needed an FM-2 but could not meet the 182 day requirement.
• Under which visas can I have my car and house hold items in the country? Articles 52 and 54 of the law say that you can bring your property into Mexico “subject to the applicable legislation” – which in this case are the tax laws and customs laws. Right now those laws have not changed to take into consideration the reforms of this law and therefore right now we are uncertain of the implications.
• If you were an “immigrant” under the old law you were not required to get a further permit to work. The new law is not as clear here. Article 52 fraction IX states that Permanent Residents can work for pay, however Article 54, second to last paragraph says that you require an additional authorization to work for pay. The Rules of the law (Article 164) states the all Permanent Residents can work for pay. We hope this aspect of the law will be clarified in the coming months.
• Article 60 states that a foreigner, regardless of their immigration status, personally or via proxy, can open a bank account. The old law was not clear here and most banks did not allow you to have an account without an FM3 or FM-2.
• Once you get a Temporary Resident or Permanent Resident visa, you have 30 days counting from entering the country to register with the local immigration office. Furthermore any change in nationality, address, civil status or work must be notified to immigration within 90 days of the change.
• If you have a company that wants to hire foreign employees, the company needs to register with immigration.

If old law states that if you wanted to marry a Mexican national you were required to get a permit from immigration. This is no longer a requirement.

This article was written by David W. Connell of Connell & Associates. For more information send an email to [email protected] or visit www.mexicolaw.com.mx. All rights reserved.

Publisher’s Note: There’s an excellent article that is quite extensive and kept quite up-to-date at “Surviving Yucatan” that you may want to read if you are looking for more information.

Below is a directory of golf courses located in or near Puerto Vallarta. For information regarding golf club memberships and their rates, visit here.

El Tigre Club de Golf – Paradise Village

• 18 holes, par 72, 7239 yards
• Blue tee box: 6607 yards,
• Rating 74.5, Slope 133
• Designer: Robert Von Hagge Group
• Location: Nuevo Vallarta, Nayarit
• www.eltigregolf.com • (322) 297-0773

El Tigre was designed on a flat surface. To make the course more interesting, sand and water define the golf holes: 12 holes feature water with three “beach” bunkers. In addition, Hole 1 starts on a shallow green alongside a street, and Hole 18 certainly offers the toughest finish. This course hosts a number of national and international tournaments. Paradise Village created the additional draw of a full-service spa in the club house and a complete sports club nearby.

Flamingos Club de Golf

• 18 holes, par 72, 6853 yards
• Blue tee box: 6982 yards,
• Rating 72.5, Slope 130
• Designer: Percy Clifford, opened 1978, refurbished 2006
• Location: Flamingos, Nayarit
• www.flamingosgolf.com.mx • (329) 296-5006

Although this was the first golf course in the area, the design by Englishman Percy Clifford took total advantage of the natural terrain. Over the years, it fell on hard times, but the recent renovation brought it back to its deserved professional level. Three tee boxes from each hole offer every golfer a truly challenging game. Here you can appreciate wildlife such as crocodiles, turtles, birds and even anteaters during the course of a game. Flamingos hosts a number of local fundraisers and other charity events for the community.

Punta Mita Golf Course Pacífico

• 18 holes plus one optional #3 for a total of 19,
• Par 72, 7014 yards
• Designer: Jack Nicklaus
• High-Season Rates:
• This private course is exclusively available to members and their guests.
• Location: Punta de Mita, Nayarit
• www.fourseasons.com/puntamita/golf.html • (329) 291-6000

Punta Mita Golf Course Bahía

• 18 holes
• Par 72, 7035 yards
• Designer: Jack Nicklaus
• Rate 74, Slope 135
• High-Season Rates:
• This private course is exclusively available to members and their guests.
• www.fourseasons.com/puntamita/golf.html • (329) 291-6000

The Four Seasons Punta Mita Golf Courses are located on one of the most beautiful spots at the north end of Banderas Bay, with magnificent ocean frontage. It is home to the acclaimed Tail of the Whale, an optional hole on a small islet accessible by an amphibious golf cart during low tides. The Jack Nicklaus Signature Pacífico course has been voted “Best Course in the World” by Condé Nast Traveler. While Pacífico follows the contours of the coastline, Bahía include lagoons, stunning slopes and the beach just below the El Faro lighthouse.

Vidanta Resort Golf Course – Greg Norman

• 18 holes, par 72
• Blue tee box:
• Designer: Greg Norman
• Location: Nuevo Vallarta, Nayarit
• www.mayanresortsgolf.com • (322) 226-4000

The Greg Norman Signature Golf Course at Vidanta Nuevo Vallarta encompasses the finest in golf with unsurpassed course conditioning on wall to wall Paspalum playing surfaces. The exciting layout winds along the banks of the Ameca River providing views of the Sierra Madres from every hole. Large landing areas off the tee give way to large undulating greens protected in typical Norman fashion by cavernous bunkers. Indigenous trees, native grasses and jungle surround the core course layout which is uninterrupted by housing and civilization throughout. As challenging from the championship tees as it is forgiving from the forward tees, the Norman course offers four different options for players. All this and a trip across the world’s longest golf cart suspension bridge spanning the Ameca River from Nayarit to Jalisco, and you’ll not experience a round like it anywhere else in the world.

Vidanta Resort Golf Course – Jack Nicklaus

• 18 holes, par 70, 6,668 yards
• Blue tee box:
• Rating 70.4, Slope 122
• Designer: Jack Nicklaus
• Location: Nuevo Vallarta, Nayarit
• www.vidanta.com • (322) 226-4000

Surrounded by lush jungle and the Sierra Madre Mountains on one side and the Pacific Ocean on the other, The Nicklaus Design Golf Course at Vidanta Nuevo Vallarta is a natural and technical masterpiece. This 6,668 yard, par 70 course is a joy to play for every player, from your low to high handicap. But with seven lakes, 49 strategically placed bunkers, and constant, strong crosswinds coming off of the ocean, this course always presents a challenge.

Marina Vallarta Club de Golf

• 18 holes, par 71, 6701 yards
• Tee box: regular, yardage 6093,
• Rating 70.0, Slope 125
• Designer: Joe Finger, opened 1989
• Location: Marina Vallarta
• www.vidanta.com• (322) 221-0073

The Marina Vallarta Golf Course was one of the early ones, and continues to be one of the most popular because of its proximity to town, the Maritime Terminal and airport. Its unique feature is that your game includes the added dimension of crocodiles, iguanas, turtles and a wide variety of native birds. Located in what was originally a swamp, water is a characteristic of most of the holes. It’s a challenging course and fun to play.

Vista Vallarta Club de Golf – Weiskopf

• Two 18-hole courses in one location
• Designer: Tom Weiskopf
• Par 72, 6,976 yards
• Blue tee box: 6,993 yards
• Rating 71.6, Slope 134
• Location: Puerto Vallarta

Vista Vallarta Club de Golf – Nicklaus

• Designer: Jack Nicklaus,
• Par 72, 7057 yards
• Blue tee box: 7,073 yards,
• Rating 71.6, Slope 134
• Location: Puerto Vallarta
• www.vistavallartagolf.com • (322) 290-0030

Vista Vallarta features two distinct designers. Tom Weiskopf retains as much of the original landscape as possible, making modifications only to accommodate the game. The feeling is very natural; the trees are native and the contours follow the curves of the hills. Jack Nicklaus likes to start with a clean slate, so he clears away to create wider greens. In fact, his stadium effect is what made this course function so well for the World Cup and other competitions. It’s a great course to see golf as a spectator. And the spectacular views include the sea on one side and the mountains on the other, a unique feature. Access from the airport or Maritime Terminal is an easy ten-minute drive.

Litibu Golf Course

Located in Nayarit, near Punta de Mita on the back road that links Punta de Mita with Sayulita, in a government built resort development. Designed by Greg Norman, it is a challenging course where seven holes are “link” style holes and eight other holes are surrounded by jungle. The last three Litibu golf course holes run along the Pacific Ocean with impressive views of Punta Mita and Mexico’s western coastline.

• Par 72, 7022 yards
• www.fonaturoperadoraportuaria.gob.mx • (329) 29 84091