The residential housing market in Vallarta is expected to remain strong and stable, with prices likely to experience minimal fluctuations. Several factors contribute to this outlook:
- Cash purchases: The majority of buyers in Vallarta purchase properties with cash, reducing concerns about losing their homes to foreclosure. This lack of mortgage pressure results in fewer owners feeling compelled to sell.
- Low carrying costs: Compared to the US and Canada, carrying costs in Vallarta are significantly lower. Property taxes are approximately $1 USD for every $1,000 in property value, translating to a yearly tax payment of around $400 USD for a $400,000 USD condo. Utilities and maintenance fees are also reasonably priced.
- Market “sweet spot”: The market’s “sweet spot” lies around the $400,000 price range, which aligns with the average selling price of condos last year ($350,000). This affordability factor ensures a sizable pool of buyers in the market.
- Rental market strength: The rental market in Vallarta is highly favorable, making it an attractive option for property investors. Rental income opportunities further incentivize property owners to hold onto their investments rather than sell.
Considering these factors, it is anticipated that property prices will remain relatively stable, with slight upward or downward movements over the next two years. Additionally, the limited supply of properties contributes to price stability, as the number of available resale properties is currently low.
It’s worth noting that during the market downturn in 2009, prices in Vallarta only experienced a modest decline of approximately 10%, unlike the more substantial drops seen in many US sunbelt areas. The market essentially stagnated during that period, with sellers unwilling to lower their prices and buyers hesitant to make purchases. However, the market gradually recovered, and by 2014, sales had returned to pre-crash levels.
The Vallarta real estate market has demonstrated long-term strength and stability, with properties typically experiencing annual appreciation ranging from 3% to 10% (averaging around 5%). While not extraordinary, this consistent appreciation offers a solid return on investment over time. Moreover, it is highly unlikely for prices to plummet by 25-35-50% as seen in stock markets or cryptocurrencies. Although sales activity may slow down, sellers are unlikely to panic due to the enduring appeal of Vallarta and the homeownership dream associated with it.
In conclusion, the forecast for the Vallarta housing market in 2023 indicates a continuation of stability, with potential minor fluctuations, but without any significant price drops expected. The enduring popularity of Vallarta as a desirable destination suggests a sustained demand for real estate in the region.