Pandemic migration moves from the big city to outlying areas are alive and well in Mexico City. The result? Heightened inventory and suppressed prices.
Lots of Supply in Mexico City
Buyers have had the upper hand in Mexico City since the 2018 election of President Andres Manuel Lopez Obrador. The combination of Obrador’s negative impact on Mexico’s contracting economy and pandemic out-migration patterns from the big city to outlying areas/countries have opened up supply and suppressed prices in Mexico City.
Hector Romero, partner with Peters & Romero Bienes Raices in Mexico City said, “…there’s more supply, with many people who are just trying to get rid of property.”
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Andres Vizcaino, an agent with KW Pedregal Keller Williams, agreed. Vizcaino said, investors “are selling properties in Mexico City to reinvest in other countries.”
Another agent, Laura de la Torre de Skipsey with Mexico Sotheby’s International Realty is on the same page as Vizcaino and Romero. del la Torre de Skipsey said, “Mexicans are buying in Madrid, Miami and New York, but not Mexico. They’re afraid to invest here, so we have a lot of inventory.”
High-End of Market Currently Has Wealth of Supply
Sergio Gomez Rabago, an architect who leads the Education Center of Realty Business Operations for Asociacion Mexicana de Profesionales Immobiliarios, said the high-end of the market has been especially hard hit and is most favorable to buyers right now. Gomez Rabago, however, believes, “…the market will realize we’re already in the second half of this government’s term, and (buyers) will take advantage of reduced prices of luxury homes. By 2023-224, prices will end up going where they should be.”
Prices
A report from the Sociedad Hipotecaria Federal, a government financial agency, reported that the average price for a home in Mexico was $65,900 in Q3 2019 while the average price in Mexico City was $62,920.
Ramon Davilla, CEO of the real estate sales and marketing firm Immoblilux,estimated the average price in Mexico City was $202,,000, “about $85,000 above the national average.”
The more affluent neighborhoods of Planco or Condesa command apartment prices of about $600,000. Romana said, “Foreigners get attracted because they think Mexico City’s a cheap market, which it actually is not.”
Middle-class neighborhoods such as Benito Juarez and Alvaro Obregon have prices ranging from $48,300 to $133,000, according to Romero.
Who Is Buying?
While international buyers are buying in San Miguel de Allende and Puerto Vallarta, foreign buyers, according to Davila, choose to rent in Mexico City. Why? Because most foreigners move to Mexico City because of corporate relocations.
The only restrictions on foreign buyers involve properties within some 30 miles of the country’s coastline or 60 miles from a border. To actualize a sale in those areas, buyers must do so via a Mexican trust, according to Jonathan Pikoff, founder of Pikoff attorneys with offices in Texas and Mexico.
Foreign buyers are advised to retain an attorney to avoid fraud since Mexico’s housing market is unregulated. All transactions are required to go through a notary, again to avoid fraud and confirm ownership. Buyers who own rental properties must pay the same taxes as Mexican nationals.
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Thanks to The New York Times.
