Are you wondering if 2023 is a good year to retire to, or invest in a home or condo in Cabo San Lucas or Los Cabos area?
Let’s take a few moments to clarify the important facts.
According to the Los Cabos Coordinating Council (CCC) president Julio Castillo, in 1997 when the CCC began operating, there were 42,000 inhabitants in the Los Cabos municipality and 3,500 hotel rooms. As of December, 2020, Los Cabos has 173 hotels, 20,816 hotel rooms and over 330,000 inhabitants. (Those numbers do not include private rental properties, Airbnb, etc.). According to recent INEGI estimates, population in Los Cabos will be half a million people in 2050.
As of August 2022, about 200,000 people live in Cabo San Lucas. The expats are speculated to make up around 5-10% of the population. The city also attracts many snowbirds and a continuous flow of tourists. You’ll also find Mexicans from all over mainland Mexico vacationing and living here.
Over 135,000 people live in San José del Cabo. The majority of that population are Mexican Nationals. And while it’s a bit less famous, San Jose also gets many foreign visitors and snowbirds. This is at least partially due to the reputation San Jose has for American-style amenities. Those include high-end restaurants and broadway-style shows and entertainment venues.
The population of 4,500 in La Ribera on the East Cape, is expected to grow to 25,000 or 30,000 in the next 10 years. According to government delegate, Miguel Mijares, it’s expected to double to approximately 9,000 people by 2025. East Cape has, until recently, been considered ‘off the grid’ and a great attraction for expats who specifically moved there to ‘get away from the crowds’. So, for some, these figures can be surprising.
At a recent meeting with the Los Cabos Coordinating Council, the most revered developer in the area, Eduardo Sanchez-Navarro, proposed applying a moratorium. He suggested four months for any upcoming development.
Or, more preferred: A total moratorium until the Urban Development Plan is finally in place and approved by all involved. Many locals believe simple enforcement of the existing building regulations is what we also need. For decades, residences and businesses on the inland side of the highway were restricted to 7.5mtrs in height. That’s 2 stories. Since the topography of the area slopes UP and away from the highway into the mountains, this regulation preserved views for all involved. But with the change of government parties comes the consequences. A few years ago, it became apparent ‘someone’ had been paid off, as several (2) 6 story hotels suddenly appeared under construction with direct immediate highway access.
In the last 5 years, that has changed to continuous development of 6-7 story condominiums dotting the highway from San Jose to Cabo, to Cerritos on the Pacific Side. Some with UNDERGROUND parking. And though a majority of them are very near to highway access points, many now dot the foothills themselves, and all points between. These buildings block what were once pristine, unobstructed views. Views, of course, are a huge draw for purchasers. Many of those communities with now-blocked ocean or even highway views are more than 15 years old.
Many of those previous condo-regime and development residents were able to slow down the new blocking construction for a time. Those efforts have become fruitless over the last few years, as evidenced by the burst in construction. Buyers and agents must be aware of that potential as our population continues to grow, increasing the NEED for development of adequate quality and attractive housing.
This is especially true since most of the population growth has been expats with higher expectations for housing, and Mexican nationals with higher education, positions, and income.
SO: what should you expect as a Cost of Living in Los Cabos as an Expat?
Well, as a start; keep in mind, Most expats living in Los Cabos are retirees. Meaning they’re living off their Social Security for the most part. As in every country, even retirees may become bored enough to actually obtain a part time job with secondary income. And the last 5-10 years have seen a surge in Gen-X buyers for a variety of reasons.
However, in Cabo San Lucas, a couple can live well on 40,000-60,000pesos (2,000-3,000USD/mo). In San José del Cabo you can reduce your living costs by a few hundred dollars. But you should expect to spend up to 50,000pesos: or 2,500 USD as a couple.
Keep in mind that these are only approximate figures. Some expats spend much more, but many Mexican National residents also live on much, much less.
The Mexican government just increased the minimum pay increase of 20% beginning Jan 1, 2023. This is the highest salary increase in 40 years! Mutually agreed upon by workers’ unions, business organizations and the government. The new minimum wage will be 207.44 pesos for an 8-hour shift (about $10.63 USD), up from 172.87 pesos. For the border zones, the new minimum will be 312.41 pesos (about $16.02 per 8-hour shift), up from 260.64 pesos. This increase affects EVERY Mexican national worker; including your personal MAID.
If you’re wondering how we know USD vs MX peso exchange;
we ‘local’ ex-pats have a tried and true trick or two up our sleeves. Looking to buy a souveigner while here? Standing in a shop in love with the perfect reminder, but only have USD on you today? Take the Peso amount; divide it in HALF. Now remove 1 zero. poof; APPROXIMATE USD amount you’re about to spend. We say ‘approximate’ because the exchange rate changes daily if not hourly. But in 2023, you’ll be extremely close in your calculations. SO 1500 MXpesos…divided in half; 750…take away 1 zero…that cute little statue will cost you 75 USD.
Speaking of Income, that is another change to be aware of in Baja Sur and Mexico Mainland.
It will also affect the need for ongoing development and construction in this once very small, intimate, and under-populated fishing village. This growth affects inadequate infrastructure, and requires the implementation of ‘other means’ of sustainability. Such as De-Sal Plants for water requirements for the population growth in addition to the needs of high-end vacation resorts moving into the area from around the globe.
Mexico’s Economy continues to Skyrocket, even in the face of inflation in 2022-23 to date! It ranks now as #6 out of 34 countries analyzed by the British magazine “The Economist”. That places BCS above Canada (#7), Japan, France and the U.S. (#20). The magazine’s ranking considers 5 economic and financial factors: GDP growth, inflation, inflation breadth, stock market performance and government debt.
While Mexico’s inflation ended at 7.7% this year, the price of groceries in Los Cabos has increased 20%, according to the La Paz chapter of the National Chamber of Commerce. Restaurants in La Paz have increased their prices by 15%, according to the La Paz Restaurants Association President. And yet, Costco in Cabo has been packed to the rafters daily. Many days shoppers must postpone the day’s shopping due to lack of parking spaces (yes, it’s that full! Mimicking my grandma’s favorite line “Everyone and their brother’s cousin and uncles are here”).
The Informal Economy in Mexico is Big enough to affect tax revenue.
Mexican outdoor markets (called Tianguis), plus those beach and street peddlers, Bici taxis, taco stands and many other mom and pop’s pay very little in tax fees in the form of permits to sell, but nothing more. No 16% Value added tax (IVA), no income tax, and no space rentals. This represents 23.7% of the Gross Domestic Product and is growing at a pace of 1.9% a year. And yet we still wonder why Mexico’s infrastructure, education, public transportation, and other neglected social necessities are in such bad repair.
How Many Cruise Ship Passengers visited Cabo? During 2022, the number of cruise passengers that visited Cabo, Loreto and La Paz through Dec 20th was 498,445. According to statistics, each of those passengers spends an average of $70 bucks for tequila, margaritas, beer, trinkets, food and tours. That’s more than $35 million USD. Keep in mind…that’s CRUISE ship visitors.
There were millions more arriving at SJDC International over the course of the last 14 months.
Through September, 2022, 15.5 million international tourists had visited Mexico, an increase of 61 percent over the same period in 2021. The tourism secretariat reported that the international airports of Los Cabos, Cancun and Mexico City accounted for 11.7 million of those air travelers.
In addition, the Ministry of Economy reports that tequila exports increased 34.1% this year from January to October, compared to the same period in 2021. Tequila exports reached $3.6 billion, and are growing faster than beer exports, which during the same period sold $5 billion USD.
If you’re looking for a residence of your own in this paradise, whether for future retirement, vacation use, or as a rental-income generator, you’re certainly in luck in 2023 and beyond:
There are many various kinds of Los Cabos properties available, so there is something for everyone in Cabo San Lucas real estate. Beautiful beachfront condos, incredible luxury waterfront homes, and off-the-grid real estate in the mountains or other rural areas are all available in Cabo. It completely depends on your current desire, or future-vision!
Most of the purchases up until this point (and the population growth) have come from its two northern borders, the United States and Canada. Now that there are several flights that fly directly to Los Cabos airport from many major US and CANADIAN cities, traveling here is simple and uncomplicated whether you reside in New York or Chicago on the east coast, Atlanta in the south, or Los Angeles on the west coast.
However, you don’t want to wait too long to take advantage of this boom. Prices are up a bit, but compared to the USA and Canada, it’s a bargain hunter’s dream.
Property prices are only expected to rise in the next few years, especially in the now-popular market of Cabo San Lucas. Properties are being snapped up fast in this region! There’s never been a better time to buy property in Los Cabos. All too often, a property listed on the Local MLS and scheduled for viewing tomorrow will not be available tomorrow. Many properties have an accepted offer the same day it’s listed.
Nearly all single-family homes have a pool (either community pools in walking distance, or private pool). Most new construction homes are in gated, secure communities and HOA’s include landscaping maintenance at least up to the front door of your home. Many of those communities can be found near or on a golf course. Almost all include community BBQ/entertainment areas, gyms, a clubhouse, or other similar facilities.
You can assume a two-bedroom, two-bathroom home will start at about $250,000, although single-family homes near the ocean will cost twice that, and luxury models in gated and known high-end oceanfront communities generally cost several million dollars.
Of course, there will always be a need for upscale housing. The average price of a luxury residence in Cabo San Lucas is $3 million, while a private beachfront villa has been sold in Cabo for as much as $16 million.
But, again; the best part of Los Cabos is yet to come: It actually IS the cost of living annually.
You’ll find a wide price range of properties in Cabo San Lucas, accommodating lower price points as well as luxury. But besides property prices, it’s the overall low cost of living that attracts most expat home buyers.
BEST news of all, for most of the American/Canadian population, is the annual property tax savings. At time of purchase, there is a 2% acquisition tax on your purchase price at closing. As a foreigner, your title is held by a fiduciary bank in a family trust (known here as a Fideicomiso), so there are annual fees of about $450USD. There will also be fees for 3rd party escrow to keep your funds safe until distribution at closing. But Consider this: the annual property tax in Los Cabos is only 0.1%! Meanwhile, back in California, it’s 0.79% and in Texas, 1.86%!
Add to that, overall cost of living is much lower in Los Cabos than in other North American countries. For instance, a couple can live comfortably in Cabo San Lucas spending just $1,500 a month. That amount can be even less if they live and shop like locals. Much of the gringo population here survives very well off their Social Security from their home country.
Cost of healthcare services is also about half that of the US, and it’s just as excellent, since most doctors in Los Cabos earned their doctorates in the USA, Canada, Mexico City, etc. Then moved here for the cost of living, family safety/security, and ability to expand their field of expertise. https://internationalliving.com/countries/mexico/health-care/