And Why Would You Buy a Home or Condo in Los Cabos, Anyways?
WELL; cost of living might actually make a difference. In 2024, 173k pesos in NYC is equal to a lifestyle of 64k pesos in Los Cabos. Add the beach, the view, the clean ocean air, breezes, whale watching in Vacation Central, etc. Now; why WOULDN’T you want to buy a home or condo in Los Cabos, anyways? Do we have your attention yet? Investment properties or condos for sale in Cabo and the Los Cabos area are becoming the new trend in moving your retirement dollars into ROI ventures.
Living in Cabo San Lucas is a dream come true for many. As of December 31, 2022, authorities in Los Cabos reported 14,679 foreigners now have their primary residence in Los Cabos. The unique combination of stunning beaches, world-class amenities, and a vibrant culture truly make it an ideal place to buy a property. Whether for full-time occupancy, or for generating a secondary income through vacation, or short/long-term rentals. It is considered a personal piece of paradise for all expats who made the ‘move’.
Let’s Look at the Positives, Shall We:
Spring 2024, found Cabo ranked #4 of the top 10 vacation locales in the world for Spring Break by The U.S. News & World Report. Los Cabos offers many advantages for U.S. visitors, including it’s warm weather all year. Now add access to all the resort amenities of one of Mexico’s top tourist areas. Since 2019, we’ve managed to be front liners in Forbes, Expedia, Reuters, Conde Naste Traveller Magazine and others. This continued growth is, at least in part, due to the number of high-end resorts moving into the area. The Hyatt, Solaz, Regency, Villa La Valenzia, St Regis, Corazon Cabo, Waldorf Astoria and Nobu to name a few. These all-inclusive resorts will provide 5000+ additional rooms to rent.
That fact is all well and wonderful. But another reason is Cost of Living in Mexico in General. Baja is considered the most expensive place to live in Mexico because of the tourist driven economy. However, growth in population by expats and middle class Mexican Nationals has been astounding.
Located in the Pacific state of Baja California Sur, bordering the Pacific Ocean we’re just a few hours south of the United States.
This beautiful area is 1,000 miles from the U.S. West Coast, yet surprisingly close to other popular travel destinations. It is about 550 miles north of Mazatlan, Mexico. And only 950 miles south of Los Angeles. It’s 1,050 miles southeast of Phoenix. And 1,150 miles northeast of Las Vegas. In other words, it is easy to reach and cost efficient for U.S. travelers anytime the travel bug or wander-lust strikes.
You may have heard of people from all over the world buying houses, condos, and villas in Cabo or San Jose Del Cabo. Owning property here is like getting a personal piece of paradise. Could it be due to fantastic ocean views, activities, and relaxation options in the Los Cabos area?
But is it a good investment to buy property in Cabo San Lucas? The answer is a resounding yes!
For many current and long-term property owners, purchasing real estate in Los Cabos has been a worthwhile investment. As evidence here are multiple great reasons why:
· Timing: The 2023-2024 Real estate boom:
Los Cabos – and Cabo San Lucas in particular – is undergoing a real estate development surge, with so much new infrastructure being built in the last five years. From resorts to apartment complexes to master-planned communities, new developments are popping up all over the southern tip of the peninsula. Many of those offer beachfront locations or direct ocean or beach vistas. Someone with greater experience than ours is proving to developers that cost and efficacy are positives.
However, you don’t want to wait too long to take advantage of this boom. 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 this Baja California city.
· Location: Paradise in proximity! Location-Location-Location!
Los Cabos has so much natural beauty that it’s quite surprising to know how close it is to major American cities. It’s a mere two-hour flight from San Diego International airport, and easily accessible from various other airports in the U.S. as well.
Los Cabos has hundreds of direct flights to cities across North America! But the Municipality is also beginning to introduce direct flights to Europe, with a route to Madrid, launched earlier this year and expansion to London and Frankfurt. This could also make our Mexican destination even more attractive for Europeans looking to buy second homes or holiday homes in the area as well.
Proximity and ease of access is why Cabo San Lucas is an easy choice for US and Canadian property buyers, And for these new property owners, this proximity means it’s easier to relocate. For part-time residents, traveling to and from either La Paz, or SJDC airports is cost-efficient and easily accessible getting to and from those airports.
· Cost Of Living: Lower costs for high-quality life
There’s a wide range of properties in this southern tip of BCS accommodating lower price points. But, adding to the lower property prices, the low cost of living in Mexico is what attracts many renters and home buyers.
Consider these comparisons: the annual property tax in Los Cabos is a whopping 0.1%, while in California, it’s 0.79% and in Texas, 1.86%! For instance, on a $500k property, taxes are only about $500 a year. If you pay your predial in January you get a 20% discount. In addition, if you have a permanent resident card and are over the age of 65 you get an additional 30% discount (a total of 50% discounted; making your annual property taxes closer to $250 per year). In contrast, US property taxes average around .25% -2.5% on the assessed value of the property (assessed at time of sale) and there are no discounts.
The overall cost of living in general is also much lower than in other North American countries. For instance, a couple can live comfortably in Cabo San Lucas spending about $1,800USD a month, or even lower once they adjust to the local economy. (We always recommend allowing your Real Estate Adviser to show you the best outlets for your needs…whether groceries, furnishings, window dressings, mechanics, etc)
Electricity and gas :
can cost $100-150 a month. The price of 1 liter (1/4 gallon) of gas in Cabo San Lucas is $1.35USD (Mex$ 23pesos). Your bi-monthly invoice is based on your location (a barrio vs a mostly Foreign occupied high-end development). But if you live on the corridor, a good example is a 3BR condo; 1400sq ft under a/c. A/C is used 3 mos of the year, and only for short periods. But a floor fan and ceiling fans are on 24/7 during summer months. A recent invoice totaled $2009 mx pesos. In March of 2024, that is approximately $125 USD for 2 months extra-ordinary use.
Water:
is invoiced monthly, and again, varies based on the region. It may cost anywhere from $5 – $60 a month depending on whether you have potable water; i.e., purified for human consumption or rain water collected in a tinaco on your roof. Remember, this is a desert region. Municipal water is doled out in cycles. If your pila (private water storage tank usually underground) needs to be filled and municipal water is not forthcoming, you can call a PIPA…this is a truck carrying thousands of liters of water. Pricing depends on the size of your pila, and your provider. A delivery of 2500 liters of water by the PIPA supplier will cost 400-600pesos. About $20-30USD. Needless to say, we learn to conserve quickly!
If hiring staff such as housekeepers, landscapers, pool cleaners, etc. is part of your dream, they will cost less than half the hourly rate in the US.
Other factors people are considering when buying second homes are amenities such as the cost of gyms/fitness centers, childcare, attractions and activities– which Los Cabos, with its world class beaches, Top 10 Resort locations, landscapes and wildlife, has in spades.
But let’s not leave out the cost of healthcare:
locally, healthcare costs are also about half that of the US. And that care is just as excellent, with doctors who have studied globally and are licensed internationally. In addition to that, and just as importantly, as Permanent Residents, you can purchase health insurance through the Mexican government (IMSS). It is a fraction of the cost of insurance in the United States, with options and flexibility increasing each year you subscribe. President Amlo has also proposed no-cost healthcare for the impoverished and those over the age of 65. However, out of pocket health expenses are much less in Mexico already, and provide the flexibility of receiving care where and in whatever facility you choose. Medical expenses paid out of pocket with private practice providers (dental, dermatologist, general practitioner, radiology, and osteopath) range in price from $25-$100 USD (or approximately 400-1600pesos depending on the services required).
Medications in Mexico also tend to be much, much cheaper. And most of the medications you would need a prescription for in the U.S. you can get in Mexico over the counter.
LOS CABOS MARKET DIRECTION
We have seen the current market stabilize after seeing an increase of 30%-40% or more over the last couple of years, depending on amenities and community. It’s not a buyer’s market yet, but at certain price points it’s heading that way. With interest rates declining in the US and Canadian Real Estate markets, both buyers and sellers are getting back in the market.
The number one reason for the spike in the purchase of second homes in Los Cabos is that although they are pricey, they are still far cheaper than homes in cities such as Los Angeles, San Francisco or Chicago. Or, as comparison, further afield, capital cities like London and Paris. That’s not to say secondary properties in Los Cabos are affordable for the everyday pre-covid homebuyer.
Even though prices have risen substantially this year, there is no shortage of potential buyers.
Currently, 80% of buyers come from the US, although Canada and Europe are emerging markets.
The 2024 market has brought the highest inventory levels since 2020 Q3 with 1,493 houses and condos for sale. A significant portion of the current inventory, over half, remains pre-construction with 762 houses and condos. Houses under the $1m mark are, unsurprisingly, the most popular. and new developments are being built all the time.
The $300k to $400k and $400k to $500k price point were the leaders in terms of unit volume with 35 houses and condos sold each for a total of $28m. Prices held in Q4 with the average house price rebounding by 28% and the median house price rebounding by 38%. Condo prices responded with smaller price gains. Days on Market, particularly for houses, is on the rise with average DOM at 152, the highest since Q3 2021.
The luxury market has also stabilized
Those who want to sell are looking to move up and invest into bigger property or a new community with more amenities. We continue to see more interest in Cabo Real Estate than ever before. That momentum is building with limited inventory for more people discovering the value of a Los Cabos lifestyle.
As you can see from the chart above, the market picked up some in Q4. After a slow summer Q3 produced a sales dollar volume of $201.5m. Sales volumes in general are down by 12%, with 231 houses and condos sold. The $2m to $5m price point again remains the market hot spot with $73.5m and 23 houses and condos sold.
People are asking why is the market getting stronger?
What kind of growth are we seeing? What is selling the most? One of the best ways to gain an understanding of what’s happening with the Real Estate market in Los Cabos is to take a close look at the statistics here and contact us for more information. There was a time in the very recent past, buyers were looking for ‘off the grid’. The newer, younger generations of buyers are looking for ‘access’ and ‘amenities’ they’re used to.
And again, why would you want to buy a home or condo in Los Cabos, anyways?
Los Cabos has quickly gained a reputation for being a luxury holiday destination. With frequent celebrity visits, 5-star hotel openings and the region being voted the 7th most expensive holiday destination in Mexico, you may initially assume buying a home here is out of the financial question. The past 12 months have proven quite the opposite. Whether for ROI vacation income, or a private haven of rest in Paradise offering 300+ days of 80 degrees and sunny skies. You’ll find a staggering number of people, particularly from the United States, have purchased second homes in Los Cabos.