Forget The Second Home At The Lake, US Vacation Home Buyers Are Going To Mexico

Tyler Durden's Photo
by Tyler Durden
Wednesday, Sep 13, 2023 - 02:45 AM

Authored by Mark Gilman via The Epoch Times (emphasis ours),

With the average 30-year fixed mortgage interest rate now over 7 percent and a shockingly low inventory of homes available, Americans are looking for second or vacation residences out of the country more than ever. According to a report from Coldwell Banker, 92 percent of high-net-worth Americans actively looked at real estate overseas last year and two-thirds (67 percent) of those surveyed said they already own residential property outside the United States, according to Mansion Global. So, what country is experiencing the highest rate of American home buyers? Mexico.

Atomosphere of the Carbon38 and Hamptons Magazine Opening Celebration of the Beach House in Bridgehampton, New York, on July 30, 2016. (Mark Sagliocco/Getty Images for Hamptons Magazine)

Buying a home is not as cheap in Mexico as it once was, but you get a lot for the money,” Certified International Property Specialist for Worth Clark Realty Daniel Seidel told The Epoch Times. A Mexican native, Mr. Seidel says there’s a lot to like about buying a second home in Mexico. “When you experience the culture, the food, the people and the fact it's just a short plane ride away from the States, it’s a popular choice for my clients. If you live there half-time, it’s ideal. My advice is to work here, make money, go there and spend it.”

According to a new study from online Real Estate marketplace Point2, based on 136,530 monthly searches on Google, Mexico is the most popular home-buying location, especially for men in the 35- to 44-year-old age group. But what are these buyers looking for?

"First off, it should be a better version of the home they already live in and boast all the amenities they love or would love to have; and second, the location should be exceptional. That's why beach and waterfront properties in countries like Mexico, Puerto Rico and Costa Rica immediately come to mind,” Andra Hopulele of Point2 said in a statement to The Epoch Times. She also mirrored Mr. Seidel’s belief that countries like Mexico are high up the wish list because of its proximity to the United States. “These locations also make sense to the American buyer because they're closer than, say, European countries like Italy or Spain, which might be lovely to visit but are harder to access as a homebuyer.”

In the Homes2 study, Canada was the second most popular destination for U.S. homebuyers, with monthly searches jumping 54 percent since last year’s edition. Costa Rica was third and Puerto Rico was fourth for most popular locations.

Locations like the ones that made the top 10 seem to have it all," Ms. Hopulele said. "They are not home, but they are close to home; they capture home seekers' imagination with their incredible potential for rest, relaxation, and entertainment due to their amazing climate, never-ending beaches and turquoise waters, and fascinating cultures. Best of all, these homebuying destinations often have more affordable home prices.”

However, according to a recent report from the National Association of Realtors (NAR), foreign investors are not returning the favor, and are instead backing off from purchasing in the United States for the same reasons Americans are looking elsewhere: high prices, mortgage rates, and a lack of inventory. According to the NAR, the number of existing homes purchased by foreign buyers from April 2022 to March 2023 decreased to its lowest level since 2009. International buyers purchased $53.3 billion worth of U.S. residential properties during the period, down 9.6 percent from the previous year and the 84,600 existing homes sold was down 14 percent.

Mr. Seidel said that while Mexico continues to top lists for U.S. buyers and expats in the country, the journey to homeownership there is challenging.

As a foreigner [in Mexico], it’s difficult unless you have a business in the country or a local bank relationship, but even then, I’m not sure they’d give you the loan,” he said. “It really depends on a pretty sizeable down payment, north of 40 percent. You also have to buy life insurance in case something happens to you so the bank can make sure the mortgage is paid.”

Home2’s report stated that Canada’s increase in U.S. buyer attention reflects the “calmer and more peaceful lifestyle” in the country is becoming more appealing to American home seekers “than Mexico’s dreamy beaches and lively, vibrant culture.”

Crime in Mexico has become a big concern for Americans looking to move or purchase property. According to a U.S. State Department advisory earlier this year, “Organized crime activity – including gun battles, murder, armed robbery, carjacking, kidnapping, forced disappearances, extortion, and sexual assault – is common along the northern border and in Ciudad Victoria.” There have also been many news reports focused on increased crime in popular tourist destinations such as Cancun and Puerto Vallarta.

But Mr. Seidel says the benefits of moving to Mexico outweigh the crime concerns. “The hot buying areas are the beaches like Puerta Vallarta, Cabo [San Lucas] and Oaxaca. Crime in Puerta Vallarta is hit-and-miss and with the current government on the way out, crime has risen and it’s all over the place. You just have to be a little more careful. Listen, parts of London and Spain aren’t safe either,” he said.