We own several homes, and they all provide solid income. In fact, they more than cover themselves, and allow us to build up contingencies.
But we want to live in Mexico.
Housing prices there have skyrocketed, but with rising interest rates, I’m thinking that prices will drop everywhere, including in Mexico.
Do you think it would be wise to sell one of our houses here, wait for the price drop, and then purchase in Mexico?
Renting there has become too difficult, the prices are outrageous and it’s even more challenging with pets.
We don’t have enough liquid cash to buy a place in Mexico without selling something. What should we do?
Moving to Mexico
‘The Big Move’ is a MarketWatch column looking at the ins and outs of real estate, from navigating the search for a new home to applying for a mortgage.
Do you have a question about buying or selling a home? Do you want to know where your next move should be? Email Aarthi Swaminathan at [email protected]
Dear Moving to Mexico,
It’s always amazing to live in a new city, let alone a new country. It’s definitely an adventure if one is up for it.
But before you take that plunge and move south of the border, I have questions: Have you checked out where you want to live in Mexico? And have you nailed down a neighborhood that you see yourself living in for a long period of time? Are you familiar with the property taxes, insurance, and other costs you’d have to bear for the home you’re planning to buy in Mexico?
Putting aside the nitty-gritty details like income tax and insurance costs, instead focusing on the home you’re about to buy, the property market is definitely more interesting in Mexico, because you have more options to choose from.
The price can vary significantly, depending on where you look.
The median home price in Mexico was 881,000 pesos ($44,000) as of June, according to a report by Sociedad Hipotecaria Federal, a government financial agency. Home prices are up 8% from last year.
“‘Are you familiar with the property taxes, insurance, and other costs you’d have to bear?’”
But if you’re looking to buy a beachfront property, such as in Cabo, Cancun or in Tulum, that price tag can run up to a million, or even as steep as $40 million at the high end of the luxury market, Ed Eakin Jr., a realtor in Dallas who also operates a brokerage in Mexico, told MarketWatch.
Eakin Jr. also refers potential buyers to local realtors in Mexico.
In the U.S., the median home price of an existing-home in August was $389,500, up 7.7% from a year ago, according to the National Association of Realtors.
On top of that, if you’re buying a home in Mexico on the beachfront, it’s also not a direct transaction — you’ll have to go through a trust to purchase the property. But you can sell it, rent it, lease it, just like you own it, and even list your children as a beneficiary.
And if you’re interested in renting that out as an Airbnb
consider yourself one among many: “The demand for Airbnb in the Riviera Maya is crazy,” Eakin Jr. said.
As to the matter of timing: You said you’re expecting prices to drop everywhere, and want to jump in when they do.
“It may make sense to move fast and buy if you see a home you like in the spot you’ve chosen.”
But if you wait for prices to drop in Mexico, your property value in the U.S. may likely drop too, so your budget may shrink.
Consider the fact that economists like Moody’s Analytics’ Mark Zandi are expecting home prices to fall 10% peak-to-trough. Home price growth is also slowing fast in the U.S.
On that basis, it may make sense to move fast and buy if you see a home you like in the spot you’ve chosen.
Additionally, you’re more likely to save on property taxes, since they’re far lower than what we pay here in America, according to Eakin Jr.
It’s not an easy decision to make, but since you’ve got multiple homes and have the opportunity to expand internationally, it may be worth embarking on this adventure sooner rather than later.
But of course, you’ve got to choose wisely and see what makes the most financial sense to you.
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