San Diegans take heed: In the next 12 months, stretches of affordable luxury residential property south of the border could be just a bank loan away. U.S. citizens who have long dreamed of owning beachfront property in Mexico, but could not secure financing, may be able to make that dream a reality sooner than they once thought.
Several U.S. banking institutions are ramping up their lending programs to serve the growing demand among U.S. citizens to invest in residential real estate in Mexico. According to one expert, in 2005 there is likely to be six banks offering mortgages on Mexican homes, which is significant considering that just three banks were originating such loans at the end of last year.
A good deal of the interest can be attributed to the fact that the residential real estate market in Mexico is quickly heating up. "It is safe to say that there is a residential acquisition boom going on in Mexico. The investment markets in Mexico today are prolific," said Mitch Creekmore, vice president and Mexico division manager for Houston-based Stewart Title Guaranty Co.
Statistics provided by the U.S. Department of State indicate that as many as 400,000 North Americans have purchased second homes or vacation properties in Mexico, with the majority investing in resort destinations. Creekmore pegs the number of U.S. home buyers now owning property in Mexico at closer to 1.5 million.
The prime development areas include Cabo San Lucas in Baja California, Puerto Penasco on the Sea of Cortez, and Punta de Mita and Puerto Vallarta on the Pacific coast, according to David Wiesley, the director general of First American Title Services de Mexico - one of the only other U.S. title insurers, besides Stewart Title, to have entered the Mexican real estate market.
The availability of title insurance provides the security that gives foreign buyers confidence. With the advent of new lenders in the market this year, Creekmore said the result will be a more competitive mortgage market. "Now we could see a more favorable lending structure, including lower interest rates, lower down payments. And given the amount of pent-up demand that is out there," he said, "there is tremendous opportunity."
(c) San Diego Business Journal. Heather Bergmann.