Strategy & Supply in a Changing Market
Summary of a Pricing Strategy in Today’s Market
by Harriet Murray Cochran
This letter was sent to a seller who needed evaluate the position of their property in the Puerto Vallarta market in June of 2008. It is interesting to compare what has changed since 2008 or if anything has really changed at all… I will track these differences or similarities in upcoming blog posts, so stay tuned.
Names and area have been changed. The method and strategy we have actually used from the resources we have available to us in this market.
I have reviewed the list of clients who have seen the condo, as well as the current MLS data. Of those who have looked at the condo so far, almost half thought the condo needed some remodeling. Some were not ready to buy yet. Most of the comments indicate the buyers were in the 500k price range and higher. The couple whom we know bought: the wife thought the condo needed too much work. Their purchase ended up being a new one in the 500k range on the beach in the NV-Flamingos area north.
If our buyer can afford more, then the age of your unit and the idea of remodeling can affect their decision, and its location from town can hurt us. This is my sense of it.
Condominium Data in the Vallarta MLS:
In the MLS there are currently a total of 305 resale units and 1,115 preconstruction for a total of 1,420 total condos for sale in our reporting area of the Bay.
There are 73 units for sale in your location: 16 are resales and 57 preconstruction.
In the price range 250k-400k* (in all of mls) there are 464 for sale. There are 15 for sale in this price range in your area: 2 are resales and 13 are preconstruction. When these new ones are closer to completion, they will be in the 300′s with spa and other amenities, but not ocean front.
In the price range 425-625 there are a total of 278 units for sale and 28 of them are in your area. Resales in your neighborhood are in all price ranges for a total of 16 units ranging in price from 149k for a studio to $1,100,000USD for a condo.
Conclusions: We have a larger supply of condos for sale in the Bay than previous years.
*The real estate conference at the Krystal included several panels of realtors and developers answering questions. One of the points made by Real Estate Co. A and Real Estate Co. B was that their “sweet spot” or most active sales activity was in the condo price range of 250k-400k. This price range recorded a tremendous amount of sales since 2006 through the present. A number of these were in the area XXXX, closer to town going south on the mountain side. These brokers said that the problem now is there is not enough supply for this demand.
Your unit is one of 28 for sale in its price range of 425k-625k. Of the sales we can find for 2007, the XXXX condo penthouse sold the end of last year for 542,500k and was listed for 590k It is being totally remodeled and is three bedrooms, three baths, 253 m2, oceanfront. The building is not in as good a shape your and the beach has less sand, more rock. XXX is less than 10 minutes north your location, so it is a little closer to town.
Two noteworthy listings for sale your area are XX for 499k (169 ms construction) and YY is 170 m2 for 535k.
There is also ZZ which is ocean front 130 meters on beachfront for 450k.
In the resale inventory in your location, there are two condos in the 400′s; there are 5 resales in the price range 535k-595k.
We have a lot of supply right now and your unit is competing with other locations as well as what is for sale in your neighborhood. I recommend we drop below 500k to be in the smaller supply list of condos for sale in your location.
Some of the statistics given at the conference included:
For the period from 2003 through 2007, average prices of condos increased from $196,000 to $351,000USD. For this same period of average home prices increased from $256,000 USD to $693,000USD.
Developer Inventories began 2006 with 5,600 new units on the market. At the end of 2006, the balance of inventory for new properties was 3,450 units. The difference was sold or no longer on the market. We have not methods yet to track what happened to them more closely.
This year more than 50 new projects came on line adding almost 5,400 new units for a total or 8,900 to the market.
From the ending 2007 inventory, about 1,700 units sold leaving a balance at the end of they year of approximately 7,200 new units for sale.
Two large projects were additionally announced the beginning of the year, addition 1,800 more units to the total to give us 9,000 new units.
Total value of all developer property listings currently: USD 5 Billion
2008 Resale Inventory
Resale or prior owned condos listed in MLS are 305 units.
Resale or prior owned homes are 332 units.
There are 150 lots listed.
40 commercial properties are listed for sale or as traspasos (acquiring the lease).
There are no statistics yet for the amount of sales so far this year.
Harriet Cochran Murray, Director of Cochran Real Estate, is a seasoned Real Estate professional both here in Puerto Vallarta, Mexico and in the United States. Harriet has served in many capacities as a board member for the local Real Estate Association AMPI (AMPI is the national association of real estate professionals). She is also a member of FIABCI, NAR in the United States and a proud member of CIPS (Certified International Property Specialist), a designation of NAR. Harriet’s expertise and experience in the Real Estate and especially in the Mexican market makes her Viewpoint blog articles both informational and intriguing. Harriet is a Buyer’s Agent who specializes in getting the best deal on the right property for her clients. Click HERE to view Cochran Real Estate Listings.