‘We Want to Live in Mexico’: Should We Sell Our Property in the US Before Prices Drop and Buy Our Dream Home Abroad?


By Aarthi Swaminathan

“So do you think it would be wise to sell one of our homes here, wait for the drop, and then buy in Mexico?” »

Dear MarketWatch,

We own several houses, and they all provide a solid income. In fact, they do more than hedge and allow us to build contingencies.

But we want to live in Mexico.

Real estate prices have skyrocketed there, but with rising interest rates, I think prices will go down everywhere, including Mexico.

Do you think it would be wise to sell one of our homes here, wait for prices to drop, and then buy in Mexico?

Renting there has become too difficult, the prices are exorbitant and it is even more difficult with pets.

We don’t have enough cash to buy a house in Mexico without selling something. What should we do?

Move to Mexico

“The Big Move” is a MarketWatch column examining the ins and outs of real estate, from navigating the hunt 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 TheBigMove@marketwatch.com.

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 you’re up for it.

But before you take the plunge and move south of the border, I have some questions: Have you checked where you want to live in Mexico? And have you identified a neighborhood where you see yourself living in for a long time? Do you know the property taxes, insurance and other costs you would incur for the home you are considering buying in Mexico?

Putting aside the fine details like income tax and insurance costs, and instead focusing on the house you’re about to buy, the real estate market is definitely more interesting in Mexico, because you have more options to choose from.

The price can vary greatly, depending on where you look.

The median home price in Mexico was 881,000 pesos ($44,000) in June, according to a report by Sociedad Hipotecaria Federal, a government financial agency. Home prices are up 8% from a year ago.

But if you’re looking to buy a beachfront property, like in Cabo, Cancun, or Tulum, that price can be as high as $1 million, or even as high 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 also directs potential buyers to local agents in Mexico.

In the United States, the median 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 house in Mexico on the beachfront, it’s also not a direct transaction – you’ll have to go through a trust to buy the property. But you can sell it, rent it, lease it, just like you own it, and even enroll your children as beneficiaries.

And if you’re interested in renting it as an Airbnb (ABNB), consider yourself one of many: “The demand for Airbnb in the Riviera Maya is crazy,” Eakin said.

As for the question of timing: you said that you expected prices to fall everywhere and that you wanted to intervene when they did.

But if you wait for prices to drop in Mexico, your property value in the United States could also drop, so your budget could shrink.

Consider the fact that economists like Mark Zandi of Moody’s Analytics expect house prices to fall 10% from peak to trough. Home price growth is also slowing rapidly in the United States

Based on this, it may be a good idea to act quickly and buy if you see a home you like in your chosen location.

Plus, you’re more likely to save on property taxes, since they’re much lower than what we pay here in America, according to Eakin.

It’s not an easy decision to make, but since you have several houses and you have the possibility of expanding internationally, it may be worth embarking on this adventure as soon as possible.

But of course, you need to choose wisely and see what works best for you financially.

By emailing your questions, you agree to have them published anonymously on MarketWatch. By submitting your story to Dow Jones & Company, the publisher of MarketWatch, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.

-Aarthi Swaminathan

 

(END) Dow Jones Newswire

10-08-22 1539ET

Copyright (c) 2022 Dow Jones & Company, Inc.

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