Los Cabos Residential Real Estate Market Report 2022 Q3
2022 Q3 Market Report
October 11, 2022
In Q3 the market saw a continued decline in sales in every price point as the market cooled against the summer heat in Cabo. This dip is reminiscent of the typical summer decline in sales which is when buyers spend their time at home in the US and Canada and sellers shutter their properties for hurricane season. This year may have a small bit of that going on but lack of physical inventory remains THE reason for lower sales. The persistent low physical inventory seen throughout Q1 and Q2 is easing but has a long way to go to return to levels of early 2020 & 2021. Demand remains strong with Days on Market continuing its downward decline. Price increases continue appearing with sellers testing the outer bounds of the market.
Inventory makeup remains in our “new world” where pre-construction inventory (554 units) on MLS exceeds physical inventory (416 units). Properties that are priced to sell are having the shortest days on market. Aggressively priced sellers are now accumulating days on market and may be subject to price reductions.
Los Cabos Market Expectations vs America
Many clients continue asking about price direction in Los Cabos amid rising interest rates and slowing markets in America. We continue to see demand remaining strong in Los Cabos and prices continue holding. Once again, lack of physical inventory is the number one reason sales are lower this quarter.
The biggest thing that is different about the Los Cabos Real Estate Market (vs America), is it is predominantly a second home market. Buyers don’t have to buy here. Work isn’t bringing people here, but retirement is. Purchases here are normally all cash so movement in interest rates doesn’t affect buyers. When financing is involved here, most buyers are using Moxi Mortgage whose interest rates have declined while rates have risen in America. There are many buyers on the sidelines with cash in hand waiting to move on the right property at a reasonable price.
When quality properties are hitting the market, many are priced very aggressively. This is a reflection of seller attitudes in second home markets – “We’re in no hurry but we’ll sell it for THE RIGHT PRICE”.