BHAUS EIGHT April 2023 Newsletter

Hello community,

Spring break was here and now gone! We have heard so many stories from our community regarding their travels. From beach locations near and far, to skiing vacations (and/or both!!!). The BHAUS EIGHT team enjoyed some R&R in Hawaii and in the Mexican Riviera, and it was just what the soul and mind were asking for. Where did you go?

We all know BHAUS team just loves real estate, and as such, we could not help but notice the booming real estate industry in Cabo San Lucas. While we had not been there in 10 years, the change is palpable in its development of condos as well as mega mansions with fabulous Pacific Ocean and Sea of Cortez views. The deep blue and turquoise ocean water is the perfect backdrop to the desert landscape and the blue skies above.

Some of our favs were dinners at Don Manuel (@waldorfastoria) and @MetateCabo. If you find yourself in Cabo, these 2 places are not to be missed!

In this month’s newsletter,…

• It’s very apropos that the Investor Corner discusses vacation homes/second homes, and the process and nuances an investor should be aware of before buying in Mexico.

• The Southbay Real Estate section will not only give you local stats, but it also talks about the advantages sellers have to go to market now - there is no better time!

• Finally, read on to Economy & News to get the latest updates on inflation, consumer spending, and up-to-date mortgage rates.

Also, this month our new format takes over - while you will continue to find the overall local Southbay home pricing stats, we will bring you the specific list of cities and their stats on the 3rd week of each month to include fun-to-read graphics for an easier grasp. As always, reach out to us if you’d like to see those stats earlier in the month.

Stay tuned for the next BHAUS EIGHT newsletters throughout the summer as we visit different hot spots for Americans to buy, and learn the processes and important information before taking the plunge to buy abroad!

SouthBay Real Estate.

In the month of March we saw a slight slow down in the Southbay market (across all Southbay cities and property types). Average prices dropped by 13% versus last year., although the median price only dropped by a narrow 1.6%.

Sold listings dropped by 30% versus last year, while DOM kept on increasing. At the same time, we had roughly only 1/2 of new listings come on the market compared to same time last year, thus supply remains low while demand is staying steady.

While those are the stats across all Southbay cities and property types, on the ground we see a different reality when it comes to the cities we follow closely. The lower-priced homes (under $1MM) remain in high demand, and when priced competitively, they are still receiving multiple offers and little if any, concessions from sellers are being made. At the higher end of the spectrum, the higher-priced homes are staying on the market a little longer, although those homes that are priced competitively and are turn-key and immaculately staged, are flying off the market.

This continues to be a great time for sellers to go to market and sell:

First, the inventory challenge remains and is expected to be a bigger challenge during the Spring selling season (which is typically the busiest season of all). According to C.A.R. research, new listings fell roughly 21% from a year ago nationwide during the last 4 weeks. Less inventory means more buyers looking at your home to purchase, more buyer competition gives sellers more leverage in pricing and concessions.

Second, homeowners who want to sell can take advantage of their built equity. While mortgage rates are higher, a bigger down payment will not only give sellers looking for their upleg a competitive advantage, but it will also reduce their monthly mortgage payments.

It is a matter of having a great “going to market” strategy, innovative marketing, and a knowledgable, hard working RE team such as BHAUS EIGHT. Call us to discuss!

Home Stats by City.

You will be receiving this information the 3rd week of each month going forward. For pricing stats earlier in the month, please contact us directly at Sonia@bhauseight.com.

Economy & Mortgage News.

According to C.A.R. research, economy is feeling the intended lagged effects of the Fed’s monetary policy, and it is showing signs of a slow down. Retail sales continued to decrease for the 2nd consecutive month, pointing to consumer spending losing momentum due to the higher costs of borrowing.

Inflation is also showing signs of slow down, although it still remains high. The March report for the CPI indicated that prices rose by the smallest amount in the last 9 months (excluding the core CPI which includes food & energy). The core CPI is still roughly double the Fed’s target, which makes analysts believe that the Fed will again raise interest rates in their next May meeting by another 25 basis points.

On the mortgage front, mortgage rates dropped to the lowest in 2 months. A conforming 30-year fixed loan is averaging at 6.250%, down from 6.4%. Mortgage applications also jumped by 8% in the beginning of April, but still about 31% lower than a year ago.

All eyes are on the next Fed May meeting, as analysts weigh in whether the Fed will raise rates for the last time this year.

Investor Corner.

The second home market hit real highs during the pandemic, and some second home markets continue to make a big splash. One of those places is Cabo San Lucas, located on the Mexican Riviera with access to the Pacific Ocean and the Sea of Cortez.

While those who bought a decade ago are enjoying an amazing equity gain in their properties, you can still find some great condos and homes. You can buy a small condo 1-mile from the beach starting at around $200K, as well as a beachfront mansion in the millions - whatever your budget is, there is something for everyone.

Our friends at Own in Cabo gave us some information regarding the purchasing of RE in Mexico:

• Own the Land: You can own in Cabo, not just lease the land., as long as it’s within the “restricted zone” which is located 60 miles of a national border and within 30 miles from the Mexican coast. The way to own the land is via a Mexican Property Trust (Fideicomiso). Basically, a bank of your choice doing business in Mexico acts as a “Trustee”, while you (the owner) are the “Beneficiary”. As the beneficiary, you have all the rights to the land that any owner will have, including developing the property, selling it, and renting it out. The trust or “fideicomiso” lasts for 50 years, but it is renewable for another 50 years. The process can continue indefinitely.

• Taxes: the real estate taxes are very low in Cabo, averaging about $300-$500 USD annually. Of course these tax laws can change anytime, and when ready to purchase, it is always a good idea to consult with a local tax consultant for up-to-date information.

• Transfer Tax: There is a transfer tax every time title is transferred, currently at the rate of 2% of the purchase price. When selling, there is a capital gains tax of roughly 30%.

• Inflationary Credits: after you pay your 2% transfer tax, you are eligible to receive an annual inflationary credit that will be added to your base purchase price, and can be helpful when you sell your home.

• Cap Gains Tax Exemption: Mexico provides its residents with a tax incentive anytime they sell their primary residence. While this incentive is only for Mexican nationals, it can also apply to certain foreigners who have established residence in Mexico.

While it is not necessary to be a Mexican national or have a special immigration visa to purchase property in Mexico, it is important to know all the information ahead of time so you are ready to proceed with the best plan forward.

We have partners in many international countries and can help guide you to the right local broker when ready. Don’t hesitate to call us with any questions before you start your search!

Next month we will bring more information on a different part of the Americas that we find is a hot spot and one that will only get better - hint: it has amazing surfing and it’s only a 5-hour flight from LAX!

Contact your BHAUS EIGHT team with any comments or questions!

To subscribe to our weekly emails of investor opportunities and our digital newsletter, please email Sonia directly at Sonia@bhauseight.com

From BHAUS to yours.