Cabo Real Estate in the COVID-19 Pandemic

Has COVID-19 Hurt Cabo Property Values and Sales?

Yes, many businesses will be forced to close as a result of lost revenue. Yes, the local Mexican national population is the hardest hit segment of our society. Yes, we are still wondering when things will begin to return to normal. No, none of us have all the answers. Yet, amidst this time of unknowing we find that much like the aftermath of Hurricane Odile, this diverse community we call home has once again rallied to help our friends, neighbors and strangers in need. From local business owners to expat retirees, from home-grown entrepreneurs to transplanted business leaders, Los Cabos has retained it’s strong sense of self and community. And that bodes well for a future that we here at Baja International Realty believe will be better for the challenges faced and the solutions and improvements that come from adversity. So far, Cabo real estate has held up to the challengs of COVID-19.

Why are we optimistic about the future? Several factors that we’ll outline here.

1: Cabo's unique geographic location. What first drove people to visit our area is its proximity to major metro areas in the USA. For much of the Western US, Los Cabos is a short two to three hour flight with usually low ticket prices. That alone is a significant factor in our growth over past three decades and it will continue to be a driver of tourism and development for decades to come.

2: Cabo has a diverse real estate market. Not many vacation destinations have the range of prices and offerings that we are fortunate to have. Our market brings to the table a wide range of property types and prices. Our inventory of available properties ranges from smaller homes and condos in the low $100,000’s to spectacular ocean front estates that run up to $40 Million plus. There is truly something for everyone here and as such we enjoy a strong level of interest and a great number of willing buyers.

3: Cabo's amazing weather. While we are in a place where hurricanes can and do occur, we are also blessed with over 300 days of sunshine and a temperate climate with only a few months of high temps and humidity. Most days in Los Cabos are t-shirts and shorts days… grab a light jacket for cooler winter nights and you’ll be just fine. Our oceans are warm near year-round as well.

4: You'd be hard pressed to find more outdoor activities than you will in Cabo. Sport fishing takes center stage here with some of the best fishing on the planet. But let’s not overlook the fact that we’ve become a golfer’s paradise with some of the world’s top rated golf courses lining our coastline. There’s also a bevy of water sports, off-road adventures, horseback riding and hiking opportunities. If you love crystal clear waters, then you’ll love the wide variety of diving and snorkeling available as well.

While the COVID-19 pandemic has certainly put a crimp in being able to enjoy our amazing outdoors, it has also hit construction companies hard. A recent report from the local government estimates that as many as half of current construction companies may close their doors as a result of the shutdown. A sad state of affairs for those companies and employees and one that no doubt will also have an impact on inventories of new homes and condos. We expect to see some projects shelved for the time being. We also anticipate that new and planned residential unit inventories will shrink as a result. With time, shelved projects will begin again. New projects will be proposed and approved and those construction firms that make it through this trying period will no doubt absorb pent up demand. Employees who lost jobs with defunct companies will eventually find new positions.

What many might expect to happen is for asking prices to drop with some expecting large price cuts. For most markets that would make sense and we’ve read reports of that happening all around the world. However, as of mid-May, we’re not seeing that happen here in Los Cabos. Prices, for the most part, remain where they were before the pandemic began. Perhaps what creates this dichotomy is human behavior; the fact that many see this moment as an opportunity to invest simply because they, like us, expect that a great number of travelers who intend on visiting Cabo will prefer to rent a vacation home or condo as opposed to booking a room at a crowded hotel. Privately owned rentals have always done well here and there is reason to believe that will only strengthen post COVID-19. Becoming a vacation home owner who also earns rental income on their Cabo real estate holdings could prove to be today's best investment option.

Most would also expect that buyers would be making ridiculously low offers on the hunt for desperate sellers. Once again, we’re not seeing that happen here. However, during the next few months, testing the waters with offers under asking price can certainly lead to good outcomes for interested buyers and investors. We're also finding that some sellers are more open to creative financing options than they have been in the past. If you, for whatever reasons, need to sell your property here in Cabo San Lucas, San Jose del Cabo or any of the areas that make up the the municipality of Los Cabos, get in touch with us by email at: don@bircabo.com

Now, we’re not saying we have some magical crystal ball that tells us what the future holds. We don't. What we do have is 30 years of local market experience and knowledge. We’ve seen just about everything that can affect the real estate market from hurricanes to global economic downturns and recessions. Each time we see a temporary stagnation in sales and development but those have never lasted. In fact, turnarounds in real estate activity come faster here than just about any other market. It’s our belief that Los Cabos will endure, that property values will hold steady and that demand will not go away. Why? All the reasons we wrote about above and then some.

Bottomline is Cabo is such an attractive destination that hard times will not change its appeal or its inherent value as a real estate investment. Value is what remains when all other factors are considered. They won’t be making another Los Cabos and there’s only so much of a good thing on hand. Investing in vacation or retirement property here in Los Cabos now may be the best move one can make. Perhaps now more than ever.