Lake Chapala Real Estate Values and
Lake Level - Mexico Real Estate Voodoo

I’m often amazed at how some ‘experts’ explain what affects Lake Chapala real estate values. Don’t get me wrong when it comes to increasing the value of real estate assets that I own in Mexico, I’m all for that as long a it’s based on reality.

Today I was visiting a Mexico Real Estate Blog and read the following:

“watch the water level of the lake as the prices of real estate vary with the level of water in the lake. There is however, a lag of a year or two with the real estate prices following the level of water in the lake.”

This blog post was written by ‘Agent’ at the following blog:

www.buymexicohomes.com/lake-chapala-mexico.html

I’ve heard some doozies but I think this one takes the prize.

 ‘Agent’ I don’t wish you any ill will, but I’ve got bone to pick with you with regard to your comments

Comments about Mexican property values increasing in value out of thin air, without any basis in fact and are not supported by any logical thinking are what I call Mexican Real Estate Voodoo.

By way of background, I have lived in Ajijic, Mexico on the shores Lake Chapala for 8 years and have been involved in over 100 real estate transactions.

Some misinformed realtors and local residents of Chapala and Ajijic have made similar comments and when challenged to explain in detail the logic of the comments they just can’t.

This line of thinking may have started with a September 2003 article  in the Wall Street Journal by Jim Carlton where a an unhappy home seller says, “The homeowners attribute the falloff in values mainly to the lake's decline”.

When this WSJ article was first published, "Shrinking Lake in Mexico Threatens Future of Region”, the water level Lake Chapala was at 20 year high water mark and the Real Estate market was strong.  At the time the two are totally unrelated. Take a look:

http://www.mindfully.org/Water/2003/Lake-Chapala-Mexico3sep03.htm

Fast forward to today, January 2009, the lake is at 30 year high water level and the Real Estate market soft.

So if the stated theory is correct, some how cash laden, starry eyed gringos from up north will get the ‘migratory message’ to descend upon Lake Chapala by the plane load like the swallows returning to San Juan Capistrano, California. They will proceed to buy everything in sight, like swarm of locusts picking a corn field clean. After all the lake is at a 30 years high, so the coming sellers market will be a hum dinger.

I don’t think so.

If you search the web you’ll find other mistaken references to lake level and Lake Chapala property values.

Wikipedia, that tome of empirical wisdom, where anyone can post their view of the truth. Take a look here for their commentary: http://en.wikipedia.org/wiki/Lake_Chapala .

The website Answers.com gives you authoritative answers to question that you might have about Lake Chapala, Ajijic and real estate in Mexico.

Nationmaster Encyclopedia, draws the same exact conclusion.

“Real estate values fluctuate with the level of the Lake although there is some year or two lag time before lake levels are reflected in real estate prices.”

Almost the same wording or in some cases the same exact wording is used.

Whatever the original source of this 'wisdom' about Mexico’s largest lake, Lake Chapala and property prices and market trends, it appears that others picked up this information and reported it as fact.

I just goes to show you, you need to watch what you read on the internet. Not everything is accurate.

Not everything is true.

So what affects real estate prices in, Lake Chapala, Mexico?

Same as Rincon de Guayabitos or Dallas or Denver or Miami.

The law of supply and demand.

Currently, most real estate around the globe has more supply than demand for properties at the current asking prices.

Recently, there were US news reports that there was a slight up tick in home sales in certain US home markets. The story was that, first time buyers could now afford to buy because real estate prices had lowered to a point where it became affordable to buy. No real estate voodoo in that explanation.

How is demand for Lake Chapala real estate affected?

Short and simple: economics.

If your stock and retirement accounts got hammered recently like most of us did. Then you have 27 – 51% less value than you did a year ago in those accounts.

If housing market where you live in the US is also in a tail spin to the tune of a 21 – 36% range. Maybe you can’t sell your home right now, because there is a lot of inventory for sale compliments of the recent rash of foreclosures homes.

For some, the stock market and housing problems don’t affect their ability to purchase a retirement villa in Ajijic, Mexico.

The asking prices need to reflect the current the market demand (or lack there of). I don’t think housing prices have adjusted to where they need to be in the US or in Mexico for that matter.

So, keep track of what is going on regarding Lake Chapala real estate values.

Just my 2 centavos…

Obviously the 78 million baby boomers in the US will have an impact on both Ajijic Rentals and Lake Chapala homes for sale.

The constants that are unlikely to change much in the foreseeable future is the relatively low cost of living in Lake Chapala, world class medical care in Guadalajara and the world's best weather for retirement as proclaimed by National Geographic.

So if you choose to visit, take a look at Casa Preciosa Ajijic Villa Rental Home. Providing all the comforts of home for your Ajijic vacation stay in Mexico.