Home buying heats up south of the borderMore lenders attracting U.S. borrowers with ARM productsBy Tom Kelly, Wednesday, June 25, 2008. Inman News The cold U.S. housing and mortgage markets have lenders looking for warmer possibilities, and a few are sending more efforts to finance Americans looking to purchase primary residences and second homes south of the border. New York-based Lehman Brothers Resort Home Lending (1-866-233-4799) will enter the market in a big way, offering U.S. consumers mortgage packages this year in Mexico and Costa Rica, beginning July 1. The company plans to offer borrowers in Canada and the United Kingdom similar loan programs in Mexico and Costa Rica by the end of the year. The programs, featuring one-, three-, five- and 10-year adjustable-rate mortgages amortized over 30 years, also will be available in the next year to U.S. borrowers who wish purchase in the Bahamas, according to Lehman Brothers. The company also is targeting the second-home market in Canada, the United Kingdom, Panama and the Dominican Republic, but specific roll-out dates were not released. GMAC was the first national lender to introduce a 30-year, fixed-rate product south of the border but pulled out of Mexico late last summer when the U.S. mortgage market meltdown began to influence international partner companies. Lehman Brothers purchased some of GMAC's Mexico back-office operation late last year. Wachovia Bank also has launched a program that enables the bank to purchase vacation-home loans made in Mexico. The vacation-home origination process is designed to look and feel like the loan origination practices in the United States, according to Wachovia. "Having the support of a successful U.S. bank like Wachovia really speaks to the strength of the vacation-home market in Mexico," said Joe Schneider, project administrator for Cascadas de Manzanillo, a 530-acre planned-unit development on Santiago Bay just north of Manzanillo, Mexico. How have Americans financed second homes outside the United States? Traditionally, it was get out your line-of-credit checkbook, add any savings you could muster, and then pray that the seller would "carry the paper" until you found another way to refinance the balance. Bryant said the company will scrutinize builders and developments in specific destinations. For example, Lehman Brothers will focus on waterfront and view communities in Mexico's Riviera Maya, Los Cabos and Puerto Vallarta. Anaheim, Calif.-based World Wide Lending LLC, which plans 20 locations in Mexico, has begun to list its approved developments on its Web site. It plans to utilize a broker network throughout Mexico while Lehman Brothers will have retail sales relationships inside each approved development. Chris Stopp, a broker for Sacramento-based MexUs Capital, said his goal is to provide a menu of attractive loans to not only second-home recreational buyers but also for retirees and sophisticated investors. "The variety of people coming to Mexico to live part time or full time continues to increase, and their needs are different," Stopp said. "We want to offer them an American transaction in a development they will enjoy for a long time." Interest rates on Mexican loans are nearly 2 full percentage points higher than those in the United States because there has been no competition in the secondary mortgage markets or with Wall Street capital markets to purchase the loans as securitized assets. Once the loans become more attractive and marketable to investors, interest rates will drop, according to financial analysts. The Canadian offerings could provide an attractive option, especially with the 2010 Olympic Games in Vancouver just around the corner. Retirees and aging baby boomers "from the states" are drawn to Canada for its wonderful skiing, health care, bargain medicine, terrific sailing and clean air, but the numbers of second-home buyers and older full-time residents have not been as attractive to lenders as the pool of thousands of snowbirds who head south to Mexico and Latin America. Americans can borrow from Canadian banks and vice versa. But trying to finance Canadian property with U.S. funds becomes difficult. Location, security in the property and the ability to enforce simply make the package unattractive to most U.S. lenders. Lehman Brothers is willing to gamble that it can make cross-border lending work, and that the number of Americans buying in Canada -- and elsewhere -- continues to rise. Christopher ReynoldsLos Angeles Times Apr. 4, 2008 06:52 PM PUERTO PEÑASCO, Sonora - Once, it was enough to be Arizona's beach, a nice wide patch of south-of-the-border shoreline where college kids could camp out and drink too much.
But now, Puerto Peñasco wants to be more. In less than a decade, more than three dozen condo towers have risen in the Sandy Beach area, surrounded by ever-widening waves of upscale vacation Click Here For Full Article: The LA Times features Penasco this month "AT PUERTO PENASCO, MEXICO THE VIBE IS UP AND COMING" | The Los Angeles Times featured Puerto Penasco in January as an affordable alternative to other Mexico destinations but still offering many of the same ammenities and activities. The author does a great job quantifying the rapid change the town has seen in the past decade while creating a positive image of Rocky Point as compared to places like San Felipe and Los Cabos. To read the full article, click here. |
Puerto Penasco's Economy Continues to Grow | CANACO, Mexico's System of Local Chambers of Commerce and Development issued their year end report with nothing but praise for the local economy going forward. "It was a positive year for the growth and development of the economy of Puerto Peñasco, we were the hosts of the most important event in the history of this port, the meeting of the border state governors. It was a huge success and received publicity worldwide, publicity that would have cost the Chamber of Commerce millions of pesos but was completely free," said Arturo Rodriguez Rico, President of the National Chamber of Commerce. "[W]ith the new infrastructure next year we expect tourists from California and Colorado, as well as people that will come by air on new commercial flights. So we are expecting a sudden increase to the economy since Puerto Peñasco is an excellent destination," he continued. To view the complete article from De Frente, click here. |
INVESTMENT OF 400M PESOS PROJECTED FOR PENASCO INFRASTRUCTURE Money to go twoards improvements in roads, electricty and water in 2008 | Mayor Heriberto Renteria Sanchez is designating an unprecedented amount of funding to continue improvements in Puerto Penasco's infrastructure for the coming year. The majority of the funds will go towards continued improvement of the city's boulevards and avenues as well as their adjacent sidewalks. In addition, funds will be put to work in the Old Port area and local schools. To read the complete article in De Frente, click here. |
Traveling to Rocky Point? Some changes in travel to be expected: |  BORDER CROSSING CHANGE - If you're traveling to Rocky Point after January 31, when re-entering the U.S. you are now required to present either a valid U.S. Passport, or a valid government issued photo I.D., such as a driver's license, plus proof of citizenship, such as a copy of a birth certificate. Also, beginning February 1, you may begin applying for the government's new Passport Card for land border travel, which will contain an "radio frequency identification chip (RFID)" and will have the same validity as a passport book. For more information click US Passport Card. For those of you wishing to check border crossing traffic ahead of time, the government provides regular updates here: Border Wait Times (scroll down to Mexico Ports of Entry: Lukeville). SONOYTA DETOUR - There is a brief detour in Sonoyta as the town works to improve road conditions. The detour is short, and well marked as it travels behind the Arizona Grocery to meet back up with the main road south to Rocky Point. And watch your speed through Sonoyta, on our last few trips we have noticed a number of police officers on foot with radar detectors looking for speeders. IN PENASCO - In August the city began an ambitious road paving plan to upgrade many of the town's main thoroughfares. A total of nearly $2.5 million is being spent on this project which is expected to be completed in April this year. For more details, click here. |
NEW INTERNATIONAL AIRPORT RECEIVES FIRST PRIVATE FLIGHTS Governor's Border Conference Attendees Use New Runway |  For those of you who hadn't heard, Puerto Penasco's new international airport was briefly open for business as September's Border Governor's Conference brought in political VIP's from around Mexico and the U.S. The runway has been completed and striped and handled numerous private jets during the conference. The airport is scheduled to begin full commercial operations in the first quarter of 2009. For more information and to view a slide show of the completed runway, click here. In addition, Aeromexico began running flights from Los Angeles (LAX) three times per week to Rocky Point's current municipal airport, opening up Penasco even further to the Southern California market. |
Jan. 18, 2008, 9:15AM
Puerto Peñasco is a resort for the future
By DAVID HENDRICKS
San Antonio Express-News Puerto Peñasco, Mexico This fast-developing resort area, on the eastern shores of the Sea of Cortés in the Mexican state of Sonora, is Arizona's beach. But not to worry. Texans are welcomed, too. Many American visitors refer to Puerto Peñasco as Rocky Point, its English translation. The name in either version refers to a Gibraltar-like rock outcropping that punctuates two long stretches of beach. Whatever the names, the area resembles Cancún of 20 years ago, especially the way Puerto Peñasco's line of towers stretches several miles west of the city. This resort zone is known as Sandy Beach. The economic model for Puerto Peñasco differs significantly from Cancún's, however. Whereas hotels catering to one-time or occasional tourists dominate Cancún, Puerto Peñasco's developments are entirely condominiums owned by frequent repeat visitors. Puerto Peñasco, if nothing else, is a reflection of Arizona's rising prosperity. The town is only 62 miles south of the Arizona-Mexico border, and if Arizonans were not grabbing up condos, Puerto Peñasco no doubt would remain the isolated fishing village it was before the resort boom began. Puerto Peñasco's condo model is working. Indeed, developers cannot seem to build condo towers fast enough. An 80-year master plan already has been designed for the five miles of Sandy Beach that envisions more condo towers, a golf course, neighborhoods of second homes, commercial strips and even senior housing. The shore's most luxurious resort, the Mayan Palace, operates several miles away, but it plans to expand, too. All this glitz surrounds a Mexican city of only 45,000 residents, a community that doesn't even have a movie theater. That will change, however. To accommodate the resort growth, an international airport will open in 2009. A water desalination plant is planned to supplement the current underground water supply. A new highway now under construction will connect with Southern California and will increase the tourism demand. A Wal-Mart is coming, too, just as in Cancún. Tourists do not have to be condo owners to visit Puerto Peñasco. The condos are rented out on dates when the owners are away. On our trip, travelers from as far away as New York City joined us at the 228-unit Sonoran Sun resort. Because the condos have kitchens, refrigerators, balcony dining tables and washer/dryer units, a first stop is usually Puerto Peñasco's lone grocery store, Super Ley. Once the kitchen is stocked and the luggage unpacked, visitors can concentrate on wonderful beaches and sprawling resort pools. The condo economic model makes Puerto Peñasco perfect for families with small children. The resort managers, though, have struggled to make this happen. At one point, Puerto Peñasco was popular for wild spring-break crowds. To subdue partying, resorts now generally enforce a 25-year-old age limit for condo renters. Exceptions are made for couples younger than age 25 wanting to be married and/or spend their honeymoons in Puerto Peñasco. English is readily understood throughout the city and the resort zone. The U.S. dollar is the dominant currency. Visitors can even receive U.S. currency in change instead of pesos. The Sea of Cortés is wonderful at Puerto Peñasco. Clear and turquoise, it's distinctive because of wide tidal swings. The shore will be 40 yards farther from a resort at sunbreak from where it was the afternoon before, because of the shallow seabed. Although sunset cruises, deep-sea fishing, snorkeling, parasailing and banana-boat rides are available, the Sonoran Sun beach and hotel pool were fabulous enough. As easy as it would be to forget you are in Mexico, it would be just as much a mistake. We made sure to escape the fantasy resort world by dining for lunch at a Puerto Peñasco taquería and dinner at a seafood restaurant beneath the Rocky Point lighthouse. Dining one evening at the Old Port, also known as La Choya, is a must. We enjoyed a spectacular sunset, fireworks launched from sunset cruise ships, the view of the night-lit resort towers along Sandy Beach and tasty fish. Only 18 percent of the city's streets are paved, but there are plans to pave the high-traffic streets. David Hendricks is a San Antonio Express-News business columnist. E-mail dhendricks@express-news.net. To read the full article and get editorial information click on the link above Mexican Housing Booms Despite US CrisisAP Posted: 2008-01-20 13:31:40 MEXICO CITY (AP) - In her bustling corner real estate brokerage, Ana Laura Pulido is doing her best business in years, enjoying a sort of Mexican immunity from the U.S. housing crash. "It's a time of hope," said Pulido, who has sold hundreds of homes to middle-income families since 1992. "The buyer today is more aware. People buy with more ease. They can plan long-term." Long thrashed by swings in the U.S. economy, Mexico now boasts a thriving housing sector whose record growth leads Latin America - a sign of increased economic stability and an outlet for investors looking to escape the U.S. downturn. Giants including the California Public Employees Retirement System, the largest U.S. public pension fund, are already bankrolling projects in Mexico, where they see "more bang for the buck," said Clark McKinley, spokesman for CalPERS, which has invested more than $300 million in Mexican real estate funds. The trend could even slow emigration from Mexico, by generating millions in jobs and personal savings as a fresh supply of loans gives many their first chance to own a house. President Felipe Calderon has set a national goal of a million new mortgages a year by 2010. On Monday, he unveils a set of measures to ensure growth continues, with plans to boost Mexico's small resale market and combat the urban sprawl that has begun to carpet valleys with hundreds of thousands of matchbox rowhomes. Behind the boom are six years of economic growth and stability, and a national shortage of 6 million dwellings. While interest rates are falling, just 6 percent of Mexico's 25.7 million homes are financed with mortgages - compared to about 67 percent in the U.S. Most Mexicans inherit their homes, buy them with cash, or build them by hand. That pent-up demand in a nation of 108 million means lenders can be choosy, enforcing strict standards that held delinquency rates below 4 percent in third quarter-2007, compared to 5.6 percent in the U.S. "Mexico is in the early stages of expansion," said Juan P. De Mollein, managing director for Latin American structured finance at Standard & Poor's. "There are still plenty of points for evolution because there's still plenty of demand." In the U.S., lenders looking to expand their portfolios granted risky mortgages to borrowers with weak credit, but in Mexico, that "subprime" category doesn't exist, because lenders don't need it to grow. Also, few Mexicans flip homes or refinance mortgages, keeping the market stable. "Mexico doesn't have a credit issue. We can still choose our borrowers because demand is so great," said Mark Zaltzman, chief financial officer at Su Casita, one of Mexico's largest mortgage lenders. A recession north of the border could choke U.S. investment in Mexico, curbing job creation, discouraging new homebuyers and stalling housing growth. But that won't likely lead to mass layoffs and defaults, said Rafael Amiel, managing director for Latin America at the financial consultancy Global Insight. Mexico simply has too much room for growth, and expanding local markets have insulated it somewhat from U.S. downturns. Housing demand could swell more as migrants are pushed home by the souring U.S. economy and crackdown on illegal immigration - generating four new jobs for every home raised, said Carlos Gutierrez, Mexico's housing policy director. All this represents a major change from 1994, when Mexico devalued the peso, sending inflation and interest rates soaring, forcing homeowners into default and pushing banks to the brink of collapse. Credit was so tight that most Mexicans paid cash upfront or constructed their own homes, often adding one room at a time. Since then, Mexico has seen a housing recovery built on a mix of government initiatives, private investment and a winning gamble by a new group of entrepreneurs who took a local approach to mortgage lending, using knowledge of family and neighborhood connections to make sure loans got paid. Rather than build public housing, the government restructured mortgage-lending laws, setting stricter credit guidelines, standardizing appraisals and urging lenders to raise cash on financial markets. It also overhauled Infonavit, a public agency that grants more than half Mexico's mortgages, funded by a 5 percent payroll tax. Some 20,000 jobs were outsourced as the agency more than doubled new loans to 458,700 in 2007, director Victor Borras said. When commercial banks ran for the border, a new kind of lender stepped in, known as "sofoles" for the Spanish acronym of "limited financial association." Taking advantage of Mexico's tight family ties and government credits, these nonbank mortgage lenders set up neighborhood offices, required relatives to co-sign loans and collected late payments door-to-door, proving profits could be made. Banks have since returned, and blossoming competition drove average 15-year mortgage rates to 12.5 percent in November - a deal in Mexico, where rates topped 65 percent in 1995. Construction is booming too, as just 30 percent of new homes were self-built by their owners last year, down from 50 percent in 2004, Gutierrez said. While big banks target higher-income borrowers, sofoles are now pioneering mortgages for street vendors and taxi drivers, who work in the huge informal economy without documented salaries or credit histories. Sofoles study spending habits to establish their income, offering trial payment periods to prove borrowers can afford payments on entry-level homes that range from $17,000 to $37,000. Another huge potential market is the estimated 11 million Mexicans in the U.S., who can now buy "cross-border" mortgages to pay off homes in Mexico, giving them more control over the earnings they send relatives and cutting the time they need to work in the U.S. to build a future back home. Even as home lending soars, overall debt remains low, making a Mexican credit bubble unlikely. Major mortgage insurers, including U.S.-based AIG United Guaranty and Genworth Financial , now back Mexican loans, slashing risk and making it easier for lenders to bundle and sell debt to investors as mortgage-backed securities - raising capital to grant yet more loans. Nearly $5.8 billion of these securities have been sold since 2003, offering investors an alternative to tumbling U.S. markets and giving Mexico's nascent pension funds, which have relied on lower-yielding government bonds, a place to store assets long-term. Mexico's housing sector is still full of risks, including land ownership disputes, infrastructure delays and limited access to water. The emphasis on private building has concentrated developments in wealthier states, while masses of poorer people still live on dirt floors. Even so, millions of first-time homebuyers now have an asset to leave their children, or to use as collateral to finance future spending, fueling growth. "I always had in my head that the only thing you can give your kids as inheritance is an education and a house," said Antonia Correa. The 37-year-old receptionist paid $7,200 down on a three-bedroom stucco townhouse in a sprawling new development in Cuautitlan, outside Mexico City. "You could be short on things," she said. "But a roof is the best. It's your world, your home." The reality of Rocky PointFrom growth to ownership of land, Americans labor under 5 key myths about the areaDec. 16, 2007 12:00 AM Thousands of Arizonans who have purchased real estate in or frequently visit the booming vacation town of Puerto Peñasco (Rocky Point), Mexico, experienced leftover turkey indigestion the Sunday after Thanksgiving when reading The Arizona Republic's front-page article about a disputed piece of land known as North Beach outside Puerto Peñasco ("Prime deal, prime debacle," Nov. 25). Could it be they were in danger of losing the condo, home or land they had purchased there because of corrupt dealings? A couple of quick phone calls to their local Puerto Peñasco developer, real-estate agent or lawyer confirmed for them that, in fact, their dream vacation home or condo was safe and their children and grandchildren would be able to continue to enjoy sunsets for many years on what is affectionately known as "Arizona's beach." For others who have not yet had the opportunity to enjoy Puerto Peñasco or buy Mexican beachfront property, the article raised more questions than it answered about the safety and security of making an investment in our neighbor south of the border. Although the article documented a serious situation that is affecting a small group of real-estate investors (both Mexicans and Americans), this land-ownership dispute is an isolated incident similar to ones that arise in the United States from time to time. It does not affect the safety and security of American real-estate holdings in other parts of Puerto Peñasco. Puerto Peñasco, in fact, has experienced unprecedented growth over the past 10 years, with developers successfully building and selling such resorts as Puerta Privada, Las Palomas and the Sonoran Resorts. To date, several thousand condominiums worth an estimated $2 billion or more have been sold or are close to delivery in Puerto Peñasco. Larger developers from other parts of Mexico, Spain and the United States have begun planning for the next stages of Puerto Peñasco real-estate development, and new development areas such as Las Conchas Resorts are being master planned for building over the next 25 years. In this day of increased rhetoric and misinformation about Mexicans and Mexico, it would benefit us Americans to take a little time to separate the facts from the myths about Puerto Peñasco: Myth No. 1
Americans can only lease real estate in Mexico.
In 1993, in order to make its real estate more attractive to foreigners, Mexico passed laws to protect American and other foreign real-estate investors by allowing us to own condos, homes and land in Mexican coastal towns through a bank trust. A Mexican bank (all of which are now owned by large European, U.S. or Canadian banking conglomerates) holds the real estate in a trust, while the American acts as the sole beneficiary, enjoying all the same rights of ownership they would in Arizona. This bank trust lasts 50 years and then is renewable indefinitely and transfers to the beneficiary's heirs when he or she passes. Myth No. 2
The Mexican government might take away my land.
This is the last thing Mexico wants. The Mexican government has been doing everything it can over the past 15 years to promote tourism and American investment in Mexican real estate. Tourism and foreign real-estate investment is now the second-largest contributor to the Mexican gross domestic product behind oil - and, unlike oil resources, U.S. investment in Mexico is growing rapidly. The Mexican government is expected to zealously protect this important revenue stream and continue to strengthen real-estate laws and protections for foreigners. In fact, Mexico's real-estate laws are now friendly enough that large U.S. lending institutions such as GMAC, GE and Citibank are willing to provide mortgages to Americans for real-estate purchases in Mexico, and title insurers such as Stewart Title and First American Title issue U.S. title insurance on Mexican real estate. Myth No. 3
The growth of Puerto Peñasco has ended.
Although Puerto Peñasco has experienced the residual effects of the slow Arizona market, its fundamentals have remained strong. The resort town is only beginning 25-plus years of stable, sustainable growth fueled by the wealthy, retiring U.S. baby-boomer generation and the population boom in Arizona and the U.S. Southwest. The lull Puerto Peñasco is experiencing in the new condo sales market has been felt much less in the resales market, and most agree it has been healthy for the local economy. Developers and the Sonoran government have had a chance to catch their breath and start implementation of the commercial tourism infrastructure necessary to continue the transformation of Puerto Peñasco into a world-class vacation destination. The spas, restaurants, golf courses, nightclubs, shopping and transportation that have long been planned are now being built. And the Sonoran and city governments are refurbishing city fresh-water wells, increasing electrical capacity and improving roads. Transportation infrastructure also is expanding rapidly with a nearly completed coastal highway to California, new Aeromexico flights between Los Angeles International (LAX) and Puerto Peñasco and the soon-to-be-opened Puerto Peñasco International Airport. Best of all for Arizonans, the Lukeville border crossing is slated for expansion this coming year, which should dramatically cut down on waiting times to cross back into the United States. Myth No. 4
Political instability and the Mexican economy make an investment in Mexico unsafe.
Mexico is experiencing a sustained period of economic growth and increasing prosperity amid political calm. In 2006, Mexico elected President Felipe Calderón, a pragmatic, Harvard-educated politician, to continue Mexico's, business-friendly economic policies. During his first year in office, he has built consensus in the Mexican Congress and has quelled political strife by taking the lead on solving some of Mexico's most pressing issues. Mexico is experiencing strong job growth, and its economy continues to expand at a rate of 5 percent per year with low inflation. The country also has escaped being directly affected by the subprime-lending woes experienced in the United States because of its much tighter consumer-lending standards. In September 2007, Calderón visited Puerto Peñasco to pledge his federal government's support for its tourism growth. Myth No. 5
Puerto Peñasco is unsafe for Americans.
The real-estate boom in Puerto Peñasco has created one of the lowest unemployment rates in Mexico, so low that developers must bring most of their workers in from other parts of the country. This has led to low crime rates. Americans can wander the streets and beaches of Puerto Peñasco day and night. Many Americans are surprised to find how welcoming the residents of Puerto Peñasco are, despite us sometimes imposing on their quiet lifestyles. Although Americans should always take the proper precautions, as they would traveling in any U.S. city unknown to them, they are no more likely to be a victim of crime in Puerto Peñasco than in Phoenix, Scottsdale or Tucson. It is estimated that in the course of a year, more than 1.6 million visitors travel to Puerto Peñasco to safely enjoy its beaches and fine seafood. Americans can enjoy a secure and potentially profitable investment in Puerto Peñasco that will last for generations to come. I encourage everyone to take the time to learn more about Arizona's beaches. Paul P. Kingsley is a member of the Puerto Peñasco Destination Group, an association of real-estate developers and professionals committed to promoting sustainable growth there. Kingsley, a resident of Phoenix, writes a blog covering real estate, tourism and business at www.puerto penascopost.com. |