THE WASHINGTON TIMES
April 1, 2007
Standing on his third-floor patio, overlooking the turquoise blue Pacific Ocean, coconut palms swaying in the gentle breeze, he sipped his Pacifico beer, chuckled and shook his head.
"No, I can't think of a single downside," said Mr. Preston, surveying the comfortable three-bedroom, three-bath home he had built and furnished for less than $100,000. "I feel at home here like nowhere else."
Mr. Preston is a retired Detroit executive with the now-defunct North American Soccer League who helped bring the World Cup to the United States in 1994. He first visited Mexico on soccer business 17 years ago and then started spending winters in Chacala, 60 miles north of Puerto Vallarta.
He and his wife, Nancy Lehocky, are two of the estimated 1 million Americans and Canadians living in Mexico at any given time.
Mexico's laws were revamped in 1994 to make it easier for foreigners to invest in Mexican real estate and buy second homes, creating a building boom as "gringos" from the north flock to the white sand beaches of the south.
Although foreigners still have to negotiate some legal hurdles, the population along the coast is growing -- swelling exponentially after Christmas, when harsh winds, cold and snow rake El Norte and "snowbirds " from Canada and the United States head south for the winter, to bask on the beaches and sip margaritas in the near-perfect weather -- sunny 80-degree days with no humidity and 60-degree nights -- that bless coastal Mexico in winter.
Like the campers currently parked on the beach, Mr. Preston started out in a tricked-out recreational vehicle. And like many U.S. retirees south of the border, Mr. Preston maintains a "summer" home in the United States. But seven years ago, he bought a piece of prime real estate on the hill overlooking the small fishing village and its two scenic bays. He started building three years ago.
"We drive down before Thanksgiving and go back in April or May. But I may spend the summer here this year," he said. "Hopefully, my kids and grandkids will get this someday."
Many second-home settlers first visited for a resort vacation, returned for longer stays in recreational vehicles and then started buying.
"My biggest mistake when I came here 11 years ago was not buying everything I could. If I won a million dollars today, I'd invest it all right here," said Harvey Craig, a fast-talking, retired Canadian tool-and-die maker, reborn as a real estate broker and developer in Sayulita, a booming surfing village between Chacala and Puerto Vallarta.
"I don't know anyone who ever bought property here who didn't make money. ... Moving here was absolutely the best decision I ever made in my life." As a result of Mexico's legal changes that protect foreign investment, the sheer volume and intensity of major and minor construction on the coast, especially along "Costa Vallarta" -- the 100 miles of coastal villages north of Puerto Vallarta to San Blas -- is difficult to fathom.
Dozens of giant billboards line the highways going in and out of Puerto Vallarta -- advertising condominiums for sale, pre-sale offers, luxury oceanfront villas on golf courses -- Nuevo Vallarta, Punta Mita, Marina Vallarta and La Cruz de Hunacaxtle.
The Puerto Vallarta airport is expanding to accommodate the ever-growing number of nonstop jumbos flying in from Alaska, Chicago, New York, Houston, Vancouver, Toronto, Dallas and Atlanta.
Day and night, 18-wheelers navigate Mexico's highways, unpaved dusty back roads, and village cobblestones, filled with concrete, brick, rebar, copper, roofing tiles, and other building materials. Much of it is destined for gated communities filled with second homes, where modest two-bedroom homes start at about $400,000 and increase to $2 million and well beyond. In some places it seems as though every house on every block is undergoing remodeling or add-ons.
The Mexican government recently announced plans to spend millions improving highways and water and sewerage facilities in the region. One of the first projects, a large sewage- and water-treatment facility in Higuera Blanca-Litibu, on the coast between Punta Mita and Sayulita, is under construction. Sayulita's modern new sewage-treatment plant is scheduled to begin operating this winter.
In early February, Front Porch Development Co. in partnership with Mexico firm Grupo Krone, announced it will develop "Luma," an "active adult" retirement community in Nuevo Vallarta, 15 minutes north of the Puerto Vallarta airport. When completed, Luma -- which is being built exclusively for the over-50 set -- will have 400 residences starting at $400,000 and topping out at around $1.2 million.
Not to be outdone, the Related Group Inc. of Miami, the largest builder of luxury condominiums in the United States, announced recently that it would build $1 billion worth of property in Mexico in the next two years, much of it north of Puerto Vallarta. Beachfront condominiums that cost $300 a square foot in Puerto Vallarta would sell for $1,500 a square foot in Los Angeles or San Diego, according to Bloomberg News.
Stewart International, one of several companies selling title insurance for foreign investors, has insured between $3 billion and $4 billion worth of property in Mexico, mostly in second homes for American and Canadian buyers, since 2001.
"Buying property in Mexico is safe, with competent legal counsel and title insurance," said Michael Skalka, chief executive of Stewart International.
And GMAC International Mortgage announced in December that it would be the first U.S. lender to offer 30-year fixed-rate mortgages for second and retirement homes in Mexico, at 8.75 percent.
Housing prices in Mexico are skyrocketing with the building boom.
Two years ago, the cheapest lot in the Marina Chacala gated community next to Chacala cost $100,000. A similar lot today is on the block for $200,000.
"I didn't want to, but I had to buy [my $175,000 town house behind the Puerto Vallarta Wal-Mart] now," said Paul Werner of North Vale, N.J., who has been wintering in Mexico for three years and has watched prices double in that time. "I would not have been able to afford it in three years. They say my house appreciated $40,000 the day I signed my contract."
A beachfront bed-and-breakfast in Sayulita that was bought for $75,000 seven years ago is currently listed for $1.6 million. It is all but impossible to buy a small lot for less than $50,000. And ocean-view lots, even in out-of-the-way places such as Chacala, which two or three years ago sold for $20,000, now start at $60,000 to $75,000. Building a home costs between $60 to $100 a square foot.
Michel Peretiako and Cheryl Watts, of Kalispell, Mont., who spend four or five months each winter in Chacala, rent a room with a bath and kitchen at Casa Concha, a small inn run by Concha Garcia Velazquez, for ethical reasons.
"We'd rather pay a Mexican owner and put our money into the Mexican economy, rather than buying a piece of property or paying the mortgage of some gringo who bought a second home here but lives in Colorado," Mrs. Watts said.
"We know Chacala is going to change, but we come from an area [in Montana] where the locals have been priced out by rich investors. We'd rather see Mexican families make the money, so they can stay here."
Still, the Mexican coast is cheap compared with the U.S.
According to the March-April 2004 issue of AARP magazine, "For 600 bucks a month, retirees in Mexico can [rent] a three-bedroom home, with a gardener. For a cool thousand well, you won't believe it."
Rod Rosile, a California surfer turned real estate entrepreneur, agreed.
"This place will ruin you. It is inexpensive, and the people are so nice. Spend any time here and you won't want to go back," said Mr. Rosile, who has a home in Sayulita and is building another one in Marina Chacala.
With so much construction, like the massive developments going up on either side of Chacala, it feels like a land rush.
"I compare it to the Wild West, only instead of Conestoga wagons, the settlers are coming in RVs," said Mindy Christie, of Modesto, Calif., who retired from 35 years of teaching last year and moved to Mexico.
Mrs. Christie, and her husband, Ralph, a Spanish teacher, sold their home in Modesto last year, but have been renting in Chacala since November. They live on a budget of about $2,500 a month.
"We did not want the stress of homeownership in Mexico, and for what we are renting for, it made sense for us," said Mr. Christie, occasionally glancing up to check the score of the Florida-Vanderbilt basketball game on ESPN, beamed to his living room by satellite.
Instead, they have the stress of heavy trucks constantly lumbering by out front and construction on three sides of their rental home.
"We came down here expecting to read and write and relaxing in a small, quiet Mexican village, but Chacala is on the edge of a boom," Mrs. Christie said.
Mr. Christie's only criticism about Mexico: It is hard to find "decent wine" beyond Chilean in the $10 to $15 a bottle range.
Some expats complain about Mexico's "manana" culture. Foreigners quickly learn that when a Mexican says he'll do it "manana," it does not mean "tomorrow," it just means "not today."
Others don't like the culture of petty corruption and bribes. For example, the traffic police are poorly paid, and it is standard procedure to slip the cop who has pulled you over $20 or so, to get out of a traffic ticket.
But most go with the flow.
"It is Mexico. It is a different country. If you don't like the way they do things, don't come," Mrs. Watts said.
Mrs.Watts and Mr. Peretiako are regularly invited to Chacala weddings and baby christenings.
"We know Concha's nieces and nephews and sons, her whole family," Mrs. Watts said.
She and her husband, who have traveled all over the world, said that based on seven winters in Chacala, she finds the Mexican people are warm and welcoming.
"I wish Americans treated Mexicans as well as Mexicans treat Americans," she said.
Mr. Craig said relations between Mexican locals and newly retired Canadians and Americans who have transformed Sayulita are excellent.
"There may be some resentment, but most Mexicans seem to be very happy with the changes. This was a very poor village 25 years ago and a lot of locals have made a lot of money with the influx of gringos. Look out on the streets, there are a lot of expensive new trucks being driven by Mexicans out there," he said.
Expatriates do not seem too concerned that Mexico might elect a socialist president, like Venezuelan President Hugo Chavez.
"You know what, I looked at [the political situation in] Venezuela before I bought. They don't know if their property will be taken," said Jim Campbell, a retired computer executive from Boston who recently bought a home in Sayulita.
"What if [Andres Manuel Lopez] Obrador, rather than [Mexican President Felipe] Calderon had won, I thought about that. But I think Mexico is too far along, oil, American tourists, too integrated into the U.S. economy to go the way of Venezuela. NAFTA and globalization make that unlikely," he said.
The Mexican government has no desire to interrupt the flow of tourist and retiree dollars from the United States.
"At the Mexico Tourism Board, we are focused on travel to Mexico, not precisely promoting real estate, but we have discovered a lot of interest in that area," said Eduardo Chaillo, Mexico's tourism director for North America, noting that tourism, after oil, is Mexico's second most important economic engine, at about $10 billion a year.
"We are focused on the 50-plus market, the baby-boomer segment, not kids and spring breakers. We are conscious of the power of the money that baby boomers have."
AMERICAN STYLE LIVING
Mr. Campbell, who retired 14 years ago from Data General in Westborough, Mass., recently bought a three-bedroom, 2-- bath home two blocks from Sayulita's surfing beach.
"I resolved when I left Boston that I'd never live in that climate again," Mr. Campbell said. He spent a few years in California before settling in Santa Fe, N.M., and now Sayulita.
"Feel that breeze. It would be 95 degrees in Oaxaca by now. The climate is wonderful, less tropical than farther south. It is the same time zone as Santa Fe. It is a new house, totally furnished. There was a clear title the light just went on," he said.
He noted that Puerto Vallarta, just 35 minutes from Sayulita unless slow-moving construction trucks clog the two-lane highway has a Sam's Club and Wal-Mart, for American-style shopping.
Mr. Campbell said he and his wife are still trying to figure out if they need to buy a car, and if they want to wire the house for high-speed Internet. His XM Satellite receiver works, and he is using his American cell phone and local Internet cafes to keep in touch with his family and read the daily newspapers.
Being 67 and having some health concerns, Mr. Campbell said he researched local health care facilities before taking the plunge.
"Puerto Vallarta has two American-style hospitals with American-trained doctors. There is a nice medical facility in [the next village up the coast at] San Pancho. And if needed, I can always jump on an airplane back to the United States," he said. "I've had no buyer's remorse at all."
The Christies echoed that sentiment.
"I saw a cardiologist in Puerto Vallarta last week. She was American trained and spent 45 minutes with me. It cost $50. I'd trust her in any situation. You rarely get that kind of attention in the United States," Mr. Christie said.
Mr. Campbell said while American newspapers are filled with Mexico's crime and drug problems, he feels safe.
"There may be problems in some of the border states, but I feel safe walking around Sayulita after dark," he said.
Mrs. Watts in Chacala agreed.
"I feel much safer in a Mexican bus station than I ever would in an American one," she said. "The people [at home] concerned about safety in Mexico have never been here."
As for water, many of the communities along the Pacific Vallarta coast are putting in new water and sewage plants, and expats as well as Mexicans in Chacala and Sayulita said they "could" drink the water from the tap, but most stuck with bottled water.
"We drink bottled water here, just like we do in Canada," said Mr. Craig, who is a central character in the recently published "Gringos in Paradise" written by Barry Golson, a former "Playboy" and "TV Guide" publishing executive, whose new book chronicles retiring and building a house in Sayulita. Retirees said their family and friends were horrified that they were retiring to Mexico. But they were beginning to change their minds. "Everyone we know thinks we are crazy," Mr. Werner said.
The Christies agreed.
"My 86-year-old mother was aghast. Most of our friends thought we were out of our minds, but they'd never been here," Mrs. Christie said. "Now they are coming to visit and cannot believe how wonderful Mexico is."