In 2023 the Puerto Vallarta/Riviera Nayarit real estate market overall sales volume was somewhat in line with past years. The number of sales transactions completed, however, was down considerably, as shown in the charts below. Sky-rocketing real estate prices are keeping sales volume up while lack of inventory is what’s keeping the number of sales completed, down.
Sales volume was down 6% over 2022, but up slightly over 2021. The overall trend continues upwards.
When looking at the overall number sales that took place, however, sales were down 17%. The market only managed to keep volume up by real estate prices increasing significantly (more on that later).
But there was an interesting addition to the market this year. In past years the real estate market in Mezcales (situated on the other side of the highway from Nuevo Vallarta) has shown none or very few sales. In the first half of 2023 there were none. And then in the second half over 100 sales were reported making up 8% of all sales, more than Marina Vallarta or the Hotel Zone had for the whole year. And all these sales came primarily from one project which is offering condominiums at an average sales price of $165,000, substantially less than the average condo sales price of $424,000. They aren’t beachfront, but they are new, come with amenities, are close to shopping, and cost less than half the market average.
This may be a new trend, a new market, but it throws off the numbers when trying to compare to previous years. For example, if we take these sales out, it doesn’t affect overall dollar volume, it only drops by a couple of percent as they are low-priced units. But when they are removed from the overall number of sales that took place, it drops by 8% and when you then compare this to the previous year, the number of sales taking place actually dropped by 23%. That’s a significant decrease in real estate transactions.
And why such a drop? While there is plenty of real estate currently under development or planned to soon start, the market is experiencing a lack of inventory, especially re-sales and especially in Puerto Vallarta. This is driving prices up and has narrowed the list/sold price spread by the most seen since 2007. The gap today between what a property is listed for and what it sells for is only 4.5%, whereas the industry average historically has been about 8%
As mentioned, there is new product currently under development, but most of it is taking place in Riviera Nayarit where obviously there’s room to grow and land prices are less. In 2017, 70% of sales took place in the Puerto Vallarta region. In 2023 Vallarta accounted for just 53% of all sales while in the third quarter more sales were actually reported in Riviera Nayarit than in Puerto Vallarta (thanks to Mezcales).
Prices jumped considerably last year primarily because of lack of inventory. The average condominium sold for $424,000 in 2023, up 16% over the previous year, and up 116% since 2003. The last time the market saw such an increase was back in 2006.
Over the past six years there has been a steady climb in sales prices, after falling consistently in the previous nine years.
If we look at just a two-bedroom unit, which makes up more than 50% of all condo sales, the trend is very similar.
But the trend is not being distributed evenly. When we look at where the sales have been taking place more and more they are occuring outside of Puerto Vallarta and inside Riviera Nayarit or outlying areas. For years Central Vallarta, south of the Rio Cuale, was the market leader accounting for nearly 24% of all sales in 2017. But since then the number of sales have fallen as it has for over popular market areas such as the Hotel Zone and the South Shore. Marina Vallarta has seen a resurgence in recent years, after being ignored for quite some time. Lately condominiums towers have been constructed, similar to what took place in the Hotel Zone in the previous decade, after managing to get height restrictions lifted.
Two good comparables are Bucerias and Central South Vallarta. Bucerias has the beach and the space and, thanks a lot to Canadian buyers, it now accounts for 14% of the market sales whereas Central South now only makes for 10% of all sales.
The following chart shows how the higher-end price ranges are increasing while it is becoming more difficult to find properties in the lower price ranges. If it wasn’t for Mezcales there probably wouldn’t have been anything available under $100,000. The strong demand for real estate priced under $200,000 probably means we’ll be seeing more of these types of properties, farther from the beach and city centers.
The chart above graphically shows just how prices have increased. It isn’t so much that people are richer and want more expensive properties, it’s that there just aren’t many cheap properties anymore.
Current condominium MLS inventories show that there are more condominiums listed over $500,000 than there are listed between the “sweet spot” of $251,000 - $500,000. And with the average sales price being $424,000 last year, if we look at current inventories, 60% of condominiums are “listed” above this price. “Listed” is highlighted to point out that properties rarely sell at full list price, so this spread would be even greater. Bottom line - prices are most likely going to continue to rise because that’s how inventories are priced.
Although the rise in real estate prices has been steep over the last few years, they are still reasonable compared to other tourist markets back in the USA, in places like Southern California, Florida and Hawaii. The market continues to grow as buyers realize that there’s still good value when compared to other similar markets.
Note: These statistics are generated from the MLS services of Puerto Vallarta and Riviera Nayarit, which do not include all properties that may have sold, but it is certainly the majority. And it does not include Punta Mita, which is a market unto its own.
