It’s hard to believe that we are already in the last month of the first quarter but despite the negative drumbeat of news coming out of Washington, the real estate market here remains strong with pricing stable and some sellers now starting to reduce pricing according to time on market and urgency to sell, which is good news for buyers.
Compare that to the market in Phoenix where just less than a year ago there would be multiple offers on a property within the first hour of a listing, to today where homes are not moving at all, prices are falling and there is no foot traffic.
While the real estate market has obviously stalled in the United States mostly due to high interest rates the great news here is we have not seen that contagion transfer to Rocky Point. Why is that?
Our real estate economy remains strong for many reasons, but the main reason is that we are a Cash-Only economy meaning no chance of excessively hiked interest rates by corrupt bureaucrats to spoil the party. In the United States, the real estate economy is totally dependent on interest rates and since rates have jumped more than 4% over the last six months it has turned the real estate market upside down and hence the instability in the market, compared to our stability.
Another reason our real estate market remains strong here in Rocky Point is that we are a second-home economy meaning people are buying vacation homes and not principal residences using only discretionary income that they already have. I interpret this as the demand to live here in paradise outweighs or is resilient to the drumbeat of negative economic news coming out of the United States. Those who decide to make the move here purchasing a home, condo or land are using money they already have which keeps the real estate economy chugging along.
Finally, the next reason why our market remains strong despite what is going on in the United States is that purchasing a property in Puerto Peñasco is a great investment when you compare it to traditional investments such as stocks and IRAs. An investment here nets passive rental income much higher than any dividend income received on a traditional investment. The passive income you can receive on rental income can range on average from $50,000 up and over $100,000 a year depending on the location and number of bedrooms. The closer to the beach and the more you can sleep determines how much money you can make off short term renting.
So, to summarize why our real estate economy remains strong is Buyers who are paying cash, using discretionary income, who understand the value of passive rental income returns. They are the reason why our real estate market remains strong and will remain so throughout 2023 and beyond.
If you are looking to tap into our real estate market based on strong economic fundamentals of cash transactions, not affected by interest rates and with strong passive income returns then you need to have a conversation with your local real estate advisor who would be happy to answer any more of your questions or shoot me an email at firstname.lastname@example.org.
About the author: Joseph Sanchez is president of Rocky Point Home Builders a design/build contractor specializing in custom home design, construction and engineered renovations and is also a real estate agent with RE/MAX Legacy specializing in the building and sale of new home developments. He resides here in Puerto Peñasco with his wife and three children and is originally from Chicago. For more information email him at email@example.com .