There has been a considerable amount of media coverage recently regarding top retirement areas for Americans and Canadians, and Puerto Vallarta has received a significant portion of it and in a positive light. That shouldn't be surprising, as Vallarta has been a favorite retirement destination for years, with one of the largest American/Canadian expat communities in Mexico.
Each year International Living and Live and Invest Overseas, two online resources for people looking to move abroad, release the results of their findings regarding the best places to retire. International Living selects by country, and Ecuador, Panama, Mexico, Malaysia and Costa Rica (in that order) made the top five, with Puerto Vallarta prominently featured as a best option for Mexico. Live and Invest Overseas is more specific, and their list of the top 21 best places to retire ranked Puerto Vallarta second, stating, "Its popularity with tourists means there are top-notch hospitals that often accept international insurance, as well as an airport with many direct flights—making it easy for the grandkids to visit." These findings have been picked up and covered by news outlets such as CNN, Forbes, Huffington Post and US News, among others.
Direct flights are wonderful, but so are short overall travel times that allow not only for grandkids to visit but also for grandparents to fly back home regularly. People from California, Arizona, Colorado, New Mexico and Texas can return home from Vallarta in around three hours flying time, while other top retirement places mentioned, such as Costa Rica, Panama, Columbia and Ecuador, are more than six hours away. No popular second-home destination is closer to the USA than Mexico.
Retirement has once again become a favorite media topic as Americans have seen the stock market return to its highs, a rebound in the real estate markets, and an economy that, although not booming, has seen consistent growth over the past seven years, along with a continually declining unemployment rate. Those who saw their retirement years set back in 2008 are now back in the game, ready to make plans for the future. And for some this means finding a place that is warm in the winter and has a comfortable climate, friendly people, amenities such as golf and boating, and, as already mentioned, is not too far from home. An actual pent-up demand has been created for retirement properties, which has already started to materialize in the USA with people taking advantage of low real estate prices, at least in comparison to pre-2008.
Vacation home sales rose 57 percent last year, to 1.3 million properties, well above their most recent peak level in 2006, according to The National Association of Realtors (NAR). In fact, vacation home sales accounted for 21 percent of all real estate transactions last year, their highest market share since the survey was first conducted in 2003. NAR found in a survey that 85 percent of vacation buyers think now is a good time to purchase real estate.
The potential of this pent-up demand is just now starting to take effect in the Vallarta region. It has been delayed over the past few years by an increased interest in renting. Both short- and long-term rentals, at all price ranges, have created the most in-demand rental market in quite some time. And it makes sense for a couple of reasons. First, after the serious losses incurred both in savings and investments and also in home values, retirees or second-home buyers are a little hesitant before making any large investments. Second, renting provides an opportunity to try out different neighborhoods and communities in and around Puerto Vallarta to find a place that will best meet one's lifestyle.
There will come a point, however, when quality rentals will become difficult to obtain. Prices will be driven up by demand, and people will want to have a place of their own where they can keep the golf clubs, the surf and paddle boards, etc., and create a place that reflects their style of living, where their artwork will hang on the walls, where they can decorate and furnish the way they prefer, and where they can better get to know their neighbors.
At a local real estate conference in 2008, I presented the Case-Shiller (above) graph to explain what had created the real estate boom in the region from 2003 to 2008 and why things didn't look so good looking forward. Between 2000 and 2006, real estate in the USA was rising 8 to 15 percent on average, creating a situation where many homes doubled in value over that period of time. Much of that newly found equity was removed, and some of it found its way to Puerto Vallarta, where it was used to purchase a vacation home. After five years of continued negative growth, equity in homes is once again in positive territory, reaching 12 percent growth in 2013 and averaging about 4 percent since then. We are not seeing the incredible growth we saw at the beginning of this decade, but that is a good thing, as we don't need another bubble bursting. But it means that people are once again building equity in their primary homes, which will certainly make the retirement move easier.
At the same time, the stock markets have shown consistent growth for the past six years, providing good returns on family investments, which again allow a less challenging transition into retirement. And odds are that Puerto Vallarta will be one of the top retirement destinations of choice as savings and home equity continue to strengthen.