Our Year in Review: Real Estate in Los Cabos and South Baja, 2022
Marked by geopolitical stress, crucial elections, doggedly high inflation, and rising interest rates, 2022 posed deep questions to the global real estate industry. As is the case throughout the world, the market in South Baja is transitioning into the kind of activity we were used to before the demand surge that the covid-19 pandemic detonated. However, the pandemic produced several permanent changes, including the shift to remote work, which intensified the desirability of Los Cabos and its surrounding regions. Read on to learn about our market's key trends and data in 2022!
The market in Los Cabos is driven by a highly-desirable lifestyle of which sportfishing is a major component. In the foreground is Pisces Sportfishing's "Happy Ending," a stunning 60' Viking available for charter.
Prospective buyers in Los Cabos, the East Cape, La Paz, and the Pacific are driven by the area’s unique lifestyle. They are looking for a secondary vacation home, a property for immediate relocation, or an investment asset. South Baja, where the weather is warm, the sun shines 350 days a year, and there is easy access from many major American and Canadian cities, is a highly-coveted destination. While not isolated from global macroeconomic and geopolitical trends, our market is moved chiefly by lifestyle, and the bottom line is that supply for properties in prime beach destinations like Los Cabos and its neighboring regions is not keeping up with demand.
Our market is based on strong fundamentals. Real estate that provides an ocean lifestyle is one of the most compelling property segments with international buyers today. As Philip White, president and CEO of Sotheby’s International Realty, recently said, “beachfront homes remain a popular investment for many homebuyers around the world. Searches for properties that offer a waterfront lifestyle on sothebysrealty.com have increased 63 percent year on year.” White adds: “Today’s luxury homebuyer is not just interested in a property’s location, but also one that aligns with their lifestyle. Beachfront properties offer the best of both worlds – stunning views and appealing activities for the family.”
Looking into 2023, we forecast a slightly slower year than 2022 in Los Cabos and generally in South Baja. Nevertheless, our market will not bottom down – it will rather level out. Due to the reasons already mentioned, demand will stay high and inventory will remain limited throughout most categories in the inventory, resulting in stable prices. That being said, the sector of the market that is in the mid-range (below US$1M and above US$300K) has experienced overbuilding recently: supply there is higher than anticipated demand, and prices will likely decrease.
Prospective buyers should know that now is a good time to buy in Los Cabos and South Baja. The main driver affecting demand here is the unique lifestyle the region offers. That is not going to change even if the macroeconomic environment is less dynamic than in previous years. In 2023 we look forward to relatively strong demand, while those who have already purchased properties in the area since the onset of the pandemic will likely hold on to them for some time.
In what follows, we have included a selection of key graphs and tables that provide a panoramic view of our market's behavior in 2022. The data is grouped according to the areas we service: Los Cabos, the East Cape, La Paz, and the Pacific. All data was sourced from Flex MLS.
There is a caveat pertaining to the condos category. Those located in the Cabo Corridor remained on the market 54% fewer days on average in 2022 than they did the previous year. When taking into account the other three zones that make up Los Cabos (San Jose Corridor, Cabo San Lucas, and San Jose del Cabo) the change compared to 2021 is offset to -6% .
The number of condos sold in Los Cabos during 2022 experienced notable differences compared to 2021, especially in the Cabo Corridor (+68%) and the San Jose Corridor (-40%). The changes in Cabo San Lucas (+12%) and San Jose del Cabo (-6.5%) were less dramatic.
Just like it was the case with condos, the most significant changes in the houses category in 2022 when compared to the previous year took place in the Cabo Corridor (+20%) and the San Jose Corridor (-43%), while Cabo San Lucas saw a moderate increase of 16% and San Jose del Cabo experienced no change.
Land listings sold during 2022 experienced considerable differences when compared to 2021, except in the Cabo Corridor where no changes took place. 25% fewer land listings were sold in the San Jose Corridor and 23% fewer in San Jose del Cabo. A whopping 94% more land listings were sold in Cabo San Lucas this year than in 2021.
Except for two months when the average price of houses in the Cabo Corridor rose to, or was near, the US$1M mark, this type of property hovered around US$500K for most of 2022. Condos sold on average at approximately US$300K, but average prices picked up in October and November selling at almost double that figure. The average price of land listings was more volatile throughout 2022: the lowest point was felt in May (US$65K) and the highest in August (US$677K).
The average price of houses in the San Jose Corridor only fell below US$2M in January and November. Condos hovered around US$600K for the first five months of the year, picking up and reaching their highest point in October. Land sold on average at its lowest in February (US$544K) and hit its peak in June (US$2.1M).
Houses in Cabo San Lucas sold at an average price ranging between US$840K and US$1.7M during 2022. The average price for condos ranged between US$329K and US$664K, except for January when the average was uncharacteristically low (US$215K). The average price of land listings varied more markedly during 2022: May was the lowest at US$122K and January was the highest at US$881K.
The average price of houses sold in San Jose del Cabo experienced notable highs and lows during 2022. The zenith was January with an average price of US$2.8M, while April was the nadir at US$418K. Condos were more stable than houses, selling at an average of approximately US$470K. Land also sold at a stable average price of US$461K, except for June (US$947K) and October (US$1.4M).
The East Cape
The number of condos sold in the East Cape increased from just two in 2021 to 19 in 2022. 25% fewer houses were sold compared to the previous year. Land listings accounted for the majority sold: their total was 51% higher than in 2021.
Excluding February, when the average price of houses sold was uncharacteristically high, the yearly average was US$521K. The average price for land listings sold was US$165K, while the one for condos was US$250K (the MLS showed no data for condos for February, July, or November).
The number of condos and land sold in 2022 in La Paz saw no major changes compared to 2021. However, 41% fewer houses were sold in 2022 than in 2021.
Land in La Paz sold at a steady average price throughout 2022 (US$116K). Houses sold on average for US$240K from January to August, after which monthly average sale prices experienced volatility. Condos reached a high point of US$591K in February and declined to US$150K in November.
While land saw practically no change in 2022 compared to 2021, the number of condos and houses sold in 2022 experienced considerable shifts. 57% more condos were sold, while 15% fewer houses were sold.
Having gone over the US$1M mark in August, the average price of houses sold decreased to US$500K in November. The yearly average price for condos was US$323K (the MLS provided no data for May). Average price for land sold in 2022 was US$176K.
Source for charts and graphs: Flex MLS
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