Real Estate prices plummet in Culiacán due to escalating violence, with values dropping as much as half a million pesos
Real Estate Market in Sinaloa Faces Challenges Amidst Drop in Home Sales
The real estate market in Sinaloa, Mexico, is currently grappling with a significant drop in home sales, according to the National Housing Agency (Canadevi). In the state capital, Culiacan, and the rest of Sinaloa, the drop in sales has reached up to 70%, meaning that only three homes out of every ten that were sold are currently being sold.
This decline in sales has also impacted the financial sector, with banks in Sinaloa seeking to avoid an increase in their non-performing loans. The banks' actions are not related to the housing developers' price reductions or promotions but rather a "red flag" on Sinaloa.
Daniel Feliz Teran, the president of Canadevi in Sinaloa, made these statements. He also revealed that only apartments and houses between 1 and 1.5 million pesos maintain some demand in the Sinaloa market. The rest of the market is stagnant, with the situation leading to a decrease in demand for homes valued above 1.5 million pesos.
To revive the market, some developers have implemented a strategy focusing on higher-value properties. They are offering promotions and down payments of up to 500,000 pesos, but the properties are still worth over 4 million, 4.5 million, or 5 million pesos. This strategy aims to attract buyers to a market facing challenges due to insecurity and banks' caution in granting mortgage loans.
The price reduction is due to a sharp decline in developers' activity for almost a year, largely attributed to the wave of violence. Access to financing for buyers in Sinaloa has been further complicated due to bank actions, tightening mortgage loan requirements.
Environmental regulations also impact supply by restricting illegal or environmentally harmful developments, limiting unchecked expansion, particularly in coastal or protected areas nearby. This can reduce supply growth and, in areas with steady or growing demand, contribute to price increases.
Mexico's overall stable macroeconomic environment supports consistent demand in real estate markets, including regions like Sinaloa. However, local factors such as property taxes (generally low nationwide) and market liquidity affect buyer incentives and transaction speed.
In summary, real estate prices in Sinaloa rise when demand exceeds supply, influenced by demographic, economic, regulatory, and external financial factors. Environmental constraints and market dynamics ensure supply does not grow unchecked, thus affecting pricing trends in the region. The current challenges in the Sinaloa real estate market are a result of various factors, including the drop in sales, tightened bank requirements, and the developers' strategy to attract buyers with promotions on higher-value properties.
- The drop in home sales in the real estate market in Sinaloa has also affected the financial sector, with banks seeking to avoid an increase in their non-performing loans.
- Daniel Feliz Teran, the president of Canadevi in Sinaloa, stated that only apartments and houses between 1 and 1.5 million pesos maintain some demand in the Sinaloa market.
- To revive the market, some developers have implemented a strategy focusing on higher-value properties, offering promotions and down payments of up to 500,000 pesos.
- The sharp decline in developers' activity for almost a year is largely attributed to the wave of violence in Sinaloa, resulting in access to financing for buyers being further complicated.
- Environmental regulations in Mexico impact supply by restricting illegal or environmentally harmful developments, potentially contributing to price increases in certain areas.
- Despite the challenges in the Sinaloa real estate market, Mexico's overall macroeconomic environment supports consistent demand, but local factors like property taxes and market liquidity can affect buyer incentives and transaction speed.
