From what we are told, sales of previously owned homes in the United States are at their lowest rate in 13 years, while the average sale price for a home in the US has risen in just the last three years from around $374,500 to around $513,400 today.
While I’m not an expert in this field and there are many factors to consider, I believe that one of the main reasons why so few homes in the US are being sold today is because so many people who would otherwise sell their home have a 30-year mortgage around 3% so if they were to sell their existing home and buy a new one, they would have to give up their existing 3% mortgage and get a new mortgage at around 7.9%.
Here’s an example. If an average person (let’s call him Joe) purchased that $374,500 home with a 3% mortgage and a 20% down payment three years ago, Joe’s monthly payment would be $1,263. If today, Joe sold his home and then, the next day, he purchased it back at its new price of $513,400 and had a 7.9% mortgage with 20% down, Joe’s monthly payment would be $2,985 for the same house.
No wonder there are so few people willing to sell. If Joe sold, using the example above, his monthly mortgage payment for the same home would more than double.
So, lots and lots of “Joe’s” are not selling, even though the average house for Joe has gone up in value almost $139,000 in just three years. It makes sense for Joe to hold on to his 3% mortgage on his existing home. Some Joe’s may even feel “trapped” in their own homes.
Maybe you feel like Joe.
However, what if I told you that there was a great way to get out of that trap, and even help to finance the lifestyle of your dreams with the great gain in the price of your house but without having to pay more for an equivalent house?
Would you be interested?
Here’s how: take the gain from the US housing market and buy or rent a house outside the US housing market, where prices are lower.
Perhaps you may consider living in the Mexican housing market, where I live.
Of course, it is extremely difficult to compare “apples to apples” houses in the US with houses in Mexico. I can, however, tell you that house prices in Mexico are a less than in the US.
A lot less.
For example, the house I’m sitting in now while I’m writing this has a gorgeous view of the Sea of Cortez. (You can see my view to the right.). Compared to a house with a gorgeous view of the Pacific Ocean in Southern California, I could buy perhaps six or seven of the houses I’m sitting in now in Mexico. Of course, I don’t need half a block of houses for myself, so I get to keep all that money for the houses other than my own and use it for my lifestyle.
That’s a lot of money.
The same is true in the Mexican Highlands, in places like Lake Chapala / Ajijic, San Miguel de Allende, Mexico City, Queretaro, and many, many others. It’s also true in beach towns such as Puerto Vallarta, Mazatlán, Cabo San Lucas, Cancun and Tulum, to a greater or lesser extent.
Rich Varney, one of the top real estate salespeople in the very popular and very nice expat area of Lake Chapala (best known town: Ajijic; picture to the right) which has close to perfect weather year-round, tells us: “In this market, a nice three bedroom, three bath home
with a view of the lake in a very nice, gate-guarded area, may run around $385,000.” Is this ridiculously low? No, but it’s a lot less than in the US for equivalent properties. (As a point of comparison, the average sale price for a house in California is $747,000 and the house Rich was using for an example is a lot nicer than the average California house. Rich has dozens of YouTube videos showing exactly this.)
And that doesn’t take into consideration the cost of property taxes. While each state in the US is different, that average-priced house located in Southern California may run the owner about $9,320 per year in property taxes. Compare that with the house Rich referenced above that may have property tax of about $400 per year. (Not per month; per year.). If Joe buys that house from Rich at Lake Chapala, Joe gets to put that $8,820 difference in property tax he didn’t have to pay for property tax in the US in his pocket, each and every year. (It starts to add up after a while. In five years, Joe would have an additional $44,620 in his pocket, and in Mexico, that can buy quite a lot of lifestyle.)
Joe could also rent, and just enjoy looking at his bank statement each month.
It is in this way that buying or renting a house in Mexico is a great way to take advantage of the high prices offered to sellers in the US while not being penalized by then having to be a buyer of a house in the US. You just take the gains from the US market and apply them in the Mexican market.
Along the way, you’ll also enjoy other benefits as well, including extremely good health and dental care that will not bankrupt you.
In our moving business, we move about 10 times the amount of people to Mexico from the US and Canada than we move people from Mexico back to the US or Canada, and this may be one of the reasons why.
Of course, there are other considerations to make when deciding where you want to live in addition to taking advantage of the substantial rise in the price you can get for your home in the US while not having to suffer when buying a new home in the same market.
But it’s a nice start.
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