Real Estate Boom hits Ensenada
Market Heats Up

By David Valenzuela, Attorney at Law

Since September 11, the Rosarito real estate markets has been steadily heating up, with a major "boom" expected to hit this year. Now, with prices in Rosarito heading skyward, buyers are beginning to look at the Ensenada market. Several major real estate players are scheduled to open offices in Ensenada this year, and more units will soon be available for sale. If the Rosarito experience is any precedent, home prices in Ensenada will probably double in the next three to five years.
Back in the 1960´s and 70´s, Ensenada was a growing real estate market for Southern California buyers who wanted a vacation or retirement home in Northern Baja. All that ended in the 1990's, however, when the Punta Banda fiasco damped buyer enthusiasm for this area. Buyers turned to Rosarito and San Felipe, where developers began offering projects that upscale U.S. buyers wanted, with amenities like gated communities, homeowners associations, garbage collection, area maintenance and security.
The housing boom in these areas was fueled by factors such as the overpriced real estate market in Southern California, and increased baby boomer wealth. Many homeowners have enough equity in their California homes to refinance the price of a Baja "second home". At San Felipe's El Dorado Ranch, the developer estimates that 46% of sales are the result of refinancing primary residences in the states. Also, baby boomers have enjoyed an additional five billion dollars of discretionary income over the last five years. This economic growth, coupled with U.S. real estate appreciation, has resulted in a whopping 21% of foreign owners purchasing their Mexican homes via refinancing of stateside properties.
Ensenada has lagged way behind Rosarito and San Felipe in the development of gated communities. At last count there were only three such communities. However, a new day has dawned in Ensenada: A new mayor, whose 3 year term started this year, a new planning department and developers now anxious to satisfy the foreign home buyer. Mayor Cesar Mancillas recently announced a goal of completing 10,000 housing units this year with features to satisfy the U.S. consumer.

In Rosarito, beach or ocean view properties in Rosarito now exceed $350,000.00. Comparable home prices in Ensenada are thirty to fifty percent less. Consequently, the major real estate franchises in Rosarito are now opening or planning to open offices this year in Ensenada. Coldwell-Banker, Remax and Realty Executives (2nd office) are opening new offices in Ensenada. Realty Executives and Century Twenty One have a brief but unspectacular history of developing the Ensenada foreign buyer market, primarily due to a lack of inventory.
On a recent bus tour, sponsored by Coldwell Banker, two busloads of So. Cal buyers (112 prospects) were transported across the border to review Rosarito housing developments. The agents were surprised to discover that one half of the buyers stated they were interested in seeing Ensenada properties. Kerry Sims, manager of Coldwell-Banker Rosarito, said "This is a recent phenomenon, buyers in the past said they wanted to go no further than Bajamar". (Kerry Sims is no longer affiliated with Coldwell Banker in Rosarito due to their  unethical  Real Estate practices.)
Construction and home financing is entering a new era also. In the past, buyers were forced to pay cash or pay expensive seller financing. Since most of the major Mexican banks have been bought by foreigners, credit has now loosened considerably. Citicorp, for example, bought the largest Mexican financial institution-BANAMEX. Mortgage rates from Mexican banks in pesos have dropped to 12% per annum. Given the historical erosion of the peso in relation to the dollar, many developers claim that this figure will be the equivalent of a 5% loan if it were set in dollars.
U.S. title insurance companies-First American, Stewart and Fidelity are now providing affordable title insurance on Mexican properties.
Their new confidence in Mexico was spawned by changes in the foreign investment law; allowing coastal property trusts in perpetuity for foreigners. Title insurance has provided the security to motivate foreign financing companies to enter the Baja market using Mexican property as collateral. Financing for two subdivisions in Ensenada were recently approved by Home Capital Funding of San Diego. Also accepting loan applications for Ensenada developments are Wall Street Associates and Lender's Depot.
Given the economic forces spurring Mexican Real Estate sales and internet driven virtual offices that allow business to be conducted from anywhere, the Ensenada boom is a sure bet to accelerate.