Ensenada Real Estate Boom

By Leroy Jose Perez - 2005

Ensenada in the 1960's and 1970's was the fastest growing real estate market for Southern California buyers who wanted a vacation or retirement home in Northern Baja .

Beginning in the 1980's, Rosarito began listening to foreign buyer needs and developing projects that upscale U.S. buyers wanted. North Americans and Canadians requested gated communities with infrastructure guaranteed or already completed. In addition, homeowner association control to insure: garbage collection, common area maintenance, architectural review and security from burglaries.

In the last five to ten years, San Felipe and Rosarito realty companies have successfully exploited the overpriced real estate market in Southern California . Equity in So. California Homes purchased in the last five or more years, has resulted in many homeowners having enough equity to refinance the price of a Baja "second home". At San Felipe's El Dorado Ranch, the developer estimates that 46% of their sales are the result of refinancing primary residences in the states.

Also, in the last five years, baby boomers in Baja California enjoyed an additional five billion dollars of discretionary income. 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 real estate has lagged way behind Rosarito real estate and San Felipe real estate in the development of gated communities. At last count we have only three such communities. However, new days are comming to Ensenada: A new mayor (Cesar Mancillas), whose 3 year term started this year(2005), a new planning department and developers now anxious to satisfy the foreign home buyer in Ensenada. Mayor, Cesar Mancillas announced a goal of completing 10,000 housing units this year with features to satisfy the U.S. consumer.

A factor propelling the Ensenada boom is that beach or ocean view properties in Rosarito or Rosarito beach (on average) now exceed $350,000.00. Comparable home prices in Ensenada are thirty to fifty percent less.

Consequently, the major real estate franchises in Rosarito and San Felipe 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, and now Remax Ensenada is entering with some projects and developments.

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. According to Kerry Sims, manager of Baja Relocation: "This is a recent phenomenon, buyers in the past said they wanted to go no further than Bajamar (a gated community 20 minutes North of Ensenada)".

Construction and home financing is entering a new era for foreigners and Mexicanos alike. 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 loosened considerably. Citicorp, for example, bought the largest Mexican financial institution - BANAMEX.

Mortgage rates from Mexican banks in pesos has dropped to 12% per annum. Given the historical erosion of the peso, in relation to the dollar, many developers claim that (over time) that 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 Mexico 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. What are you waiting for? Your dream of a Baja home can come true before retirement. Our advice: don't wait much longer. If Rosarito is any precedent, Ensenada home prices will probably double in the next three to five years.