Lake Chapala Real Estate Prices, Water Level, and Mexico Real Estate Voodoo

Are Lake Chapala real estate prices, affected by the water level of Lake Chapala in Mexico?

I saw a recent Mexico real estate blog post by ‘Agent’ that was discussing the relationship between Lake Chapala real estate prices, and the water level of Lake Chapala, Mexico.

First, I had to laugh.

And now, I need to set the record straight. I’m sorry ‘Agent’ but I’ve got to take you to task with your statement:

“Watch the water level of the lake as the prices of real estate vary with the level of water in the lake. There is however, a lag of a year or two with the real estate prices following the level of water in the lake.”

This what I like to call Mexico real estate voodoo, statements that make no sense and can’t be supported by any rational argument.

By way of background, I have lived in Ajijic-Chapala on the shores Lake Chapala, Jalisco for 8 years and have been involved in over 100 real estate transactions in Mexico.

Many misinformed realtors have made the same statement that ‘Agent’ did and when challenged to explain in detail the logic of their statement they fail to do so.

It may have started with a Wall Street Journal article in September 2003 by Jim Carlton where a frustrated seller says, “The homeowners attribute the falloff in values mainly to the lake’s decline.”

When this WSJ article “Shrinking Lake in Mexico Threatens Future of Region” went to press, Lake Chapala’s water level was at 20 year high and the Real Estate market was strong, but the two are totally unrelated. 

Today, the lake water level was at 30 year high and the Lake Chapala real estate market soft.

There are a couple other erroneous references floating around the internet that elude to lake level and Lake Chapala property values.

Nationmaster Encyclopedia, answers.com and Wikipedia, where anyone can post their ‘opinion’, all exactly say the same exact thing:

“Real estate values fluctuate with the level of the Lake although there is some year or two lag time before lake levels are reflected in real estate prices.”

It appears that whatever the original source of information was, that others picked up this false information and reported it as fact.

Web surfer beware, everything reported on the net as fact is not and this is a great example.

So what drives real estate values in, Lake Chapala, Mexico?

Same as Rincon de Guayabitos, Mexico or Los Angeles or Boston or Miami.

Supply and demand.

Right now, most real estate worldwide has more supply than demand for homes at the current prices.

Recently, there were reports in the US news that there was a small rise in home sales. The explanation given, first time buyers could now enter the market because real estate values had dropped to a point where it became affordable. Makes total sense no real estate voodoo in that reasoning.

What affects demand for Ajijic real estate?

The simple answer is economics for people wanting to retire or retired already.

If you are one of the many that have see you stock and retirement portfolios deduced by 27-51% in the last year. If you are one of the many who have a house in the U.S. that has lost value in the last year in the 21-36% range. Maybe you can’t sell because there is a glut of foreclosed homes for sale in your area that you’ll have to complete against to sell your home in the U.S.

For a fortunate few retirees, the stock market and housing values won’t impact their ability to buy a home in Lake Chapala, Mexico or purchase in Rincon de Guayabitos on the coast.

The current property prices in the Lake Chapala area need to adjust to the market demand. I don’t believe that this has happened yet in Mexico or in the U.S.

So, don’t succumb to Mexico real estate voodoo. Get the real facts and make an informed decision.

Oh, by the way here is that Wall Street Journal article the I mentioned above Take a look: http://www.mindfully.org/Water/2003/Lake-Chapala-Mexico3sep03.htm. 

Lake Chapala Real Estate Prices, Water Level, and Mexico Real Estate Voodoo