Is Cabo Real Estate Unaffordable?

Cabo San Lucas is one of the more expensive cities in Mexico, particularly in terms of real estate, tourism, and the cost of living for foreigners and tourists. However, it is not necessarily the most expensive city in the country.

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Mexico City, the capital, is often considered the most expensive city overall, especially in terms of housing, dining, and entertainment, due to its size, economic significance, and international influence. Monterrey and Guadalajara are also relatively expensive, particularly in certain affluent neighborhoods.

Cabo San Lucas stands out due to its popularity as a luxury tourist destination, which drives up prices in areas such as accommodations, dining, and real estate. The cost of living can be high, particularly in the tourist zones and for luxury properties. However, everyday costs might still be lower compared to major metropolitan areas like Mexico City.

Real estate in the United States has become more expensive than ever in many areas, driven by a combination of factors:

Low Interest Rates: For much of the 2020-2021 period, mortgage interest rates were historically low, which spurred a surge in home buying. Even though rates have risen recently, they were still relatively low compared to historical averages, which kept demand strong.

High Demand and Low Supply: There has been a significant imbalance between the supply of available homes and the demand for them. Factors contributing to this include limited new construction, homeowners holding onto properties longer, and increased demand for housing in suburban and rural areas due to remote work.

Pandemic Impact: The COVID-19 pandemic led to changes in housing preferences, with many people seeking larger homes or properties in less densely populated areas. This shift increased demand in areas that were previously more affordable, driving up prices.

Inflation and Construction Costs: The cost of building materials and labor has increased, contributing to higher prices for new homes. Supply chain disruptions and inflation have also added to the cost of real estate.

Investment and Speculation: Real estate has attracted significant investment, with both institutional investors and individuals purchasing properties for rental income or as a hedge against inflation, further driving up prices.

While prices have risen across the country, the extent of the increase varies by region, with some markets experiencing more dramatic surges than others. However, affordability has become a major concern in many areas, making it more challenging for first-time buyers to enter the market.