Bargains Galore!–25% Discount on Everything in Puerto Vallarta, Mexico

Well, it appears as though the effects of the mort­gage cri­sis in the US which began in March, 2008 fol­lowed by the col­lapse of the stock mar­ket in Octo­ber, 2008 are finally being felt in Puerto Val­larta. Thanks to the strong Cana­dian Dol­lar, tourist expen­di­tures in Val­larta for goods and ser­vices, includ­ing retire­ment real estate, held up fairly well for most of 2008. How­ever, dur­ing the September/October time­frame, the Cana­dian Dol­lar plunged by more than 20%, thus reduc­ing the Cana­dian pur­chas­ing power accord­ingly. Con­se­quently, both the Amer­i­cans and Cana­di­ans are now hes­i­tant to aggres­sively invest in any­thing, espe­cially for­eign retire­ment properties.

The air­planes and cruise boats packed with tourists con­tinue to arrive daily in PV; how­ever the vis­i­tors are much more thrifty and pru­dent with their pur­chases than they were a year ago. Many of the restau­ra­teurs and shop own­ers are claim­ing that sales are down from last year by as much as 35%. The con­struc­tion of new con­do­minium projects has also notice­ably decreased as new sales slow to a trickle.

Dur­ing the past ten years, Val­larta has lit­er­ally been a boom town with explo­sive growth and new con­struc­tion every­where. Obvi­ously, many of the devel­op­ers and entre­pre­neurs failed to see the oncom­ing global finan­cial cri­sis and com­mit­ted to many long term con­struc­tion projects result­ing in a glut of more than 7,000 new con­do­mini­ums now on the market.

Finally, with the sup­ply of goods and ser­vices, includ­ing retire­ment prop­er­ties, cur­rently exceed­ing demand, we are now wit­ness­ing a true buyer’s mar­ket in Val­larta. Even though list prices for real estate have not dropped notice­ably, the devel­op­ers and sell­ers are much more apt to nego­ti­ate than they were a year ago. The same is true for store mer­chants and other ven­dors in the area.

Okay, now that we have a bet­ter under­stand­ing of how the econ­omy in the US and Canada have affected busi­ness in Val­larta, we should have a bet­ter appre­ci­a­tion for the North Amer­i­can bar­gain­ing posi­tion in this beau­ti­ful resort des­ti­na­tion. There­fore, let’s take it a step fur­ther. With the excep­tion of real estate, most all other goods and ser­vices in Puerto Val­larta are sold on a Peso basis and there­fore we must con­sider the mon­e­tary exchange rate.

The Mex­i­can Peso has held steady with the US Dol­lar for more than ten years at about 10.8 Pesos per US Dol­lar. It wasn’t until early in Octo­ber, 2008 when the Peso pre­cip­i­tously deval­ued to about 13.5 Pesos per Dol­lar result­ing in a 25% increase in the value or pur­chas­ing power of the US Dol­lar rel­a­tive to the Mex­i­can Peso.  

For those of us for­tu­nate enough to still be hold­ing a few US Dol­lars, almost all goods and ser­vices in Mex­ico just went on sale! For exam­ple, we recently pur­chased a high-end brand name washer/dryer set, nor­mally priced at $1,300 US, for $1,015 US. Most all gro­cery and food prod­ucts, cloth­ing, hard­ware, and elec­tron­ics man­u­fac­tured in Mex­ico, gaso­line, elec­tric­ity, and other native com­modi­ties are also 25% less expen­sive to those of us hold­ing US Dollars.

Through infla­tion over time, the costs of these Mex­i­can prod­ucts will even­tu­ally rise until they return to where they were only a few months ago. The one cat­e­gory where costs will rise much more slowly is that of labor. Almost every worker in Mex­ico just took a 25% reduc­tion in wages rel­a­tive to the US Dol­lar! That includes all maids, gar­den­ers, restau­rant and store employ­ees, taxi dri­vers, doc­tors, archi­tects, engi­neers, etc. It will prob­a­bly require sev­eral years for the Mex­i­can labor rates to be equiv­a­lent to where they were only six months ago.

One very impor­tant labor group is that of the con­struc­tion work­ers which rep­re­sents a sig­nif­i­cant por­tion of the total cost of retire­ment res­i­dences, all priced in US Dol­lars. Add their 25% cut in pay to the cost of Mex­i­can con­crete and other native mate­ri­als which also dropped by 25% and you can imag­ine how that will affect the com­ple­tion costs of the thou­sands of con­dos cur­rently under construction!

Now, with the demand for goods and ser­vices reduced rel­a­tive to their sup­ply and the US Dol­lar being 25% stronger, you can see the ben­e­fit of shop­ping in Par­adise at this very moment; the time for buy­ing your retire­ment dream could never be bet­ter!
As Billy Mays, the famous TV pitch­man would say, “But wait, there’s more”! Yes, aside from the 25% sav­ings asso­ci­ated with the Peso deval­u­a­tion and an increase in will­ing­ness of the local ven­dors to nego­ti­ate lower prices (caused by the reduc­tion in tourist con­sump­tion brought on by the uncer­tain US econ­omy and the deval­u­a­tion of the Cana­dian Dol­lar), effec­tive in June, 2008, you now receive a rebate for the 15% IVA tax that you pay on many of your pur­chases while vis­it­ing Mexico.

The 15% IVA or Value Added Tax (VAT) is returned to for­eign tourists who can prove they have spent a min­i­mum of 1,200 Pesos (approx­i­mately $90 US Dol­lars) on Mex­i­can ter­ri­tory and who are return­ing home by sea or air. Tourists now have the right to receive up to 50% of the net rebate, an amount not to exceed 10,000 Pesos (approx­i­mately $750.00 US Dol­lars), in the form of cash; the remain­ing 50% will be refunded via elec­tronic funds trans­fer within a period of 40 days.

In con­clu­sion, after being exposed to the past six months of eco­nomic frus­tra­tions, you deserve to escape from the pre­vail­ing gloom and doom. If you have ever con­sid­ered trav­el­ing to or retir­ing in Par­adise, now is the time and Puerto Val­larta is the place! You will find many great val­ues on every­thing this sea­son; val­ues that have not been seen for almost a decade and may not be avail­able again in the near future. As Billy would say, “Why wait, pick up the phone” and call your travel agent. The weather is guar­an­teed to be per­fect dur­ing the months of Novem­ber through May, the scenery of the Pacific Ocean, the sandy white beaches, and the Sierra Madres is world class, the mar­gar­i­tas are ice cold, and the Mex­i­can hos­pi­tal­ity is sec­ond to none. So, come on down; you’ll find bar­gains galore while enjoy­ing the time of your life on the Mex­i­can Riviera! 

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