Background on Los Cabos and its Dependence on Foreign Buyers
Los Cabos, a popular tourist destination in Baja California Sur, Mexico, has experienced a significant downturn in its real estate market due to reduced demand from foreign buyers, particularly those from the United States. This decline is largely attributed to the ongoing trade tensions between Mexico and the U.S. since early 2025.
Who is Gabriela López and Why is She Relevant?
Gabriela López, the founder of Outliance, a prominent real estate firm in Los Cabos, has been closely monitoring the market trends. Her insights provide valuable context for understanding the current state of the real estate sector in this region.
Key Market Developments
- Sales Decline: In the second quarter of 2025, the Los Cabos real estate market saw $362 million in sales, marking a 28% decrease from the previous quarter.
- Price Cuts: In response to the lower demand, developers have implemented price reductions on over 1,000 properties, with discounts reaching up to 25%.
- Impact on Buyers: Approximately 60% of buyers are from the U.S., typically paying around $900,000 per property. The trade tensions have caused uncertainty and affected the market, particularly for homes valued below $1.5 million.
- Negotiation Opportunities: Despite the cooling market, buyers now have more room for negotiation. Properties can remain in inventory for 160 to 200 days before selling.
Market Outlook for the Remaining Year
The upcoming months will present challenges due to the hurricane season and ongoing infrastructure projects affecting the real estate dynamics in Los Cabos. However, Outliance anticipates a rebound by the end of 2025 and into 2026, supported by a more favorable financial environment.
- Federal Reserve Interest Rate Reduction: The anticipated decrease in interest rates by the Federal Reserve is expected to boost real estate sales.
- Benefits for Mexican Investors: With a relatively stable dollar and lower interest rates from the Bank of Mexico, Mexican buyers may find it more attractive to invest in the U.S. dollar-denominated properties.
Challenges in the Los Cabos Real Estate Market
The primary challenge facing the Los Cabos real estate market is the scarcity of affordable housing options. With 2,200 properties for sale and an average price of $200,000, according to Outliance data, accessing housing has become difficult for newcomers attracted by job opportunities.
- Lack of Affordable Housing: There are insufficient affordable housing options for workers, as numerous infrastructure projects draw new employees to the area without adequate living arrangements.
- Rising Rental Costs: Rental prices have surged significantly in recent years, exacerbating the housing affordability issue.
Key Questions and Answers
- What caused the decline in Los Cabos’ real estate market? The primary cause is reduced demand from foreign buyers, particularly those from the U.S., due to trade tensions between Mexico and the U.S.
- How have developers responded to lower demand? Developers have implemented price reductions on over 1,000 properties, with discounts reaching up to 25%.
- What are the market outlook predictions for the remaining year? Outliance anticipates a rebound by the end of 2025 and into 2026, supported by a more favorable financial environment and potential interest rate reductions by the Federal Reserve.
- What challenges does the Los Cabos real estate market face? The main challenge is the scarcity of affordable housing options, exacerbated by rising rental costs and insufficient living arrangements for new workers.
