Guest Column
A frenzy of buying homes in Baja
- Oceanfront houses at a fraction of the cost of California properties are attracting Americans.
- By Michael Martinez
- Chicago Tribune
LA MISION, Mexico – Dec. 24, 2006 - Every weekend, Carmen Tetelboin joins the Baja boom. After work on Fridays, the Los Angeles resident drives four hours across the border to Baja California, where life is so good and living so cheap, it beats the other California, she contends.
Owning a condo on the coast, she and her husband are part of an American colony that in five years has exploded along 75 miles of pristine beaches, cliffs and towns south of Tijuana. Drawing the Americans are oceanfront homes at a fraction of the multimillion-dollar prices.
A bilingual native of Chile and a U.S. citizen, Tetelboin jokingly calls this swath of Americans "gringolandia."
"I never speak more English than when I'm in Mexico," said Tetelboin, 51, an adviser to international students at the University of California, Los Angeles.
A small city unto themselves, the Americans in Baja - about 250,000 of them, according to one unofficial estimate - have created a curious twist on the immigration crisis bedeviling Congress and the White House.
"We complain about Mexicans illegally crossing the border for a $6-an-hour job... in an attempt to take back the country, when, in fact, we're buying Mexico one lot at a time," said Patrick Osio Jr., 68, of Chula Vista, Calif., a former consultant who leads conferences on Baja real estate.
Indeed, the high-rises and gated communities dotting the coast exude a U.S. ambience, advertising in big English signs - "Beachfront condos. Models open here" - with San Diego or U.S. toll-free phone numbers. Even traffic signs on the coastal toll road are in English.
In October 2005, Christine McCusker and her husband, John, bought on sight a 2,800-square-foot house for $450,000. It is a one-minute walk from the beach in the Punta Piedra development. In Southern California, such a house would cost a few million dollars, she said.
"If I were to sit and think about a whole bunch of adjectives for Mexico, I have to think of beautiful, warm. I love it," said McCusker, 61, who with her husband and two daughters operates two private grade schools in Temecula, Calif.
Mexico's constitution forbids foreign ownership of land within 62 miles of the border and 31 miles of the coast, but Americans have gotten around the ban thanks to the Mexican government's creation of real estate trusts in recent decades.
Designed to encourage foreign investment, the 50-year trusts are an agreement between a buyer, a Mexican bank and a seller. The bank trust holds the land and lists the foreigner as the beneficiary; they trusts are renewable for an additional 50 years, after which they can be bequeathed.
But what has really ignited the Baja buying spree is money created by the recent U.S. home-refinancing binge, experts said. As they near retirement age, baby boomers are leveraging cash from their homes and buying Baja properties as second or permanent homes.
Former Baja California Gov. Ernesto Ruffo said the two Californias were blending: "Actually, the region is one, economically speaking."
As an indicator of Baja activity, more than 16,000 condos, houses and lots are for sale in present or planned projects, representing $4.1 billion, in the 75 miles between Tijuana and Ensenada, said Gustavo Torres of Re/Max Baja Realty.
Up to 80 percent of Baja sales are to Americans, mostly as second homes, and 10 percent of those buyers are retired or living in Baja permanently, said Nathan Moeder, principal of the London Group Realty Advisors Inc. of San Diego.
The buying has been so frenzied that one real estate consultant, Tom Harkenrider, sold a $250,000 condo at Residences at Playa Blanca to a stranger next to him on a flight from Los Angeles to Cabo San Lucas last year.
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