Texas real estate slump a boon for buyers from Mexico

MONTERREY, Mexico - June 29 2008 - More than a century and a half after Mexico lost Texas to the United States, Virgilio Garza wants a piece of it back.

A “Texas for Sale” sign and cowgirls in boots and white hats greeted Garza at the Convex center in Monterrey this month. A Monterrey developer and investor, Garza was in search of foreclosed US property to buy.

“Texas is like our home,” said Garza, 45, who joined hundreds of Mexicans poring over lists of Texas properties at the four-day event. Garza, who owns manufacturing sites and other land in Mexico, said he and five partners may invest as much as $8 million in Texas. “We believe there can be some opportunities,” he said.

A rising peso and an economy growing faster than the United States’ have given some Mexicans the buying power to take advantage of the housing slump in Texas, which became a state under an 1848 treaty that ended a three-year war between the countries.

The peso has gained 3.2 percent against the dollar since the beginning of the year, and the Mexican economy, which rose 2.6 percent in the first quarter from a year ago, is expected to grow 2.6 percent this year, according to a central bank survey. The US economy, by contrast, is forecast to grow 1.4 percent in 2008, according to a Bloomberg survey of 57 economists.

Marco Ramirez of McAllen, Texas, is among those trying to sell foreclosed Texas homes to Mexicans. His company, called Now Co., has bought 32 Texas properties and has options on 88 more. His best prospects are Mexican buyers, especially in Monterrey, 150 miles from the Texas border, he said.

“Many of these people have children who are studying in the US,” Ramirez said. “They’ve been renting or leasing, and now it’s a great time to buy.”

While Texas hasn’t been hit as hard as California and Florida, where the housing boom drove up prices the most, existing home sales in Texas fell 12 percent from a year ago in the first quarter.

Foreclosures in Texas rose 29 percent in the first quarter from a year earlier, with one of every 274 households in the foreclosure process, according to RealtyTrac Inc. The Texas foreclosure rate ranked 17th in the nation, according to the seller of default data.

Garza and other Mexicans with money to invest believe the time is right to buy, Ramirez said. “These are very sophisticated businessmen,” he said. “They realize what’s going on in our country. Everybody needs cash right now, and Monterrey has lots and lots of cash.”

Victor Gonzalez, 48, who owns a Monterrey print shop that employs 40 people, wants to use his savings to buy a $250,000 house in a gated community in the South Texas community of Mission.

“This is exactly what we’ve been looking for,” said Gonzalez, who was wearing a black Harley-Davidson T-shirt. “We’re ready to go.” He said the price is $50,000 less than he expected to pay.

Gonzalez said he plans to turn over the shop to his children in five years and retire to Mission, where the traffic is lighter and the crime rate lower.

The only requirement for foreigners purchasing US residential and commercial property is a valid visa to enter the country, said Jose Cuellar, a realtor with Houston-based Cornerstone Mortgage Co. who caters to Mexican clients.

Raul Fabela, owner of McAllen-based Construction Ltd., came to Monterrey looking to sell 42 rental properties of four apartments each, double his normal inventory of available properties. US buyers have dried up, he said.

Texas real estate slump a boon for buyers from Mexico
by Thomas Black | Bloomberg News