TIGER WOODS COURSE DESIGN DEBUT DRIVES MEXICO HOME PRICES
(First Published by Bloomberg Businessweek, Jonathan Levin and Brendan Case)
Tiger Woods is turning the Mexican desert in Los Cabos into grass fairways. Americans with home-equity loans are seeing green there too.
Woods, the winner of 14 majors, will open El Cardonal this year, making his debut as a designer of a completed course. The 71-par layout near the southern tip of the Baja Peninsula is part of the coastal Diamante Cabo San Lucas resort, where villas come with palapa bars approachable by infinity pools.
The golf courses and beaches of Los Cabos are luring Americans who are able to get home-equity loans to buy in Mexico as U.S. housing prices rise. Buyers, mostly from California, are purchasing condominiums, villas and estates ranging from $200,000 to more than $7 million following a plunge in prices, according to Deloitte & Touche LLP.
Visitors to Los Cabos have the rugged Pacific Ocean to the west and the calmer waves of the Sea of Cortez to the east. The coastal region has long drawn scuba divers. It has such a large diversity of fish, sharks and ocean habitats that the late deep-sea explorer Jacques Cousteau called it the “world’s largest aquarium.”
In the 20-mile-long coastal corridor connecting the towns of Cabo San Lucas and San Jose del Cabo, multimillion dollar homes sit aside $500-a-night hotels. With art galleries and nightclubs built around a 380-slip marina for 200-foot yachts, Cabo San Lucas is the contemporary companion to the colonial architecture of San Jose del Cabo.
Home Equity
The 31 percent gain in U.S. home prices since January 2012 has given property owners more equity. That’s made it easier for them to get home equity lines of credit, or Helocs, for as much as $500,000.
To qualify, borrowers usually need 20 percent equity in a property and a credit score of at least 720 on a scale from 300 to 850, said Keith Gumbinger, vice president of HSH.com, a mortgage data firm in Riverdale, New Jersey.
American buyers in Mexico are benefiting from the decline in the costs of credit lines, which have adjustable rates tied to the prime rate. The average rate for a $100,000 Heloc was 4.55 percent on May 21, down from 5.8 percent a year earlier, according to Bankrate.com. The average rate for a 30-year fixed mortgage was 4.17 percent.
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