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HGQ2112
Joined 2009
Posts: 1640

Real Estate Report - Vilcabamba

12 years ago

I generally release extremely condensed excerpts from real estate country analysis reports on July 1, 2012, for public consumption. This year, business matters and various personal matters have kept me from being punctual. Utilizing the better late than never theory, I offer them as segmented summaries, with each city having its own thread. I wanted to present them in one Ecuador thread, but it would be huge. Frankly, many people won’t even read them and those that do will likely want to focus on one or two cities. I would say that this format will cause folks to have to “hunt and peck” for data, but I still deemed it the lesser of two evils.

This data is presented only for those who have an interest in their real estate purchase, also being an investment asset. For those just looking to buy a pretty house, no point in reading further. The perspectives shared are not for every buyer. Some have different motivations for their purchase, besides sound investing, and those perspectives should be equally respected.

We have a simple system for rating a locale:

Sell - We recommend selling your asset or portfolio as quickly as possible.
Hold - If you have bought already, hang onto the asset and wait for further market developments. If you have not bought already, then do not buy now, but perhaps begin to look around for future opportunities.
Buy - Means that it is a good time to acquire an initial or additional real estate asset in that sub-market, due to favorable long-term market trends.
Strong Buy - Means that an exceptional market opportunity exists and that the time is right for the immediate consideration of an initial or additional real estate asset acquisition in this sub-market. For those looking at portfolio diversity, spreading assets across “strong buy” markets is advised, prior to focusing on “buy” markets, if investment opportunities is your sole or primary reason for purchasing real estate.

We also employ two trending systems. The first is an upward mobility and downward mobility system intended to dictate if this property market is in an upswing or downswing from the last time we reported on it. Upswing markets will be denoted by an ? and downswing markets by a ?.

Also, we place certain markets “on watch”. This is neither a necessarily good or bad thing, but a caution that a pending review to upgrade or downgrade the market is imminent. We try our best to project whether that review is likely to be positive or negative, but some market dynamics are so complex that this projection is not always 100% accurate. it should be used for guidance and not as statements of certainty.

Without further delay...here is data for the market you selected to view:

Vilcabamba Sell ?
Yep, yet another rare exception persists this year, although this one is a recognizable that is not anything new. We initiated coverage of Vilcabamba years ago, without initiating coverage of the larger, regionally dominant city of Loja. The trend continues, as Vilcabamba remains on our coverage list, while Loja remains off it. The people of Loja are very proud. In a nation already filled with rightfully proud people, the people of Loja are amongst the most proud...of their city...their culture...their heritage. They should be, but ours is not a cultural analysis, but rather an economic one focused on the real estate market. Frankly, from our perspective, short of someone that is a historical buff on the topics of Ecuadorian music or religion, no one would even know Loja exists if not for Vilcabamba. The Valley of Longevity defines the region, not its neighboring big brother. Having said that, the way Vilcabamba is currently defining itself has led to a downgrade from a “hold” to a “sell”.

Our perspective is driven largely by two factors that while building for years, have erupted to an extent that can no longer be ignored. First, real estate pricing in this small town has gone absolutely mad. Both sales and rentals are impacted. There are no fundamental driving factors to support such a steep price increase, as we are now seeing in Vilcabamba. Secondly, if I am to see this sharp rise as visible, I should be able to point to significant changes that are driven the pricing model. However, little has changed in Vilcabamba from year-to-year. Respectfully, it remains the small, quirky, welcoming little town, built around the activities of “the plaza”. Major shopping runs still call for a visit to Loja...most things do. There is no new influx of commercial expansion, tourism surge, or major new job creation. In short, the area remains the charming and affable location it has always been, but not worth the real estate prices being asked. If you own there, use any continued interest to sell and cash out what should be nice profits. If you are looking to buy, hold back and let the market catch up to reality. For my money, Vilcabamba is, relatively speaking, becoming the second most overpriced real estate market in all of Ecuador.

Hector G. Quintana
[email protected]
“In a time of universal deceit, telling the truth is a revolutionary act.” -- George Orwell, “1984”

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Real Estate Report - Vilcabamba

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