Expat Community > Ecuador

HGQ2112
Joined 2009
Posts: 1640

Real Estate Report - Cotacachi

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:

Cotacachi Sell / ?
It was big news back in Chicago. I still remember it like it was yesterday. For those outside of Chicago, it never even likely registered...that fateful day, when by-passed by Los Angeles, we stopped being America’s second city, and dropped to third place. Cotacachi finds itself in third place, as well, but unlike Chicago, it should rejoice in avoiding the number one and two spots. Reason is that Cotacachi, on a relative valuation basis, has probably become Ecuador’s third most overpriced locale, from a real estate perspective, trailing only Cuenca at #1 and Vilcabamba at #2. For this reason alone, we have downgraded Cotacachi this year, from a “hold” to a “sell”.

Cotacachi is the reason the phrase “postcard perfect” was created. Beautiful does not even come close. It is peaceful...serene...did I mention “beautiful”? Realistically, and without further fanfare, that is all Cotacachi is...beautiful...peaceful...serene. Measured by any other yardstick - economic activity, top-notch hotels, fabulous restaurants, a plethora of social or cultural options...well...Cotacachi is not well-defined by any. Despite even a deep-seated native-Ecuadorian heritage, the historical significance of the city pales relative to Quito, Cuenca or Guayaquil, as examples. If the pace of the real estate market had better maintained the gentle, serene, rolling pace that embodies Cotacachi life, likely it would still remain a “hold” in our portfolio recommendations.

However, something strange overtook Cotacachi, especially the last five years. It was a murmur at first, which has turned into a roaring rumble. A thinly traded real estate market soared in real estate price valuations, largely on the merits of a statistically modest increase in Expat interest within the region, along with some speculative real estate development projects, which led to a grossly overhyped market assessment in some circles. We fervently embraced our “hold” recommendation, in the hopes that either price sanity would reemerge or that some local commercial/economic stimulus would justify the price spike. We thought maybe we were missing something. Hey, it is possible. As our clientele knows, we have never professed to be infallible. Nothing changed. No dynamic economic proposals, no major commercial announcements, no return to sanity for real estate prices, either. We had to succumb this year and suggest that folks “sell” Cotacachi. In today’s market, if you can get someone to pay current prices...sell...smile...and say so long. Better value options await you throughout 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 - Cotacachi

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