Strategy
The super peso: should you buy property in Mexico in dollars or in pesos?
The peso reached 16.67 per dollar in July, its strongest level since 2015. What it means for Riviera Maya buyers paying in dollars or in pesos.
For whom
Anyone earning in dollars or pesos who is about to buy in the Riviera Maya.
On July 28 the peso closed at 16.67 per dollar. That day it touched 16.63, its strongest level since December 2015. It ended August around 17, and this Monday, September 18, it finished at 17.11.
For anyone buying in the Riviera Maya, the exchange rate matters almost as much as the price. How it affects you depends on two things: the currency the property is priced in, and the currency you earn.
If you earn dollars and the property is priced in pesos
This is where it hits hardest. A 3 million peso property is 150,000 dollars with the dollar at 20 pesos, and about 176,000 with the dollar at 17. The price did not move. Your buying power did.
If you earn dollars and the property is priced in dollars
The price stays the same. What goes up, measured in dollars, is everything charged in pesos: notary fees, the acquisition tax, property tax, and HOA fees if the building bills them in pesos. It is worth recalculating those costs at today's rate instead of last year's.
If you earn pesos and the property is priced in dollars
The super peso works in your favor. A 200,000 dollar property costs 3.4 million pesos with the dollar at 17; with the dollar at 20 it cost 4 million.
What the law says if you pay in the other currency
In Mexico, an obligation in a foreign currency that is paid inside the country can be settled in pesos, at the exchange rate Banco de México publishes in the Diario Oficial on the business day before the payment. That is what article 8 of the Monetary Law says. That is why the contract should spell out:
- The currency of the price.
- Which exchange rate applies if you pay in the other currency. The one Banxico publishes in the Diario Oficial is easy to verify.
- On which date that rate is taken for each payment, especially in pre-construction deals with monthly installments.
Our take
Nobody knows where the exchange rate is going. Buying while waiting for the dollar to go back to 20 is betting on two things at once: the property and the currency. What you do control is buying in the currency you earn, putting the exchange rate in writing and checking legal certainty as always.
In 18 years we have seen the peso go up and down many times. In real estate, the profit is made when you buy, and that includes knowing which currency you buy in.
If you are about to close and the contract says nothing about the exchange rate, send it to us before you sign.