The Case for Retirement in Mexico
Puerto Peñasco, Mexico, was an unknown fishing outpost until the 1920s when Arizonan John Stone opened a hotel and casino targeting Americans who wanted to escape prohibition. Today, this town is known as Puerto Peñasco in Mexico and Rocky Point north of the border. Surprisingly, it got its English name first, in 1826, from a retired Royal Navy admiral who was in the area scouting for precious metals. In the 1930s, the Mexican president renamed the town Puerto Punta Peñasco, later dropping the "Punta."
Perhaps the biggest appeal of Puerto Peñasco to American retirees is that this spot is only 62 miles from the U.S. border. That's just over three and a half hours by car from Phoenix, Arizona, or six hours from San Diego, California.
We Americans often overlook Mexico, because it's right next door. Sometimes it feels too convenient to qualify as a retire overseas destination. However, that convenience factor is exactly why certain spots in this country can be perfect for both expat retirees and second home owners.
You can easily drive back and forth between Puerto Peñasco and the United States. One of the biggest hassles when you have a home abroad, especially if it's a part-year residence, is getting there and back. In Puerto Peñasco, you can just pack up the car, throw the dog in the back seat and go. When you cross the border in Lukeville, Arizona, you enter a "hassle-free vehicle zone," a program that allows you to drive your car into certain parts of Mexico without a vehicle permit, although you still need Mexican auto insurance. If you don't live nearby, you could fly to Phoenix and rent a car or take a shuttle to Puerto Peñasco.
Not only is Mexico nearby and easily accessible, it's also culturally familiar. The culture shock can be far less than in destinations farther south. One of the many things that will feel familiar in Puerto Peñasco is the shopping. You'll find Sam's Club, Auto Zone and Burger King.
Virtually everyone in Puerto Peñasco speaks English. If your Spanish skills are limited (or nonexistent) you'll be fine in Puerto Peñasco. However, you'll be rewarded if you try to speak some Spanish. You will be treated less like a tourist and welcomed more as a member of the local community.
In addition, you will have no trouble finding and connecting with fellow expats. Most of your neighbors will be from Arizona or California.
To top off the convenience factor, you can spend U.S. dollars here. However, you'll often save money by buying in pesos, as this allows you to take advantage of the dollar's current exchange rate advantage.
The area enjoys 362 days of sunshine per year. You'll appreciate the brilliant sunshine and pleasant temperatures until July rolls around. Then you're in for three months of very hot and sometimes humid weather. This would be a good time to return to the States to visit family or to travel elsewhere in Mexico or beyond. By October, the pleasant weather returns.
Puerto Peñasco's main attraction is the beaches. Expats and second home owners here enjoy miles of wide, sandy beaches and warm, crystal clear waters. The main beach, just north of town (and cleverly named Sandy Beach), is 4.5 miles long, and almost 200 yards wide in places at low tide. The waters are calm and delightfully swimmable.
Best of all, you could own a two-bedroom condo on this beach for as little as $109,000. You could spend more, of course. Some homes cost upwards of $1 million. For that, you would enjoy an accompanying level of luxury. But single family homes with water views in a planned community start at $175,000.
Property markets in many areas of Mexico, including in Puerto Peñasco, are depressed. The great recession took its toll in this country, especially in the most popular second home markets, which have not recovered. Part of the reason for this is that Mexico has suffered a lot of bad press over the past six years. A swine flu epidemic fizzled after a few cases, but its legend carried on for years, and the drug violence in some border cities (and beyond) has affected the perception of the entire country. These continuing misperceptions mean opportunity for anyone willing to look beyond them.
The U.S. dollar is very strong against the Mexican peso right now. At today's exchange rate of 16.8 pesos per U.S. dollar, prices are cheaper in Mexico than they've been in a long time. Real estate in Puerto Peñasco often trades in U.S. dollars, but the strong dollar makes all of your other costs much more affordable.
Kathleen Peddicord is the founder of the Live and Invest Overseas publishing group.
