Los Cabos Vacation Rentals Skyrocket As Foreigners Buy Up Properties

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Last Updated 1 year ago

The prices of homes in Los Cabos continues, with rates increasing by 14.2% in 2022.

That rate made Cabo the second housing market with the biggest growth in all of Mexico throughout the year, only behind the Cancun area, which in itself was led by the increase in prices, particularly in Tulum.

Currently, the average price for a home in Cabo sits at 305,800 dollars. That’s more than 4 times the national average rate in the rest of Mexico.

Local real estate firms in Los Cabos claim that most of their sales are to foreign investors.

With most of these investors coming from the U.S.

Their reasoning is rather simple. Even though the prices in Mexico continue to rise, buying a home in Los Cabos is still considerably cheaper than purchasing one in the U.S.

Many of these investors are looking at their Cabo home as a vacation rental property.

They can purchase the property to generate income by renting it out on sites like Airbnb.

Also, if the local real estate market continues to climb, the purchase of Cabo properties can provide an attractive return on investment rates on the purchase and resale of these homes. 

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Home Rates In Los Cabos Can Vary Drastically Depending On Where They Are Located

Although the average price for a home in Cabo is around the 300,000 dollar range, there are, of course, multiple Cabo properties beyond that price. Particularly in neighborhoods like El Pedregal.

El Pedregal is the neighborhood that’s located on the cliff area that overlooks the Sea of Cortez. It’s the same area where the high-end Waldorf Astoria hotel is. Home rates in this part of Los Cabos can go from around 1.5 million dollars to more than 8 million.

Although there are still some options available that fall within that 305,000 average. These options are typically smaller homes or apartments.

For those investors perhaps looking for a better deal, San Jose del Cabo can be a good option.

You can find homes in the San Jose del Cabo downtown area that go for a lot less than the city average. However, most of these homes are not necessarily vacation rental material.

Most of the homes at lower prices are located in an area of the city that’s not necessarily near the main tourist attractions. A beachside home in this area, though, could go for around 1.5 to 2.5 million dollars.

Those rates are still considered well below the market average in most U.S. cities of the same caliber. Particularly those that offer the type of amenities that you can find in Los Cabos. That helps explain why foreign real estate investors look favorably on Cabo. 

Are Airbnb Rates In Cabo Fair?

Even though the number of foreigners buying homes in Cabo to live here full time has certainly increased, one of the main reasons these homes are purchased is for them to be used as vacation homes.

When they are not being used by the owner, they are usually rented out through independent property managers or sites like Airbnb.

With the influx in home prices, though, does that mean that renting a home in Cabo for an extended stay will also increase? 

There are no properties within the El Pedregal neighborhood currently being rented out on Airbnb.

Most of the holiday rental options for high-end properties in Los Cabos are handled by local companies that serve as property managers.

On the platform, though, you can find rooms and even entire apartments or homes for rent at anywhere from 40 to 120 dollars per night. 

These rates are for properties near the Cabo San Lucas Marina area. Taking into account that the average nightly rate at local hotels sits at 480 dollars a night, we could say renting an Airbnb is still a way to stay in Cabo on a budget.

VRBO also offers a wide selection of Cabo villas for rent. The rates for these options also vary quite a bit.

Ultimately these villas can also still be a good way to stay in Cabo on a budget. Yet travelers shouldn’t expect to find too many low-priced beachside properties for rent.