Authored by the expert who managed and guided the team behind the Mexico Property Pack
Yes, the analysis of Cabo San Lucas' property market is included in our pack
Cabo San Lucas property market is experiencing strong momentum in 2025, with luxury properties driving significant price appreciation. The market shows signs of continued growth but with moderating pace as inventory levels rise.
If you want to go deeper, you can check our pack of documents related to the real estate market in Mexico, based on reliable facts and data, not opinions or rumors.
Cabo San Lucas property prices surged 25% year-over-year in Q1 2025, with luxury properties over $1 million now representing 77% of market volume.
Average prices range from $44-129 USD per square foot depending on location, while mortgage rates hover between 9.3-11.7% annually for buyers.
| Market Indicator | Current Status (Sept 2025) | Trend |
|---|---|---|
| Average Price per Sqft | $44-129 USD | Rising |
| Year-over-Year Growth | 25% | Strong Growth |
| Luxury Market Share | 77% of volume | Dominant |
| Mortgage Rates | 9.3-11.7% | Stable |
| Tourism Growth | 5% increase expected | Positive |
| Rental Occupancy | 53% (short-term) | Robust |
| Market Competition | Intense for luxury, easing mid-market | Mixed |
What's the current average price per square foot for properties in Cabo San Lucas?
Property prices in Cabo San Lucas vary significantly based on location and property type as of September 2025.
City center apartments command approximately $129 USD per square foot, while properties outside the city center average around $44 USD per square foot. The general residential market shows an average of $106 USD per square foot across all property types.
New construction costs start from $200 USD per square foot and can go much higher depending on quality and finishes. Luxury developments and oceanfront properties typically exceed these averages substantially.
It's something we develop in our Mexico property pack.
How have property prices in Cabo San Lucas changed over the last 12 to 24 months?
Cabo San Lucas property market experienced dramatic price appreciation over the past 24 months.
In Q1 2025, overall residential prices jumped approximately 25% year-over-year, with some high-end market zones seeing growth rates up to 107%. The average sale price for residences reached around $727,000 USD, while condos averaged $792,840 USD.
The luxury segment now dominates the market, with properties over $1 million accounting for 77% of total market volume. The Pacific region showed the highest average prices at $2.25 million USD, though some submarkets experienced declines in land and certain house prices.
This surge reflects strong foreign demand, limited inventory, and increased tourism driving investment interest in the region.
What are experts predicting for the local real estate market over the next year?
Real estate experts forecast continued growth but expect the pace to moderate through 2026.
Annual appreciation is projected to slow to 3-7% over the next 12 months, driven by sustained foreign demand, limited supply, and new infrastructure developments. This represents a significant cooling from the 25% growth seen in early 2025.
Key risk factors include affordability challenges for local buyers, potentially higher inventory levels creating more opportunities for buyers under $600,000, and possible regulatory changes affecting short-term rentals.
The market is expected to remain luxury-focused, with continued strong performance in oceanfront and resort-adjacent properties while mid-market segments may see increased buyer negotiation power.
How is the overall economy in Cabo San Lucas and Mexico doing right now?
The local Cabo San Lucas economy shows mixed signals but remains tourism-dependent and generally stable.
Monthly salaries in Los Cabos average about $12,300 MXN (approximately $725 USD), though this figure has shown some decline recently. Tourism continues driving economic growth, with 2025 on track for a 5% visitor increase, potentially reaching 4.13 million arrivals.
Mexico's national economy maintains stable growth at approximately 3.7% GDP with low unemployment at 2.6% as of 2025. However, the country faces challenges from moderate inflation and fiscal deficit concerns.
The tourism boom directly supports real estate demand and rental income potential, making the local economy increasingly attractive for property investors despite wage pressures on local residents.
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What are the current mortgage interest rates for buyers in Mexico?
Mortgage interest rates in Mexico remain elevated compared to historical US rates as of September 2025.
| Rate Type | Interest Rate Range | Typical Requirements |
|---|---|---|
| Minimum Mortgage Rate | 9.36% annually | Best qualified borrowers |
| Average Consumer Mortgage | 9.3% - 11.7% | Standard qualification |
| Foreign Buyer USD Loans | Varies by lender | Cross-border products |
| Private Lender Options | 10% - 15%+ | Alternative financing |
| Construction Loans | 12% - 18% | Development projects |
How easy is it for foreign buyers to get financing in Cabo San Lucas?
Foreign buyer financing has become more accessible but remains challenging compared to domestic markets.
US and Canadian buyers benefit from improved access to cross-border loan products and specialized finance companies. Several banks and private lenders now offer USD-denominated loans specifically for Cabo properties, though eligibility varies significantly between providers.
Foreign buyers should expect stricter documentation requirements, higher down payment demands (typically 30-50%), and interest rates above domestic alternatives. The process typically takes 60-90 days compared to 30-45 days for domestic buyers.
Working with experienced local brokers who understand foreign buyer requirements proves essential for navigating the financing landscape successfully.
It's something we develop in our Mexico property pack.
Are there any upcoming developments or infrastructure projects that could affect property values?
Several major infrastructure projects are underway that should positively impact property values through 2026.
The Fonatur Overpass Project, running from May 2025 to May 2026, represents the most significant infrastructure investment. This project will ease traffic congestion, improve safety, and support local economic growth, likely increasing property values near transport corridors.
Continued luxury development includes new hotels, resorts, and eco-friendly communities attracting investment, particularly in the Pacific corridor and ultra-luxury neighborhoods. These developments create a positive spillover effect for surrounding residential properties.
The improved infrastructure should reduce travel times, increase accessibility to prime areas, and support the overall tourism economy that drives rental demand.
What is the current demand for rental properties in Cabo San Lucas?
Rental property demand in Cabo San Lucas remains robust, particularly for short-term vacation rentals.
Short-term rentals show approximately 53% occupancy rates from June 2024 to May 2025, with significantly higher occupancy during peak tourist seasons (December through April). High-season demand often reaches 80-90% occupancy for well-located properties.
Long-term rental demand comes primarily from expatriate residents and local professionals, though this market segment remains smaller than vacation rentals. The growing tourism industry creates steady demand for employee housing.
Prime beachfront and resort-adjacent properties command premium rates and maintain higher occupancy throughout the year, while properties further from tourist zones experience more seasonal variation.
We did some research and made this infographic to help you quickly compare rental yields of the major cities in Mexico versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you're planning to invest there.
How much can you realistically expect to earn from short-term or long-term rentals?
Rental income potential varies significantly based on property location, type, and management quality.
| Property Type | Short-term Daily Rate | Long-term Monthly Rate |
|---|---|---|
| Beachfront Luxury Condo | $300-400+ USD/night | $2,500-4,000 USD/month |
| Resort-Adjacent Condo | $200-300 USD/night | $1,800-2,800 USD/month |
| Marina District Apartment | $150-250 USD/night | $1,200-2,000 USD/month |
| Downtown/City Center | $100-200 USD/night | $800-1,500 USD/month |
| Suburban/Outlying Areas | $75-150 USD/night | $600-1,200 USD/month |
Are there any legal or tax changes coming that could impact property owners?
No major legal or tax changes are currently enacted for 2025, but property owners should monitor ongoing discussions.
Regulatory discussions focus on potential short-term rental restrictions similar to those implemented in other Mexican tourist destinations. These could include occupancy limits, licensing requirements, or taxation changes for vacation rentals.
Current property tax rates remain relatively stable, and no significant increases are planned for 2025-2026. Foreign ownership through fideicomiso (bank trust) structures continues unchanged.
Property owners should stay informed about municipal regulations and consider working with local legal counsel to ensure compliance with any future changes.
What is the inventory level like — are there many properties for sale right now?
Property inventory levels increased significantly in early 2025, particularly in the condominium segment.
Condo inventory surged during the first quarter of 2025, though prices have largely held steady despite increased supply. This creates more options for buyers, especially in the mid-market segment under $600,000.
Luxury inventory remains tighter, with premium oceanfront and resort-adjacent properties still experiencing competitive bidding. New development completions throughout 2025 continue adding to available inventory.
The increased inventory provides buyers with more negotiation power, particularly for properties that have been on the market for extended periods or in less prime locations.
It's something we develop in our Mexico property pack.
How competitive is the market in terms of bidding and negotiation power for buyers?
Market competitiveness varies significantly by price segment and location as of September 2025.
Luxury properties and prime beachfront locations continue experiencing intense bidding wars, with cash offers and quick closings providing significant advantages. Properties over $1 million often receive multiple offers within days of listing.
Mid-market competition has eased considerably with increased inventory, giving buyers under $600,000 more negotiation power and time for due diligence. Emerging neighborhoods and properties requiring updates offer the best negotiation opportunities.
Foreign buyers competing against cash offers may need to demonstrate financial strength and flexibility on closing timelines to succeed in competitive situations.
Conclusion
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.
Cabo San Lucas presents a dynamic property market in 2025 with strong fundamentals but moderating growth expectations.
Buyers should focus on location, understand financing challenges, and consider both investment returns and lifestyle benefits when making decisions.
Sources
- Numbeo - Cost of Living in Cabo San Lucas
- The LatinVestor - Average Cost Condo Cabo San Lucas
- Oceanside Los Cabos - Market Reports
- The LatinVestor - Cabo San Lucas Price Forecasts
- The LatinVestor - Cabo San Lucas Property
- Susana Bueno - Los Cabos Real Estate Market Report 2025
- Mexico News Daily - Tourism Trends in Los Cabos 2025
- CEIC Data - Mexico Household Credit Interest Rates
- Global Property Guide - Mexico Mortgage Interest Rate
- Alen Fabjan - Foreign Real Estate Financing in Cabo San Lucas