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Will properties get more expensive in Cabo San Lucas in 2026?

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Authored by the expert who managed and guided the team behind the Mexico Property Pack

property investment Cabo San Lucas

Yes, the analysis of Cabo San Lucas' property market is included in our pack

Property prices in Cabo San Lucas are highly likely to continue rising in 2026, driven by strong foreign demand, limited luxury inventory, and robust tourism growth.

The Cabo San Lucas residential market has experienced dramatic appreciation over the past five years, with house prices up 107% since 2020 and average properties now selling for over US$1.3 million. Foreign buyers account for 60-70% of total sales volume, creating sustained upward pressure on prices despite increased inventory in 2024-2025.

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.

How this content was created 🔎📝

At The LatinVestor, we explore the Mexican real estate market every day. Our team doesn't just analyze data from a distance—we're actively engaging with local realtors, investors, and property managers in cities like Cabo San Lucas, Puerto Vallarta, and Playa del Carmen. This hands-on approach allows us to gain a deep understanding of the market from the inside out.

These observations are originally based on what we've learned through these conversations and our observations. But it was not enough. To back them up, we also needed to rely on trusted resources

We prioritize accuracy and authority. Trends lacking solid data or expert validation were excluded.

Trustworthiness is central to our work. Every source and citation is clearly listed, ensuring transparency. A writing AI-powered tool was used solely to refine readability and engagement.

To make the information accessible, our team designed custom infographics that clarify key points. We hope you will like them! All illustrations and media were created in-house and added manually.

What are the current property prices per square meter in Cabo San Lucas and how have they changed over five years?

Cabo San Lucas condo prices average US$4,333-5,813 per square meter as of September 2025, while house prices average US$4,870 per square meter.

The luxury condo market shows recent listings averaging US$540 per square foot, translating to approximately US$5,813 per square meter. Average condo prices have reached US$792,840, while houses average US$1.32 million in 2025.

Property appreciation has been dramatic over the past five years. House prices in high-end areas have surged 107% from 2020 to 2025, representing the most significant price growth in Mexico's luxury resort markets. Condo prices experienced a 9.91% year-over-year increase in 2024 alone.

The appreciation pattern has been steady at 5-7% annually, with luxury properties consistently outperforming the broader market. This growth reflects Cabo San Lucas' position as Mexico's premier luxury destination and the sustained demand from international buyers.

It's something we develop in our Mexico property pack.

How many residential properties were sold annually in Cabo San Lucas since 2020?

Cabo San Lucas residential sales have shown significant volatility, with 2025 demonstrating the strongest recovery since the pandemic boom.

Year Units Sold YOY Change
2020 Est. 19% increase vs 2019 +19%
2021 Boom period (exact figures unavailable) Strong increases
2023 Q3 349 units (houses + condos) -16% vs Q2 2023
2024 Q4 271 units (houses + condos) +26% vs Q3 2024
2025 Q1 391 units (houses + condos) +70% vs Q4 2024

Sales volumes surged 25-27% in 2025 after experiencing a 16% decline in 2023. The sharp 70% quarter-over-quarter increase from Q4 2024 to Q1 2025 indicates robust market recovery and sustained buyer interest.

The post-COVID boom period in 2021 created exceptional sales volumes, though exact figures remain unavailable. The 2023 slowdown reflected broader economic uncertainty, but the market has since rebounded strongly with improved buyer confidence and financing conditions.

What are the current rental yields in Cabo San Lucas compared to three years ago?

Cabo San Lucas rental yields currently range from 6-10% gross for condos and well-located properties as of September 2025.

Three years ago in 2022, rental yields averaged 5.8-6.1%, indicating a meaningful improvement in investment returns. This upward trend reflects stronger rental demand driven by increased tourism and limited short-term rental inventory.

High season occupancy rates for short-term rentals range from 46-73%, with prime beachfront properties achieving the higher end of both occupancy and yield ranges. The improvement in yields has been particularly notable in the luxury segment, where international visitors are willing to pay premium rates.

The yield improvement coincides with Cabo San Lucas' tourism recovery and the growth in high-end vacation rental demand. Properties with ocean views, modern amenities, and proximity to Los Cabos' main attractions consistently achieve yields in the 8-10% range.

How does current property inventory compare to last year?

Cabo San Lucas property inventory reached 1,935 houses and condos for sale in Q4 2024, with 1,617 active listings in Q3 2024.

This represents more than double the inventory levels compared to 2023, marking a significant shift from the supply-constrained market of recent years. The inventory surge has created more competitive pricing conditions for sellers.

The Q4 2024 inventory levels reached a two-year high, providing buyers with substantially more options across all price segments. However, luxury beachfront properties and new developments in prime locations remain relatively scarce.

The increased inventory reflects both new construction completions and existing homeowners entering the market to capitalize on recent price appreciation. Despite higher inventory, absorption rates remain healthy due to sustained foreign buyer demand.

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What is the projected tourism growth for Cabo San Lucas in 2025 and 2026?

Cabo San Lucas tourism is projected to grow 5% in 2025, reaching a record 4.13 million tourists.

While specific 2026 projections haven't been published, growth is expected to continue above 4% based on current trends and infrastructure development. This compares favorably to the last decade's average growth rate of approximately 3.5%.

The 2024 growth rate was 7% compared to 2023, indicating strong momentum that's expected to moderate but remain robust. Tourism growth directly correlates with property demand, particularly in the short-term rental and luxury segments.

The growth trajectory reflects Cabo San Lucas' enhanced international connectivity, expanded resort infrastructure, and reputation as a premium destination. Sustained tourism growth above historical averages supports property price appreciation and rental yield stability.

What is the GDP growth forecast for Baja California Sur and its correlation with property prices?

Baja California Sur is forecast to achieve approximately 4.1% GDP growth in 2025, with slight moderation expected in 2026 while remaining Mexico's top region for economic expansion.

Historical analysis shows strong correlation between the region's GDP growth and property price appreciation, particularly in luxury segments. The post-pandemic period has demonstrated this relationship clearly, with both metrics showing exceptional performance.

The state's economy benefits from tourism, real estate development, and international investment, creating a self-reinforcing cycle of growth. GDP increases have consistently coincided with significant property appreciation, especially in resort areas like Cabo San Lucas.

The forecasted GDP growth for 2025-2026 suggests continued economic momentum that supports property price increases. The region's economic diversification beyond tourism provides stability for long-term real estate investment prospects.

How have construction costs changed and what are the forecasts?

Construction costs per square meter in Cabo San Lucas have increased approximately 50% since 2020, primarily driven by labor and material price inflation.

The cost increases reflect global trends in steel and concrete prices, combined with regional inflation and skilled labor shortages. These higher construction costs create a floor for new property pricing and support existing property values.

Forecasts for the next two years indicate further cost increases are likely, particularly for steel and concrete due to global supply chain factors and regional inflation. Labor costs are also expected to rise as demand for skilled construction workers continues to outpace supply.

Higher construction costs limit new supply additions and support property price appreciation by making new developments more expensive. This trend particularly benefits existing property owners and creates opportunities for value-add renovations.

What are the current median household income trends in Cabo San Lucas?

The median household income in Cabo San Lucas was MXN5,200 per month as of Q1 2025, representing a decrease of MXN150 per month (2.8%) compared to the previous quarter.

Long-term annual data for household income changes since 2020 is not readily available, limiting comprehensive trend analysis. However, the recent quarterly decline suggests income growth hasn't kept pace with property price appreciation.

The income levels highlight the market's dependence on foreign buyers and investors, as local income levels cannot support the current property price ranges. This dynamic reinforces the importance of international demand for market stability.

The gap between local incomes and property prices emphasizes Cabo San Lucas' position as an international luxury destination rather than a local housing market. This characteristic supports premium pricing but requires sustained foreign buyer interest.

How many new residential units are expected in 2025-2026 versus demand?

Precise projections for residential unit completions in 2025-2026 are not readily available, but high demand continues to outpace supply additions.

Current market dynamics show strong demand persistence despite the inventory surge in 2024. Construction delays and increased building costs have slowed new supply additions relative to buyer interest.

The luxury segment faces particularly limited new supply, with beachfront and premium view properties remaining scarce. This supply constraint supports price premiums for high-end properties and new developments.

Development activity focuses on luxury projects and mixed-use communities, but completion timelines have extended due to regulatory processes and construction cost management. The supply-demand imbalance favors continued price appreciation.

It's something we develop in our Mexico property pack.

infographics rental yields citiesCabo San Lucas

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.

What are the current mortgage rates and 2026 forecasts?

Average mortgage interest rates in Mexico currently range from 7.75-8.5% as of August 2025.

Major banks forecast rates to decline to approximately 6% by 2026 as inflation stabilizes and the central bank implements rate cuts. This downward trend should improve affordability and support continued buyer demand.

The declining rate environment benefits both local and foreign buyers seeking financing, though most international purchases in Cabo San Lucas are cash transactions. Lower rates could encourage more leveraged investment strategies.

Rate reductions typically correlate with increased property market activity and price appreciation, as financing becomes more accessible. The forecast rate decline supports positive price momentum for 2026.

What are the peso-dollar exchange rate trends and projections?

The Mexican peso has strengthened from Ps21/$1 to Ps20.13/$1 at the end of 2025, representing peso appreciation over the three-year period.

Analysts project the peso to weaken slightly to Ps20.70/$1 in 2026, but the currency is expected to remain relatively stable. This stability supports foreign investment confidence and luxury property market dynamics.

Exchange rate stability benefits both foreign buyers and peso-earning property investors by reducing currency risk. The relatively stable peso supports Cabo San Lucas' attractiveness to US and Canadian buyers who represent the majority of foreign purchasers.

Currency stability, combined with Mexico's favorable foreign ownership regulations, maintains Cabo San Lucas' competitive position versus other international luxury markets. Peso strength also supports local purchasing power for domestic investors.

How have foreign buyer transactions changed over five years?

Foreign buyers currently account for 60-70% of total dollar volume in Cabo San Lucas residential sales, with over 80% dominance in the luxury segment.

This percentage has remained steady to increasing over the past five years, primarily driven by US and Canadian buyers attracted to favorable regulations and market accessibility. The luxury segment shows 77% of total dollar volume driven by foreign purchasers.

Post-pandemic foreign buyer activity has shown strong annual growth, with international investors viewing Cabo San Lucas as a stable, accessible luxury market. Favorable foreign ownership regulations continue to support this trend.

Foreign buyer dominance creates price stability and supports premium valuations, as international purchasers are less sensitive to local economic conditions. This dynamic reinforces Cabo San Lucas' position as a luxury international destination rather than a domestic housing market.

It's something we develop in our Mexico property pack.

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.

Sources

  1. PropertyStar Cabo San Lucas House Prices
  2. James Edition Cabo San Lucas Real Estate
  3. The LatinVestor Cabo San Lucas Price Forecasts
  4. The LatinVestor Cabo San Lucas Real Estate Market
  5. Cabo Real Estate Services Q4 2020 Report
  6. Cabo Real Estate Services Q3 2023 Report
  7. Cabo Real Estate Services Q4 2024 Report
  8. Cabo Real Estate Services Q1 2025 Report
  9. Oceanside Los Cabos Market Reports
  10. Global Property Guide Mexico Rent Yields