The Other Immigration: Will NAFTA’s Boomers Boom Again?

Frontera NorteSur
    It was a time when even the taxi drivers were brokering real estate deals.
    That’s how Sarahi Cortez remembers the days when cash-laden retirees and other baby boomers from the northern NAFTA countries were arriving in Zihuatanejo for their piece of the Mexican Dream.
    “There was a boom in Zihuatanejo, everybody wanted to buy it,” says Cortez. A sales associate for the Prudential California Realty company, Cortez describes a starkly different market from just a few short years ago. “There are many foreigners looking at property but few are buying,” Cortez says. “There is a lot of offer but no demand.”
    When foreign buyers do purchase properties these days, they tend to spend in the lower to middle-priced range, she says. Prices for commercial and residential properties have stayed flat during the past two years, Cortez adds.
    “We in the tourist areas are the most affected in the country by the economic crisis,” the young professional maintains.
    Situated next door to the mega-resort of Ixtapa on Mexico’s Pacific Coast, Zihuatanejo has felt the sting of the Great Recession and the bite of other troubles blamed for keeping foreigners away.
    Though in more modest numbers, fair-skinned foreigners are still visible in Zihua-tanejo, especially the graying legionnaires of the Baby Boom Generation attired in their floppy hats, trusty shorts and trademark shades. Almost every morning during the high season, a duo of musicians appears at a popular local restaurant and cranks out a saxophone-spiced version of the Beatles’ “When I’m Sixty-Four” for the aging and frugal diners.
    Up the coast in Puerto Vallarta, Stan Gabruck has also seen the boom and bust. A former Boeing consultant, Gabruk relocated to the tropical town about ten years ago. After a stint as a time-share seller, Gabruk opened his Master Baiter’s sport fishing and tackle shop and promoted deep sea expeditions from Puerto Vallarta’s Marina.
    A man of wry humor with a quick opinion, Gabruk was part of the big wave of Canadian and US nationals drawn to Mexico during the past two decades.
    When Gabruck came to Puerto Vallarta, the town was expanding by leaps and bounds. “The boom was happening big time,” Gabruk recalls. “The money was just flowing freely.”
    And just up the road, the Riveria Nayarit was in the throes of an even more spectacular construction frenzy. Japanese investors bankrolled the mammoth resort complex at Punta Mita, upscale condos rose above the sands and ocean-front lots in Bucerias north of Puerto Vallarta soared in price from $20,000 per hectare to as much as $400,000, according to Gabruk.
    Tourists and prospective new residents came flush with cash-or at least with credit. In the USA of George W. Bush, mortgages for second homes in Mexico became available, soaring property values allowed people to milk their home equity and credit cards tumbled out of billfolds.
    Cortez and Gabruk were immersed in what might be termed post-tourism, the advanced stage of the travel economy. In Mexico’s case, the legendary jaunts of John Wayne and the Hollywood Gang to Acapulco’s beaches helped make the country a hot spot in a new international business fueled by cheap oil and modern jet technology. For some, vacations to romantic getaways eventually led to new homes. In different regions of Mexico, new colonies of US and Canada-born immigrants emerged.
    Puerto Vallarta and Ixtapa-Zihuatanejo were far from the exception. A 2008 study by the University of Sinaloa’s Omar Lizarraga Morales detailed the boomer boom in places like Ajijic near Guadalajara, where the US-born population exploded 581 percent from 1990 to 2000, and Los Cabos, which witnessed a 308 percent increase of the same population during the same decade.
    Nationwide, Mexico’s National Institute of Statistics, Geography and Informatics (INEGI) counted a huge increase in the foreign-born population, which grew from 208,340 people in 1990 to 824,492 in 2000.
    In Mazatlan, Sinaloa, the US-born population increased 95 percent in the two-year period from 2005 to 2007. According to Lizarraga, 1,135 housing units were sold to foreigners in the Pacific Coast port from 2003 to 2008. Mazatlan’s foreign-born, middle-class retirees were representative of many new immigrants in Latin America whose desire to stretch modest pensions was “the principal factor of attraction in migrating,” Lizarraga wrote.
    Yet storm clouds were gathering over the fiesta.
    In Puerto Vallarta, Stan Gabruk says he suspected “funny things” were afoot after he had trouble getting paid for fishing trips charged on credit cards. The businessman discovered that some customers would charge a trip on a new card and then immediately cancel their plastic ticket to Paradise once they got home.
    “After that happened to me about 8 times in five months, I realized that credit cards weren’t doing me any favor,” Gabruk recalls.
    As the cash stream shriveled up, so did the realty business. Today, more than two years after the Wall Street crash, unsold properties abound. A winter edition of the Puerto Vallarta Property Guide contained 11 pages displaying tiny photos of homes and condos ranging in price from about $60,000 to $6.5 million.
    In addition to economic woes, Mexican tourist towns soon began facing a serious image problem due to media fall-out from the so-called narco war.
    Worse yet, an increasing number of visitors from the US and Canada witnessed some act of violence somewhere in Mexico or heard about someone who did. The conventional wisdom in the tourism business is that for every bad rap, at least 10 new tourists are lost from word-of-mouth.
    Perhaps typical is a woman recently overhead in a New Mexico restaurant who told her companions that she used to travel to Mexico all the time but was avoiding the country for now. To an attentive table, she explained how the brother of a Mexican acquaintance was gunned down in a border town while eating in a restaurant- a presumed victim of being in the wrong place at the wrong time.
    Many residents of Puerto Vallarta and Zihuatanejo, which have suffered little violence of late, protest they pay the price for sins committed elsewhere in their huge and diverse country. From their standpoint, it’s almost as if a Mexican tourist would avoid traveling to San Francisco because of violence in Albuquerque.
    “This really isn’t a combat zone. We aren’t in a war,” Zihuatanejo resident Cortez insists. “People aren’t being killed in the streets as they say.”
    Still, violence in many parts of the country, coupled with the now-routine travel advisories, keep grabbing the headlines in the US media.
    Newly released 2010 Mexican Census data suggest the twin demons of economic disaster and violence could already have gone beyond impacting tourism per se and slowed the migration of NAF-TA-zone retirees and other foreigners, especially within the past few years.
    Although INEGI’s latest tally counted 961,121 foreign-born residents of all nationalities, a number up from the 824,492 people counted in 2000, the pace of growth from 2000 to 2010 was much slower than in the decade of 1990-2000. Notably, the slow-down occurred when more baby boomers were retiring than ever before.
    Of the total foreign-born population, the National Migration Institute estimates about 300,000 people hold permanent residency status while the remainder resides in the country during part of the year, usually between the months of November and April when flocks of northern snowbirds hit Mexican shores.
    Environmental degradation could be another unsettling factor in dissuading greater numbers of retirees and others from packing up their belongings for a new life in Mexico.
    Based in the San Diego area, the International Community Foundation (ICF) analyzes the topics and trends that shape the lives of the retiree expatriate and part-timer population in Mexico, which can be an elusive bunch to track since many people frequently travel back and forth across borders. In a new report, the ICF examines the environmental sensibilities of US-born retirees and residents living in Mexican coastal communities.
    Based on a 2009 survey of US retirees, the ICF study found that environmental and security issues rank high in importance among US-born residents of Mexico. More retirees prefer bird-watching to playing golf, and nearly two-thirds said environmental sustainability was “somewhat important” or “very important” in making home purchases.
    The survey questioned 840 retirees, the vast majority of them homeowners.
    “Most of the people who bought, bought their places in cash and owned them outright,” ICF President Richard Kiy told Frontera NorteSur.
    Kiy says 93 percent of the participants reported no security problems, but a “sizable percentage” admitted that family and friends were reluctant to visit them.
    In answer to a question about what would force them to abandon Mexico, 57.6 percent of the interviewees responded that a noticeable increase in crime directed at retirees or tourists could spell the end of their Mexican Dream, while 44.5 percent pointed to declining environmental quality from increased sewage run-off, litter and water problems.
    Polluted beach waters have been a persistent problem in many Mexican coastal communities frequented by foreigners. Even the limited water quality sampling reported by Mexico’s Secretariat of the Environment and Natural Resources shows excessive levels of fecal coliform bacteria in beach waters in Zihuatanejo, Puerto Vallarta and other popular locations on multiple occasions from 2009 to 2011.
    But Kiy argues the sheer existence of 75-80 million retiring baby boomers from the US alone represents a potential demographic and historic bonanza not only for Mexico but other countries in Latin America and across the globe as well.
    “Not all (baby boomers) are going to have the means to retire comfortably in the US,” Kiy asserts. “Mexico has a unique window of opportunity to get things right,” Kiy says.
    In order to attract new full-time residents, initial and often repeat visits are critical first steps in many cases, Kiy stresses.
    The ICF’S findings come at a critical moment for Mexico’s tourism and retirement industries. According to the federal Tourism Ministry, revenues from international tourism alone amounted to nearly $11.9 billion in 2010.
    Despite economic and security challenges, the government of President Felipe Calderon has announced an ambitious plan to quadruple national income from international tourist spending and reposition Mexico in the top five rung of global travel destinations. A central part of the strategy consists of constructing more mega-resorts like the mammoth development planned for the southern coastal zone of Sinaloa.
    Looking forward to the grand prize, the Calderon administration has declared 2011 “The Year of Tourism.”
    Kiy, for one, is concerned that the Mexican government’s ambitious tourism goals could result in more over-development and backfire among potential visitors and new residents concerned about environmental quality.
    Considering all the turbulent economic, social and political forces at work, will a new wave of retiring boomers call Mexico home in the future? Will Mexico witness a new boomer boom?
    In Kiy’s view, contradictory tendencies are at play. He says that while the US economic crisis has hampered financing sources for new and second homes and forced some people to delay retirement, Mexico is still a place where many can “retire with a little more dignity” than they could at home, given the fact that medical and housing expenses keep outpacing retirement income.
    At the end of the day, Mexico could be an opportunity for a sizeable group of people to open a “Chapter 2 in their lives,” Kiy contends.
    Stan Gabruk agrees. “I think you’re going to see a downturn, but it’s not going to stop,” Gabruk predicts. “Mexico is the only affordable option for many individuals to retire. People can’t afford to stay in the US.”
    Gabruk insists that a single woman on Social Security can live safely and comfortably in Puerto Vallarta on as little as $1,100 or $1,200 per month.
    His opinion has some influential support: The American Association of Retired Persons’ magazine ranked Puerto Vallarta as the best place to live abroad in 2010.
    According to Gabruk, another plus is the low-cost health insurance available to holders of FM3 and FM2 visas, Mexico’s version of a public option for migrants. In return for small annual fees, foreign-born residents can access basic medical care at the Mexican Social Security Institute network of hospitals.
    “When it all comes to push and shove, you can live on bananas, fish and coconuts,” he says. “You can’t do that in the States.”

The Other Immigration: Will NAFTA’s Boomers Boom Again?

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