They’re Building in Baja, and Boomers Are Buying

Times Staff Writer

For more than a decade, the high-rise tower at Calafia Resort and Villas was an empty shell, a stark reminder of oceanfront dreams gone sour.

Built on the northern Baja California coast shortly before the Mexican peso crash of 1994, the project couldn’t find any buyers. Over the years, rumors abounded: The developers had gone broke; the tower was leaning.

Calafia’s owners denied those reports, but it didn’t matter. Even at prices that wouldn’t buy a maid’s quarters in Malibu, the developers couldn’t sell the condos, with their floor-to-ceiling walls of glass and wraparound balconies featuring 180-degree views of the Pacific Ocean.

Until now. Luis Maizel and his partner, Igal Gordon, have nearly sold out the first Calafia tower, where a two-bedroom unit costs $265,000, more than double the price of two years ago. Three-quarters of the 48 condominiums in the 16-story second tower are sold. And the developers are about to begin construction on a third tower, one of several dozen oceanfront developments that are being planned along the 68 miles of rugged coastline between Tijuana and Ensenada.


After years of languishing behind its more glamorous southern cousins -- the twin resorts of Cabo San Lucas and San Jose del Cabo -- the northern Baja peninsula is coming into its own.

Long considered a weekend party destination for Southern California students and a low-rent getaway for American and Canadian retirees on a budget, the northern Baja coastline is undergoing a real estate boom fed primarily by Americans who are tapping their equity back home to buy a weekend getaway or retirement home south of the border.

These aren’t aging surfers seeking beachfront shacks or Midwest retirees fleeing the snow in their Winnebagos, though those folks still come here in large numbers. Real estate agents say at least 80% of the people buying today on the Baja coast are baby boomers who are spending $300,000 and up to purchase high-rise oceanfront condominiums and large, single-level homes with enough room for kids, dogs and toys.

By cashing out on America’s home equity explosion, some of Baja’s newest residents are trying out early retirement.

For Beth Bemiss and her husband, Henry Suri, life in San Diego had become a tiring whirl of long workdays and social obligations. So last year, Bemiss, 55, owner of a small interior design company, and Suri, 51, a holistic health practitioner, decided to take advantage of the Southern California real estate boom and head to Costa Rica.

The value of their condo in San Diego’s Pacific Beach community had skyrocketed to $1 million, and the unit sold faster than anticipated. On a whim, they decided to spend a month in Baja while they closed up their businesses and said their goodbyes. After a few weeks of lazy days in the sunshine and exploring the Baja coast, they were hooked. They still went to Costa Rica for two months, but concluded that they preferred Baja because it was less hot and humid and closer to their families.

Last April, they bought a two-bedroom ocean-view villa at Calafia for $190,000.

With their kids grown and expenses low, Bemiss and Suri figure they can live off their savings. Food and utilities are cheap, the surfing is free and they can enjoy a nice salmon dinner at a restaurant for less than $15. They make occasional trips to San Diego, mostly to stock up on health food at Trader Joe’s. And though they lock their doors and watch where they drive after dark, they said they felt as safe in Baja as in Pacific Beach.


“I sleep much better here than I did in the States,” Suri said. “I go to bed at night listening to the ocean, and we’re woken up by the birds in the morning and not the helicopters and traffic.”

But owning real estate in Mexico carries serious risks for foreigners. Many Americans still recall photos of U.S. citizens being evicted from their homes on the Punta Banda peninsula south of Ensenada in 2000. The Mexican Supreme Court ruled that the land did not belong to a peasant collective that leased the parcel but rather belonged to several private parties.

Under the Mexican Constitution, foreigners are prohibited from directly owning land within 30 miles of the coastline or 60 miles of the border. But owning land indirectly has become much easier. Foreigners now can purchase property through a Mexican bank trust known as a fideicomiso, and title insurance is available through companies such as North American Title Co. and Stewart Title Guaranty Co.

Mexican developers often presell their projects and use the down payments to finance the construction, warned Kathy Katz, a real estate agent who works for Calafia. If those developers get into trouble, they might slow down construction or even abandon the project.


Katz advises buyers to make sure that the developers place deposits in escrow or take out a construction bond to protect purchasers.

Foreigners traditionally have had to pay cash for their real estate, because until recently there were few institutions willing to lend money to foreigners on residential real estate in Mexico. But in the last year, a number of U.S. firms, including First Capital Mortgage of Irvine, CS Financial Inc. of Beverly Hills and GE Capital, have begun offering mortgages to Americans buying in Mexico.

Jeff Seabold, president of CS Financial, which has offices in Puerto Vallarta and La Paz and is about to open an office in northern Baja, said his firm had 40 loans for Mexican property being processed.

“We think the [market] is going to explode,” he said.


It already has. The transformation of northern Baja is taking place with lightning speed. The toll road from Tijuana to Ensenada is lined with billboards promising oceanfront views and sandy beaches at a discount, and bulldozers are as common as palm trees along the rugged coast. “Ocean View for Sale, House Included,” reads one sign.

Real estate developer Gabriel Robles, who is developing a 611-acre housing project north of Ensenada called Ventana al Mar, said he was recruiting Mexican graffiti artists to paint a colorful new entryway -- “The Window to the Soul of Mexico” -- to replace the bleak, garbage-strewn border crossing that currently exists at San Ysidro.

Diane Gibbs, owner of one of Baja’s leading real estate companies, expected the 9/11 attacks to damp American enthusiasm for travel abroad. Instead, her phone has been ringing off the hook with calls from Southern Californians looking for a vacation home they can get to by dinnertime Friday.

“People from L.A. say we can be here in 2 1/2 hours,” said Gibbs, whose firm is representing seven new developments along the Baja coast that will bring at least 1,278 units onto the market over the next three to four years. “That’s what they like. They don’t want to fly anymore.”


Gibbs, who has lived in Baja for 18 years, said her clients wanted Mexican- or Spanish-style architecture but with all the amenities of home, including a “two-car garage for their $50,000 cars” and a “toy room for their surfboards.”

At Las Ventanas, a 38-home gated community developed by Irvine’s Waterfront Development Co., where the prices range from $345,000 to $890,000, it took just 45 days to sell the eight oceanfront properties, Gibbs said.

Work is also underway at Porto Hussong, a high-end condominium and housing project north of Ensenada that is being built in the style of an early-1900s Spanish colonial village. The Ensenada project will include a shopping center and a 250-slip marina.

The Baja lifestyle is not for everyone. Gibbs recently gave a tour to an American couple interested in being closer to their daughter in Los Angeles. After two hours of complaints about the lack of landscaping, the garbage and the broken-down cars, she politely suggested they consider someplace like Chula Vista, a San Diego suburb.


Rapid growth is also putting strains on the region’s infrastructure, particularly the water supply and sewage systems.

Stocking the refrigerator and closets has gotten a lot easier in recent years, with the construction of the toll road from Tijuana and the arrival of big-box stores such as Wal-Mart, Costco and Home Depot. Cellphone service is now widely available, and a new hospital just opened in Tijuana that is catering to Americans.

“You have to have a pioneering spirit to even consider it,” Gibbs said of Baja living. “You can’t just run down to the corner to pick up something, and there’s a few little inconveniences you have to plan for.”