In the article: [Americans looking to Mexico for real estate [Bankrate.com]](http://www.statesman.com/business/content/business/stories/03/5mexicorealestate.html) 1.5 million Americans own real estate there. Values have tripled in the past 5 years, outpacing the US housing market.

However, foreign buyers pay premiums such as 30% down or financing through Mexican banks at 15% or more. Some US banks are starting to offer financing but the laws are different in Mexico providing more risk.

“[Development was spurred by skyrocketing real estate prices in the USA [USAToday]](http://www.usatoday.com/news/world/2005-11-30-baja-boom_x.htm?csp=N009) and changes to Mexican laws in the wake of the 1994 North American Free Trade Agreement (NAFTA) that encourage foreign investment and make purchasing beachfront land easier.”

In Baja, a 1500 SqFt house costs in the mid-$200k range.

I would suspect that demand for properties across the border would ease if demand in the US eases. Although the financing costs are higher in Mexico, [the actual values are far lower [WSJ]](http://online.wsj.com/article/SB113529348368429901-search.html?KEYWORDS=housing&COLLECTION=wsjie/6month) which is a lure for US buyers.