This analysis is based on MLS data from January 1 through June 15, 2026, and includes luxury homes priced above $2,000,000 USD located throughout the Los Cabos market, from Rancho San Lucas in the Pacific area to El Encanto de la Laguna in the East Cape/San José del Cabo area.
The data indicates that the luxury housing market is currently favoring completed homes over pre-construction inventory. While developers continue to introduce new projects, buyers are demonstrating a clear preference for homes that are already built and available for immediate occupancy.
The primary factor driving this trend is the widening gap between replacement cost and resale value. Construction costs in Los Cabos have increased significantly in recent years due to higher labor, material, infrastructure, financing, and development costs. As a result, many new luxury homes require pricing that exceeds what buyers are currently willing to pay. Meanwhile, many existing homeowners built their properties years ago at substantially lower costs and can sell at prices that remain attractive to buyers while still generating a profit.
This pricing disconnect is reflected in the market data. Pre-construction homes are achieving an average sold price of approximately $1,365 USD per A/C square foot, while completed luxury homes are generally trading closer to $1,000 USD per A/C square foot, representing a premium of roughly 35% for new construction. For a 5,000-square-foot luxury residence, this difference can exceed $1.5 million USD, making completed homes an attractive alternative.
Sales activity further supports this conclusion. The pre-construction segment recorded only five closed sales during the period analyzed, compared to thirty-eight closed sales for completed homes. Additionally, many pre-construction projects required more than two years on the market before securing buyers, while many completed homes sold within a significantly shorter timeframe.
From a buyer's perspective, completed homes offer several advantages, including immediate use, known construction quality, established landscaping, furnished options, and the elimination of construction delays and cost-overrun risks. As a result, many buyers are choosing existing inventory rather than committing to a multi-year development process.
For developers, the current environment presents challenges. Elevated construction costs and increased competition from resale properties are compressing margins and extending absorption periods. Only projects offering exceptional locations, branded residences, unique amenities, or superior design are consistently able to justify the premium pricing required by today's construction costs.
Overall, the data suggests that the Los Cabos luxury market has entered a phase where buyers have more options and greater negotiating power. Until resale inventory declines or construction costs moderate, completed homes are likely to remain highly competitive relative to new construction, creating opportunities for buyers while presenting ongoing challenges for developers. The current market is effectively demonstrating that many resale properties are trading at or below replacement cost, making it increasingly difficult for new development projects to compete solely on price.
