GUADALAJARA, Mexico - Seven months ago, the discovery of 18 headless bodies stuffed into cars on a highway here jolted a nearby community of thousands of American and Canadian retirees.

But now, those who continue to call the area home insist they feel safer in Mexico than they did in their former homelands.

"I think it's settled down now, I don't think there's the same anxiety," said Robert Owen as he walked his dog in a park on the north side of Lake Chapala one recent sunny afternoon.

The area around the lake, in the rolling mountains southeast of the western Mexican city of Guadalajara, is home to a large population of American and Canadian expatriates. A town called Ajijic, on the north shore of the lake, has neighborhoods with clusters of foreigners large enough that one can easily get by without knowing much Spanish.

Many chose the area, where the daily high hovers around 80 degrees year-round, because of its mild climate.

After the grisly incident in May, local law enforcement distributed phone lists to residents, letting them know how to get in touch with on-duty police officers if they noticed any suspicious activity. That helped put residents' minds at ease, said Owen, who moved to the lake after living near Niagara Falls in Canada.

But the escalating violence between rival drug trafficking organizations in western Mexico - often with jarringly high body counts - has become too much for some living around Lake Chapala.

News reports say the Zetas, a powerful and ruthless drug cartel based along the southern border with Texas, are battling local gangs for control of drug corridors around Guadalajara. The gangs are allied with the Sinaloa Cartel, an organization headed by Mexico's top drug lord, Joaquín "El Chapo" Guzmán.

The brutal clash led to the beheadings in May and to another incident in September, when the bodies of 17 men were found bound with ropes and chains and dumped on a roadside on the south shore of the lake.

"We Americans do not live in a perfect world, but at least we can drive to and from the airport on our highways without fear of being carjacked, kidnapped, robbed or having our car burned," said Terry Smith, who lived beside the lake for five years. The discovery of the dismembered bodies in May was a "final straw" for him, he said. He and his wife moved to Denver.

A lack of trust in authority creates an atmosphere of lawlessness in Mexico, he said.

"My wife is Mexican, and I have assured her that if she ever has a problem here in Denver, she can get assistance from the police or firemen and not think that they might be as bad as the 'bad guys,' or even part of them," he said.

Smith, who was a Realtor in the area, said many people have moved out of the area, once they're able to sell their houses.

In contrast, those who remain say there's little risk for foreigners there. The concerns of those who left are overblown, they say.

Barbara Wills, who moved to Lake Chapala 10 years ago from Calgary, Alberta, said she feels safer and more of a sense of community, than she did in Canada.

"Everybody looks out for everybody," she said.

Wills, who's a sales associate with the real estate company Absolut Fenix, said that after the May incident she was more aware of her surroundings when going out at night, but now her daily routine has returned to normal.

There hasn't been a flood of new homes listed for sale recently, she said. Retirees who choose to move to a new country tend to be adventurous.

Her colleague Dixie Nicholson, a broker at Absolut Fenix, said when people leave Lake Chapala they usually do so because of health issues and the need for medical services.

Many Americans were forced to move after the housing bubble burst in the United States, as those living off retirement benefits watched their savings dwindle, Nicholson said.

Delores Dean, a Tucson resident, said she moved back to the United States after her husband died about a year ago. Security was never a concern for her, she said.

"If I had the means, I'd move back in a heartbeat," she said.

Dean and her husband moved to Lake Chapala from Tucson after their retirement and lived there for 15 years. Dean, who has three daughters, said she's now staying in Tucson to help care for her grandchildren.

Numbers from Chapala's multiple listing service largely mirror housing trends in the United States, with prices and sales peaking in 2006, then falling steadily.

In 2006, Chapala's multiple listing service recorded 499 sales. Sales still haven't recovered. Through October of this year, there were 163 sales. But Wills said the winter months can be busy, and sales should pick up.

Slower sales and reports of nearby drug violence haven't been enough to scare away all investors and potential property buyers from the lake.

Marie Dwyer-Bullock - who moved to Lake Chapala from Alberta, Canada, in 1995 - co-founded a company that facilitates the transition of foreigners from their home countries to Mexico.

Dwyer-Bullock's company, Focus On Mexico, brings about 200 people per year who are interested in moving to or buying property in the country. She acknowledged that number has fallen in recent years, but she attributed that to the economy and uncertainty surrounding the U.S. presidential election.

Any violence hasn't had much impact on foreigners living around Lake Chapala, she said.

"Most of the violence here is between the drug cartels or between the drug cartels and the police," Dwyer-Bullock said.

Merrily Hardy of Albuquerque said she's considering buying property near the lake either to live in or rent out. She said she isn't worried about drug violence. Being retired, Hardy said the economic situation in the United States led to her to look at investing internationally. She did some online research, found Focus On Mexico, then came down to see Lake Chapala in person.

After spending a couple of days there in late October, she said she's only become more convinced it is a viable option.

Six steps to size up an overseas retirement plan / D4

Dale Quinn is a freelance reporter based in Guadalajara. Contact him at