Four Plus Year of Inventory and Growing
I want to talk about what no one else is talking about, which is San Miguel de Allende’s current four years of housing inventory backlog. To preface the conversation, I should mention that San Miguel´s real estate market always has a high inventory which is measured in years instead of months. (I’ll explain why in different blog post.)
Sales in 2019 had already slowed down a lot and we ended the year with close to three years of inventory. Throughout 2019, while sales volume was slowing, the number of new listings per month were anywhere from three to eight times the number of properties sold which built up the inventory quickly. In 2020 the inventory is still growing, but at a slower pace than 2019.
The graphic below is auto generated from our database and is a representation of this dynamic and which shows how many more resale listings there are in comparison to resale sales. Each vertical line is the ending of a quarter.
In early 2017, our inventory was as low as I had ever seen it and within the MLS there were only 175 properties listed for sale. Today, there are over 850 resale properties for sale and it looks like there will only be around 150 sold this year.
What this means for sellers?
Sellers have to realize that the higher the inventory, the less chance that they have to sell their property. If for example there are only 150 resale homes sold this year and we have 700 in inventory, this means you have about a one in five chance of selling your home this year. (If you are a seller, you should see my blog post: Is My Home Priced Too High? Why Hasn’t It Sold?, and What Will Help My House Sell?)
What this means for buyers?
The bottom line for buyers is that it puts you in the strongest negotiating position. Although there will be many sellers who will never negotiate their price and will leave their property on the market for years without movement (this is typical for San Miguel), there will be a number of sellers who either need or want to sell and will negotiate accordingly. The issue will become working with the agent who really understands the market conditions and who has the tools to evaluate a property’s current value. (see my blog post: 50% of Homes On The Market Are Overpriced!
We at Realty San Miguel, feel like this is an area where we set ourselves apart. We believe we have by far the best database in San Miguel and can easily run an algorithm on any property you are interested in. In March of 2020 we begin data analysis on every property in our database trying to determine what the value would have been at the peak of the market in mid-2018. With this value, we can tell you if a property is already priced 10%, 20% or even a few 50% below the peak of the market. However, and unfortunately, when we ran our algorithm in April, we were still showing 40% of the properties for sale price above what their peak price would have been at the peak of the market in 2018 when the market had really already dropped by 10% to 17% in 2019.
There is a saying by real estate investors that says, “the money is made on the purchase, not the sale.” If you are interested in maximizing your dollars and not wanting to overspend, let one of our agents help you. We often know which properties are already aggressively priced and which sellers are the most motivated to negotiate.
We would be privileged to help you find your dream home in San Miguel de Allende.
Philip Hardcstle
