Market Update

Most of you will be happy to know that the data shows that real estate prices in San Miguel seems to have moved into a reality zone in the past few months.  Below I show the data and what I think it indicates.

Our website page views and email inquiries seem to be on par for last year, which is a good indicator that interest in real estate in San Miguel continues strong.

Travel restrictions by the US and Canada will continue to hurt sales for a while, yet we are seeing more clients coming in spite of them, and also seeing more sight-unseen sales.

*The data below includes the last two weeks of December since there were no AMPI meetings.  So the January stats actually include about 6 weeks of data. 

MARKET ACTIVITY

Observations:

If you add 2020’s Average Price Reduction of 18.20% on 415 properties with the Sold Below Asking of 12.32% it equals a whopping 30.52%.  Considering there were also at least 106 properties just taken off the market, it appears that my previously described “over-priced” market has substantially corrected.

This doesn’t mean that every property sold for 30% less than the property was priced a year ago, but it does indicate way more pricing reality than we were seeing this time last year.  Adding the same data points for the six weeks reflected in January’s numbers, the 2020 30% number has already dropped to below 17% which indicates prices are beginning to stabilize.

I noticed a higher than normal number of lots reported sold in the January data which probably accounts for at least part of the reduction in Average Sale Price compared to all of 2020.  We’ll see in the next couple of months if the actual sales prices have actually dropped or not.

What This Means to Sellers

So many homes sold or were just taken off the market has helped reduce the months of inventory to around 33 months from 47 in October 2020.  This is good news for sellers but still indicates that there is a lot of competition.  Sellers need to make sure that their properties have some competitive advantage compared to similar properties for sale. 

I have posted some Market Update and Clients Need to Know articles on our website that may be helpful.  Also, if your current listing agreement is close to expiring, one of our agents would be happy to talk to you and come up with a strategy.

What This Means to Buyers

Compared to some of my previous Market Updates, stabilized prices make the process much easier and less stressful for buyers and remove many of their pricing doubts.  A slower covid market will keep it leaning towards remaining a buyers’ market compared to the sellers’ market of 2018. 

My belief is that at least for a couple of months many would-be buyers will postpone their trips and fewer will arrive. This means the best options will be available with little competition from other buyers. 

Frankly, I think that this is a good time to purchase for those who have been waiting.

We continue to have conversations with several buyers who want to take advantage of this opportunity.  A few who are in good health or not too worried about covid are flying here despite the restrictions, a few are now planning on driving here instead of flying, and a few more are looking to purchase sight-unseen from a distance. 

We are able to assist our buyers with the necessary testing requirements to reenter the US or test yourself before you return to Canada.

Where's The Market Going?

I don´t really see any data point which would cause prices to drop much further or cause prices to quickly appreciate.

• In general, San Miguel homeowners have paid cash for their homes and with the carrying costs so low, tend to just sit on them when the market is slow.  The price correction we have seen in the past few months is probably coming to an end as most of the fluff has been taken away.  Most will not sell at a loss even if there is continued downward pressure.  Unless something else in this list or unforeseen emerges, I wouldn’t expect any substantial changes in prices for the near future.
• Although this pandemic has hurt many, it has less so the demographic who typically buys homes in San Miguel.  Also, it has not taken away buyer’s liquidity like the global financial crisis of 2008 did when we saw huge stock market losses and a halving of real estate values in the US.
• The performance of the stock markets is something to watch over the next few months.  Although fewer buyers are actually depending on selling stocks to make a purchase, drastic corrections can cause consumer confidence to fall and new highs will cause consumer confidence to strengthen.
• The one area that somewhat concerns me is a recent report that showed 6.7 million people in the US are in some kind of mortgage forbearance program with many of those programs set to expire in March and April.  That represents about 5.5% of all households.  Although it appears many of those are working their way out of the program and be fine with full employment again, the larger concern is if there are more shutdowns and job losses which will raise the delinquency numbers.  Banks dumping large numbers of repossessed homes onto the market at discounted prices pull all home values down. 

Covid in San Miguel de Allende

It’s hard to know what is really happening in San Miguel since testing is not necessarily available to all for free. The state of Guanajuato is still listed as red. 

From a strictly observation point of view, yes there seem to be more cases but fewer deaths.  I now personally know many people who have had covid or think that they have, even though some were never tested. All but a few were mildly sick for a day or three, however, I know or have heard of a few who have been very sick for a few days but not hospitalized. The only deaths I know of were people who had other serious underlying issues. 

Realty San Miguel has successfully helped more than 1,500 clients buy or sell a home. It would be our honor to help you also.