San Miguel de Allende continues to escape the global real estate standstill.
While much of global real estate markets in the western world have become stagnant with little volume because of increasing mortgage interest rates, San Miguel de Allende continues with better than average sales. Perhaps slightly below the peak sales level seen in 2022, but still a very nice volume.
There are at least four reasons that keep San Miguel de Allende´s real estate market strong.
First and foremost is people´s love of San Miguel, which has continued to rank well in global list of desirable cities to both live and to visit. In October of 2022 San Miguel won Conde Nast´s Readers Choice Awards as the Best Small City in the World for the third year in a row. This only increases the number of people who have San Miguel de Allende on their bucket-list.
Then the fact that Mexico has no covid entry requirements, neither testing nor proof of vaccination, means that Mexico has seen record numbers of visitors in 2023. This has helped San Miguel de Allende become a desired destination for those who can work remotely.
Mexico, in general, continues to see substantial manufacturing and economic growth because of the global trend replacing off-shoring with near-shoring and shortening the distance between manufacturing and the end consumer. Although much of this growth is from US companies, an increasing number of Western European companies are moving their manufacturing here as the availability natural gas in Western Europe dwindles.
Lastly, San Miguel continues to be a benefactor of the US, Canadian, and global migration trends that emerged as a result of the pandemic and with people looking for a safer or more stable place to live. Whether that be for physical safety issues or political concerns, Realty San Miguel continues to see a percentage of our clients who are escaping some undesirable situation - real, perceived, or just anticipated in the future. I wrote more about this in the last Market Update.
There were not a lot of changes to comment on when looking at the data comparing the last four months of 2021 to the last four months of 2022.
SEPT-DEC 2021 COMPARED TO SEPT-DEC 20
|Sept – Dec 2021||Sept – Dec 2022|
|Avg Sale Price||$529,360||$517,014|
|Avg Days On Market||297||244|
|% Mexican Buyer||49||53|
|Reported Under Contract||130||131|
|Taken Off Market||35||30|
|Properties On The Market||700|
COMMENT ON PRICES
We have now certainly seen an increase in real estate prices. However, as much as I would like to tout that real estate values in San Miguel are appreciating, I am hesitant to do so. Unfortunately, I think what we are actually seeing both in real estate and in consumer goods and services is the devaluation of our fiat currencies. Fortunately for now, the US dollar is the desired currency and will probably remain stronger than others for a while.
What Will Push the Market Upward
- Smart money moving to hard assets – I continue to see and read of many individuals who are afraid of for the future and who are choosing to move their money into hard assets versus having it in the bank. This will help reinforce real estate prices in San Miguel.
- Minimal covid restrictions – If Mexico continues with minimal covid or entry requirements, this will have a favorable impact on the real estate market.
- Migration - If migration trends continue, this will be positive for San Miguel.
What Will Push the Market Down
- Mortgage Interest Rates - Although many analyst think the FED will not continue to raise rates, if you read the FED’s own statements, they are point blank saying that they will continue to raise rates. Mexico has responded at every turn by raising their rates also, which has made mortgage rates in Mexico in jump from pre-pandemic of around 9% to around 15%!
- World Uncertainty, war – Since my last Market Update the Russia Ukraine war seems to be evolving quickly into a war between Russia and all of NATO – so far mainly verbally. The potential for this to escalate to NATO boots on the ground, or Russia retaliating against NATO seems huge. Then throw in recent events involving China… None of this can be good long term for the real estate market. Hopefully cooler head will prevail.
- BRICS – I am keeping my eyes on the BRICS nations (Brazil, Russia, India, China, and South Africa) and their continued efforts to create a new financial system to at least bypass the USD and SWIFT and perhaps where their currency or currencies will be backed by commodities. Supposedly, there are more than 25 other nations wanting to join them, including at least expressed interest by Saudi Arabia. I’m doubtful that they can have overnight success in replacing the USD as the world reserve currency, but each step of success will be bad news for the value of the US dollar.
Reviewing the new listings announced every week, it seems there is a higher proportion of really nice listings compared to normal. If you haven't been able to find what you are looking for you may want to start checking the inventory again or use the Notify Me function based on your personalized search criteria.
Several of you have expressed an interest in the Rosewood Residences which have been very difficult to show because the hotel will not allow them to be shown when they are occupied by guests. However, I now have videos of most of them if you still have an interest and they are also notifying me when there will be a two hour window between check-out of one guest and the check-in of the next. These homes are four and five bedroom homes that can be used independently of Rosewood or put immediately into the Rosewood rental pool. Most range in price from around $1.7M to $2.0M. There is also one being privately offered which is just over a million and has three bedrooms. In my opinion, I think they are an incredible investment and the larger ones are actually being offered for 20% to 25% less than the original developer offered them several years ago.
Thanks to Lilia Aguilar, one of our sales and rental agents who tracks all of the sales data and helps me compile this update.