There was certainly more activity with potential buyers in October and the first week of November than there was in September. It seems that each month there are more people who are willing to travel, and many clients are telling us via email that they are planning on coming after the first of the year.  Our website and email activity continues at almost the same pace as before the pandemic, which indicates that there is still a strong interest in San Miguel, although rental inquiries have declined and purchase inquiries have increased. We still continue to have absentee buyers who are buying homes sight unseen. 

When we started this crisis, my first thoughts were to compare it to the 2008 global financial crisis.  Yes you could say this is a crisis, but there is a key difference.  In 2008 most buyers were stripped of much of the equity in their homes and much of the equity in their investments.  However, this pandemic, so far, has not robbed buyers of their liquidity and we still have sales at all price points.

MARKET ACTIVITY OCTOBER 2020

28 - Announced Under Contract

18 - Actual Closings

$233,564 – Average sales price

-11.05% - Average sold price compared to listing price

34 - New Listings

21 - Price Reductions

4 - Taken Off The Market

856 - Total Properties Listed

$499,000 - Median Price of All Properties

$542, 500 - Median Price of New Properties Listed

$350,000 - Median Sold Price

47 - Months Of Inventory (based on actual closings to total properties listed)

Observations: 

New Listings minus those Taken Off The Market continues to outpace Actual Closings, which means the inventory continues to grow. There continues to be a disconnect between Listing Prices of new properties and Average Sales price. From our database which shows a one year running average, New Listing prices were $1,238,487 while the average sales price was $765,083.  This somewhat reflects the disproportional number of million dollar plus properties that were put on the market in the last year. But still a disconnect. 

There were two positives in October.  First, the median price of all properties declined by $38,000. Second, the percentage sold below the asking price increased to 11.05%.  This means that sellers are being a little more negotiable on their prices. However, we had two disappointing interactions regarding offers in October where we felt our buyers were making reasonable offers and the sellers wouldn't come down on their price.  Both sets of buyers had to look for another property.  So not all sellers are in the mood to negotiate yet.

Our algorithm still indicates that 50% of the homes on the market are overpriced and you can read more about this in a couple of other Market Updates that I have posted recently.

What This Means to Sellers

If you are a seller, inventory increasing to 47 months should give you pause and cause you to consider your strategy and pricing.  47 months of inventory means that only one out of every 47 properties are likely to sell in the next month and that you only have about a 25% chance of selling in the next year.  47 months also represents the whole market. Homes under $500,000 are probably selling somewhat faster and homes a million and over are selling much slower.

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

There are some exceptional deals to be had.  Even though there are many overpriced homes, as I´ve said many times, there are always motivated sellers. It would be our privilege to help you find your perfect home in San Miguel.

Where's The Market Going?

This is a repeat of last month’s Market Update, but frankly it's not clear and there are a lot of conflicting signals, but I will explain the dynamics that affect our market and what I am keeping my eye on.

• Tracking 34 years of cycles in San Miguel, we should continue on a downward trend both in volume and prices. However, SMA is probably way more connected to the global economy today than it was even 15 years ago so this cycle may not track with the previous cycles.
• Home sales are hot and often selling for above asking in many suburbs and rural areas of the US. This will provide liquidity for those wanting to move here from those areas. However, those wanting to move here to escape a big city may have a harder time selling their home and have to sell it for less than they were wanting.  At this point, the US real estate trends seem to balance each other out in their effect on SMA.
• Although it seems like our clients are less vested in the stock market than they were in 2008, the fact that the markets are booming and touching all time highs tends to spill over to optimism and consumer confidence.  This will only help San Miguel.
• Following every election since I've been here we see a small influx of people moving here because the candidate they didn't want to win won. I have no doubt that this will happen again in 2021 no matter who wins. This will only help real estate sales in SMA.  However, there is a chance that the stock markets may react to the winner of the election and at least dampen the benefits to San Miguel that come with a strong US stock market.
• Mentioning COVID probably should have been first on my list.  As you are aware, it has disrupted life as we know it and it's really not clear how it will affect San Miguel's real estate market long term or our lives in general. Short term, the travel restrictions have obviously hurt SMA and as long as there is an associated risk with flying, it will continue to hurt.  At the minimum, it will limit the number of people willing to travel here and delay plans of moving or having a seasonal home here.  If either the perceived or real risk continues, then it will badly hurt the market here as people who would have moved here decide to stay closer to home.  Any lack of activity from Americans and Canadians may be offset somewhat by the increased activity we are seeing from Mexicans driving here from the larger cities.  From tracking our website visits and email volume it appears that interest in San Miguel is still very high and that COVID has simply delayed the plans of most.  Of course I am hoping that this is the case and that COVID's will continue to fade away.
• With between 33 to 47 months of inventory (depending on which month's sales you measure) I can't see there being home price appreciation for quite some time.  Even if COVID lifts completely and there is a boom of sales for a period, I don't think it can reduce the inventory enough for prices to increase.  The last boom in price increases was in early 2017 when there were only 175 resale homes on the market.  Today there are 867.

Weighing all of the above, at best I expect for sales volume and prices to remain flat.  At worst, I would expect prices to continue to decline.  From carefully tracking the declining and then flat SMA markets from the 2008 global financial crisis through 2015, the main thing I learned is that there are always motivated sellers who reduce their price or will negotiate much lower than the asking price.  In a declining or flat market here, the whole market won't shift overnight, but every month several sellers either come under financial pressures that motivate them to sell for a lesser price or sellers will just decide that they don't want to wait for better times and want to move on with their lives.  These sellers are the ones that create the opportunities for buyers no matter what the market signals indicate.

COVID STATS

As of November 10th, there was 1 new death, 8 new cases, and 93 active confirmed cases in San Miguel.  The state of Guanajuato has seen an increase in cases and has increased their status level from yellow to orange. 

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.