Eight experts examine San Miguel real estate
By José de Jesús Malagón and Graeme Howard

We asked eight real estate brokers to share their opinions about the current market in San Miguel, the realty outlook for the rest of 2009 and 2010, and the long-term outlook for real estate in San Miguel. Here are their candid answers.

Carlos F. Acuña, Atenea Realty

“The residential real estate market in San Miguel de Allende has picked up and seems to be improving. The rest of 2009 all looks very positive since most realtors have serious clients who are looking for properties and buying.

“I truly believe the market in 2010 will be stronger than 2009.

“I see a great future in the long-term real estate market for San Miguel.”



Joanie Barcal, Allende Properties

“Currently, buyers are in all price ranges, but purchases have slowed from recent years, when it was a very active market. Buyers have been hesitant because they have a notion the market has not yet bottomed here. There are bargains when an owner has to sell, but unless forced to do so, owners will not sell at artificially low prices due to the reduced carrying costs for homes here. Buyers need to understand what value real estate represents here and to also know how to enter into appropriate price negotiations. But waiting for a big bottoming out—I don’t see it.

“Since last fall the market has been affected by the drop in tourism from the swine flu and the terrible publicity about other issues affecting Mexico. On a positive note, our recent affiliation with Christie’s Great Estates has generated interest among Christie’s affiliates worldwide from the newest publication of Homes of Distinction, which showcases our finest properties offered in San Miguel. We are beginning to see more robust market responses from potential buyers and look forward to a continuation of that trend.

“What makes Mexico so special are the people, its beauty and the climate. These are real and constant characteristics, and San Miguel has done very well to protect what we have here. In the long run, statistics show many baby boomers will retire in Mexico to add to the 10,000 expats now here. San Miguel is safe, it’s got culture and has fantastic weather. I see it as being more attractive, so the real estate market in the long term will be very strong in San Miguel.”



Philip Hardcastle, Realty San Miguel

“The best way I can describe the current real estate market is that for both buyers and sellers alike, most have enjoyed a long history at a certain lifestyle level—whether that be a Mercedes lifestyle, Toyota lifestyle, or some other. But even if just on paper, most have lost a substantial portion of their net worth. For many, it means that they must adjust their lifestyle “down” a level and they are not ready to face that.

“Current sales are already reflecting this necessary adjustment. Although our office has seen more sales in 2009 than we did in 2008, I estimate that the average selling price is 25 percent less than the ‘bubble’ years of 2006–07.

“This drop has been difficult for sellers, at best. Most were counting on that extra equity of the bubble years to continue their previous lifestyle level. Dropping their prices to reflect the current market has been a slow and painful process. Some are embracing the realities more quickly than others.

“On the buyer’s side, we have seen a disproportionately high number of potential buyers leaving town without buying. Although a substantial backlog of people want to move here, the problem for most is the lack of available cash. Buyers are often sellers of a home elsewhere and can’t buy here until they have sold. Others only have the cash for a step down from their accustomed lifestyle and are sitting on the fence hoping they don’t have to take it.”



John Hendricks, Coldwell Banker Premier Real Estate

“The primary buyer in San Miguel has been the baby boomer generation from the US and Canada. The financial crisis of the past year has eliminated a good number of buyers who would finance the purchase by borrowing on the equity of their home or by selling their home. Because Mexico is a cash culture, they would purchase these houses for outright cash with no financing. Unfortunately, the source of the extra money has dried up, so fewer people are coming down here to buy. The market consists of the upper-, middle- and the lower-end properties and most sales have been under US$500,000 until recently, where the higher-end properties are now being shown and sales are occurring. Many investors really see a future in San Miguel, but I think 2009 may still be flat for the balance of the year. I think as we get closer to 2010, the real estate market will start to strengthen, but perhaps not to the level where it was at one time for a few more years to come.

“The long term looks good. Simply observe the developments that are currently in place and others that are being designed. There have been rumors of additional golf courses, not just Ventanas which is currently being developed. I think people see the long-range possibilities of San Miguel as being a great investment for now and in the future.”



Rich McClarty, Select Real Estate

“There are still a lot of buyers, still a lot of people looking at Mexico, prices are starting to flatten a bit and what happens in San Miguel is that there are two price levels, the price of a person who actively wants to sell the house and the price of a person who says, “Put my house on the market for this amount and if someone is silly enough to pay that price, I will sell and move.” Buyers having trouble determining true market values, and not having a Multiple Listing Service and sometimes not having full value recorded on deeds makes it difficult for the buyer.

“The buyers really haven’t changed that much; if anything, they’ve gotten a little younger. However, the core buyer is the person two to three years off from retirement (or they have just retired). The people who were looking at US$600–800,000 houses two years ago are now looking at $350–450,000 houses, based primarily on the factor that their net worth has taken a big whack from the US economy. I think 2009 will continue to be flat and but when it turns, it will turn quickly and prices will ratchet back up.

“The developers we work with are still very confident in the market; we still have larger and larger developers sniffing around the market. The 68 million baby boomers are going to be looking for options and I think San Miguel is going to be a key part of that equation. With the exception of Bald Mountain and their Rosewood/Artesana development, there really haven’t been the US$100 million-type developers coming into this market. Well, I am here to tell you, they are looking now and San Miguel is on their radar screens.” 



Guillermo Rodman, Royalty Real Estate

“The current state of San Miguel’s residential real estate market has been quite slow comparing it to previous years, but in the last six weeks we have seen quite a bit of movement. It is still a buyer’s market, with opportunities that could not be found in years past.

“At Royalty Real Estate we expect the remainder of the year to be very up and down. September through December have always been difficult months for real estate (as well as the best time to purchase property).

“From a personal point of view and basing it on the economy in the US and other parts of the world, I expect our high season (January 15–April 15, 2010) to improve dramatically.

“I grew up in San Miguel and have seen so many changes over the years. According to several sources such as International Living and Condé Nast Traveller, it still remains one of the top destinations in the world to invest or retire. I believe in San Miguel—its sincerity cannot be found just anywhere. I feel confident that the best is yet to come in our future real estate market.”



Salvador Moreno, ABC Realty

“In the short term, the real estate market in San Miguel will be weak. This is a result of the bad economy in the US, Canada and everywhere. The buyers who are supporting the market at this moment are the Mexicans, because everybody wants to live in San Miguel, a beautiful small city that offers culture, a high quality of life and security. Americans are still buying, but not the same way as several years ago. In a couple of years, I feel the market will be better and the economy more solid. I believe that many of the developers must open their eyes to build houses that are more affordable for people with less money. San Miguel is now on the UNESCO list as a World Heritage site and more people want to visit it and invest. The government also is investing in the area because the Bicentenary of the Independencia and I am sure more people will invest in real estate in San Miguel.”



Dotty Vidargas, Dotty Vidargas Real Estate

“The residential real estate market in San Miguel has been the slowest year we have ever had. We’ve had so many strikes against Mexico—economy, narcos and influenza.

“I see the real estate market for the rest of 2009 as being not much better than it is now. Also, it doesn’t help that there are many, too many real estate agencies for the size of San Miguel.

“We really don’t know what’s going to happen to the San Miguel real estate market in 2010. The lower-priced houses have had some buyers, but everyone this year has wanted a real bargain. We may have more of the same next year. The economy in Mexico is probably going to be worse.

“The long-term market eventually will correct itself as it has always done in San Miguel. We don’t know how long it will take, because it depends on many outside influences.”



The key to the resurgence of the San Miguel residential real estate market lies to the north. Although the S&P/Case Schiller US National Home Price Index, released August 25, rose nearly 3 percent from the first quarter, that reading is still 15 percent down from the second quarter of 2008. Home prices remain 30 percent below the peak in the second quarter of 2006. Continued reports of a slow economic recovery in the US suggest that our residential real estate market will continue sluggish for the rest of this year and into 2010. A forthcoming article will discuss the best ways for buyers and sellers to operate successfully in this difficult market.



José de Jesús Malagón and Graeme Howard are principals in San Miguel Advisors, a real estate consulting firm. Visit SanMiguelAdvisors.com for a complete list of local real estate brokers.