Is it really cheaper to live in San Miguel?
Part II: Land, construction and real estate taxes
By Jim Karger

In this second installment in a five-part series comparing the cost of living in San Miguel de Allende with selected areas of the United States, Karger looks at the cost of land, construction and real estate taxes.

Comparing land and construction costs is like comparing people—there are too many unique differences, too many preferences and none is exactly alike. It was far easier to make comparisons of food as I did in the first of this series. After all, a tomato is a tomato and a bowl of pasta is a bowl of pasta, more or less. But a house cannot similarly be valued simply by size since much of the cost of land is dependent on location and much of the cost of construction is in the finish and amenities. Weaknesses in methodology admitted, what we look at in this article is a 10,000-square-foot lot (approximately 1,000 square meters) in San Miguel on which we build a 3,000-square-foot home. To make the comparisons more relevant, we divide the lots and the construction into three categories, nominated “A,” “B,” and “C,” both in San Miguel and in a midwestern US city of approximately the same population.

San Miguel lots and construction

For purposes of comparison, an “A” lot in San Miguel is 1,000 square meters within a 15-minute flat walk to the center of town in a neighborhood with mostly other “A” homes containing amenities such as granite counters, hardwood and/or marble floors, hardwood cabinets and doors, high ceilings, tempered glass, top-of-the-line fixtures, high-end appliances, a garage and apressurized, purified and softened water system. Designed by an experienced architect, the custom one-of-a-kind plan usually has separately designed lighting, kitchen and landscaping plans drawn by independent specialists.

A “B” lot for this comparison in San Miguel may be near the Centro (but more than a 15-minute walk), is in a neighborhood that contains houses from “obra negra” (structural work only) to “B,” or are in close-in suburban developments. “B” homes usually are based on standard architectural designs that can be modified by the owner during construction. Amenities often include quality tile floors, pine cabinets and doors, medium-height ceilings, quality appliances and pressurized water. The design is by a single architect or experienced builder.

A “C” lot in San Miguel is surrounded by other “C” homes which are very basic, from “obra negra” with no exterior finish to homes with very basic standard designs, oftentimes approved but not designed by an architect, containing concrete or low-cost tile floors, minimal lighting, rough interior finishes, a tenaco without a pressure system and basic inexpensive appliances.

The lines are difficult to draw if only because one often sees “A” homes on “B” lots and vice versa in San Miguel and there are developments out of the city that offer spacious country-style living which I do not attempt to compare here.

US lots and construction

For our comparison we use the following descriptions of lots and construction in a city in the midwestern US outside Dallas, Texas, with a population between 50,000 and 150,000.

An “A” lot in this US city is heavily wooded, usually an acre or more, in a close-in location or high-end suburb surrounded by other “A” homes which contain amenities to include stone exteriors, slate roofs, hardwood flooring, custom hardwood cabinets, brass hardware, large crown molding and floor trim, wired for all advanced electronics, whole-house audio system, phones in bathrooms, commercial appliances, sprinkler system, high-end fixtures, granite or marble kitchen counters and bathroom countertops, hardwood banisters, tempered glass and high-end zoned HVAC. The design is custom one-up.

A “B” lot in this US area is a community development in the suburbs with other “B” homes that include amenities such as all brick exteriors, hardwood cabinets, trim work throughout, hardwood entry with tile floors and quality carpet, medium-priced appliances, smaller granite or tile countertops, mid-range hardware in the kitchen and bathrooms, sprinkler system, audio/intercom system, wiring for electronics, with wood or high-end composite shingle roofs.

A “C” lot in the US is usually what is known as “tract” housing and are community developments in external suburbs usually on smaller lots using standard repetitive plans, some brick masonry with a significant amount of siding, less expensive hardware, hollow core doors, small bathrooms, fiberglass showers and tubs, Formica countertops, basic composite shingles, no sprinkler system, little trim work, carpeted except for a small tile entryway, and low-end appliances with a two-car garage or carport.

Comparative costs

So, what’s the tab both here and there for these various lots and homes? For purposes of lot prices in San Miguel, I used an average of several listed lots, those advertised for sale by signage, or that I discovered in Atención for sale by owner. For cost of construction in San Miguel, I used estimates from discussions with a local builder and an architect. Using the descriptions above, the ranges of costs in San Miguel were as follows (all prices in US dollars):

San Miguel Costs

Lot cost (approximately 1,000 square meters)

“A” lot, $200,000–$500,000

“B” lot, $100,000–$200,000

“C” lot, $25,000–$100,000

Construction cost (on owner’s lot including appliances)

“A” home, $120–$200 per square foot

“B” home, $90–$120 per square foot

“C” home, $55–90 per square foot

US Costs (City outside Dallas, pop. 50,000 to 150,000)

In the US, I consulted a builder in the Texas community, and examined lots in that area listed by various realtors.

Lot cost (approximately 3,000 square meters except “C” lots which are approximately 1,000 square meters)

“A” lot, $200,000–$300,000

“B” lot, $80,000–$200,000

“C” lot, $30,000–$80,000

Construction cost (on owner’s lot including appliances)

“A” home, $150–$200 per square foot

“B” home, $110–$150 per square foot

“C” home, $75–$110 per square foot

Bottom Line

Unlike food, where I found consumers in San Miguel net a 25-percent discount both in grocery stores and restaurants over equivalent US counterparts, I found little difference in the cost per square foot of construction, especially in “A” and “B” quality homes when compared to those in a similar-size city outside Dallas, Texas. 

Land costs are a different story. Cost per square foot of “A” lots in San Miguel is substantially more than prime lots in similar-size communities in many areas in the US. Indeed, in one larger metropolitan area used for comparison purposes, “A” lots cost about the same as “A” lots in San Miguel, yet the lots in the US were about three times the size of their San Miguel counterparts.

So observed, there are factors other than land and construction costs that should be considered to evaluate overall housing cost, to include real estate taxes. In San Miguel, the owner of a 1,000 square meter lot in a highly desirable neighborhood with over 5,000 square feet of construction will pay less than US$1,000 per year in real estate taxes. A house and lot of equivalent value in the Dallas suburb used for comparisons is taxed at 2.4193 percent of appraised value each year. Using a value of US$1 million, taxes on the equivalent US home approach US$25,000 a year, thereby reducing over time the otherwise higher cost of home ownership in San Miguel.

Jim Karger is a resident of San Miguel de Allende. In the third in this series of “Is it really cheaper to live in San Miguel?” articles, Karger will compare the cost of utilities (water, electricity, gas, telephone and internet) in San Miguel to various locations in the US.