Market Analysis, December 2022
Hi there!
Hello from Central Mexico in December! The color and music this time of year is truly majestic. Our Colonial town which is alive 365 days a year, anyway, even more enlivens during the month of December! Mexico loves to party. And when you add the importance of the religious elements of Christmas… It makes for a lot of fun, lots of families everywhere, and a lot of celebration.
In the Springtime:
In the springtime of 2022 things began to shift in the housing market in San Miguel. This was precipitated as is the case generally with events occurring in the United States. What we begun to see here in our little local community was a decrease in demand and an increase in supply. This was short-lived but we did see some price reductions during the Summertime 2022 as Sellers here continue to worry about what was happening in the United States, despite demand in SMA being and remaining brisk.
Finally, The Fall:
As we came out of the Summertime and into Mexican Independence Day. The town began to fill up with tourism and the real estate market began to strengthen again despite what was happening in the United States. Lucía and I watch the metrics weekly and keep a very close eye on the coyote and non-recorded numbers as well.
Remember, AMPI (Asociacion Mexicana de Profesionales Inmobiliarios) presents only about 20% of the total market. So, there’s a lot of business happening outside AMPI but the issue with these deals often is risk: transaction risk specifically but there are many other reasons as well. Anyway, in SMA we began to see price increases across the board. We are now, perhaps for the first time, beginning to see a real divergence between the market weakness in the United States and the strength of the market here in San Miguel, Mexico. A noteworthy divergence as all investors know.
AMPI, who cares?
AMPI is to Mexico what National Association of Realtors (NAR) is to the US. This association represents, as was mentioned, about 20% of the total transactions citywide. So, let’s chat AMPI: Slow market conditions: 10 or less deals (a deal is both deals under contract and actual closing during that week); steady market (average volume, middle of the road): 10-15 deals a week; and finally, anything more than 15 deals is considered brisk and active. We’re on the high side of the market with 20-25 deals per week happening now. We also saw, in concert with this, additional inventory populates the MLS as well. This new inventory has and continues to keep prices stable: for now, new inventory is replenishing that which is being sold. We predicted the strength in the SMA market coming out of Summer and into Q3 & Q4 2022, despite worsening conditions in the US housing market. We are seeing prices beginning to increase. We further predict, the SMA residential real estate market will quickly become a Seller’s market as we move into Q1 2023. We are now being bombarded as Realtors by folks continuing to look for alternatives.
In the Fall in SMA, things got progressively busier. First the Mexican nationals come for vacation, after Independence Day things are quiet for a week! Then we roll into October and people start coming and preparing for Day of the Dead which is a huge celebration here. Interesting fact: this year, SMA brought in $31MM USD during that 5-day period alone. This was a record for our town. Our Day of the Dead coincides with US Halloween… the end of October or the beginning of November. And of course, following that is Thanksgiving. Next up: Christmas and the arrival of my College age son Alex and his partner Jessica… Merry Christmas everyone!
Thó may be contacted at: Tho@thoandlucia.com