San Miguel in a Bubble

Stew and I had visited San Miguel three times before we finally moved here in 2005, and arrived armed with the notion--I'm not clear based on what information--that a house in San Miguel could be had for somewhere around, say, $250,000.

And not any house, mind you, but an authentic, centuries-old colonial with an interior courtyard, stone pillars covered with bougainvillea, and a parrot perched on one of several large trees. We were not alone in our fantasies. Like thousands of other retirement-age gringos, we had been smitten by the beauty of San Miguel and had decided to live here without checking all of the footnotes.

Buying a house is often an impulsive decision and that is particularly true in San Miguel. The beauty and climate of the place, even after living here for a few years, is still intoxicating.

Real estate agents know that well. A question buyers are likely to hear is, "And so how many days are you going to be here, folks?" Once you explain that you live here full-time--and therefore are not going to plunge into a decision--you can expect the agents' enthusiasm to wane noticeably.

It didn't take long before we realized that San Miguel was trapped in a bubble of frenzied real estate speculation, fueled to a large extent by a similar phenomenon north of the border.

American Baby Boomers about to retire, and holding hundreds of thousands of dollars in equity in their homes, could not resist the charm and reportedly great real estate deals in San Miguel. Articles in American magazines and newspapers gushed about the town too, which even made someone's list of "Places to Visit Before You Die."

Stories abound of Americans plunking down sizable down payments after only a few days in town. Almost all real estate transactions are cash deals as mortgages or other type of financing are very expensive and difficult to arrange.

Our mountain air indeed resonated with the sounds of: "And so how many days are you going to be here, folks?"

Real estate agencies proliferated, one source in the business claiming their number had doubled or tripled between 2005 and 2007. Property prices headed for the moon. Yet what made San Miguel's real estate bubble particularly tricky for American was the lack of reliable data buyers commonly use in the U.S.

Stew, who had worked in real estate in Chicago (specifically home inspections) became increasingly aggravated by the pig-in-a-poke style of home sales in San Miguel.

There are no multiple listings of homes for sale (unless you consider the pages and pages of real estate ads in the local English-language newspaper a sort of multiple listing); no "comps" or list of properties sold or for sale in certain areas of the city during a certain period of time; no reliable or public system of property assessments. Not much to go on, in fact, that would help you determine the fair price of a piece of property.

The only way to do that was to trudge through dozens of homes for sale, and begin to develop your own sixth sense for what a house was worth. Impatient real estate agents didn't make it easy, particularly if you didn't pull out your checkbook after a few outings. "And so how many days are you going to be here folks?"

A few realtors in town, including some American expats who have set up shop here, recently have adopted practices, including ethical guidelines, to make buying a bit more transparent and consumer-friendly. But such tools as a central multiple listing service, or disclosure of recent sale prices, never appear to get past the discussion stage.

Authentic colonial houses, even without a parrot, were the first to vanish from our monitor. Prices could surpass a million dollars, particularly if you added the cost of considerable upgrading and repairs. Even if we could afford them, we could not envision living in the few that we visited. Many had more rooms and nooks that we could imagine using, much less furnishing and decorating.

There are hundreds of such manses in San Miguel and peeking into their courtyards becomes a habit after you live here for a while. Some have cathedral-size wooden doors that trumpet the splendor inside. Such doors typically have smaller entrances cut out of them for everyday use.

But even more amazing are the treasures hidden behind small, rickety doors hanging on crumbly walls. Look inside and there might be a huge garden with a sputtering stone fountain, surrounded by flowers, plus a sizable house. Who knew?

Limiting the price range to our original $250,000 then took us to the poorer neighborhoods that make up a substantial portion of San Miguel though none of the tourist brochures. We visited areas with squatter colonies, others with no paved streets or sidewalks, or even sewers or running water. In some, horses, pigs and chickens were common backyard fixtures.

Given that most of the houses we saw in this segment of the market were in nearly tear-down condition, we began looking at empty lots, presumably to build a house from scratch. But the results were just as disconcerting.

In a neighborhood or colonia called Santa Julia, we were shown a piece of land supposedly located next to a designated "green area" where a park was about to be built. Or so the realtor assured us.

Problem was that on the way there signs of urban planning had vanished to the point that the agent could not point to the boundaries of the lot with any certainty. There were no sidewalks, streets, curbs, lampposts or any other visible landmarks. Nothing except swirling dust and an asking price in the US$60,000s for a very modest piece of land--wherever it was.

Yet more than a few Americans, with a limited budget but determined to live in San Miguel, are moving into these colonias, which some Mexicans euphemistically call "zonas populares" or "popular zones."

Many of these new homes are beautiful, if carefully walled-in, enclaves and enjoy far better views of the Parroquia than properties in more expensive areas. That's true particularly at night when darkness envelops the town except for the spot-lit churches and other landmarks.

Many of the gringos already living there rhapsodized about "up-and-coming neighborhoods," rising property values and other signs of American-style gentrification.

But neither the sights nor the ambiance much moved us. We made an offer on a vacant piece of land in a colonia near Santa Julia, and we're glad it was turned down. I couldn't fake much enthusiasm and Stew grew increasingly angry. "This is not the place where I figured I would retire," became his standard line.

So we shifted our sights toward open land on the outskirts of San Miguel--and started talking about notions we hadn't even considered before, like off-the-grid living, rainwater catchment, solar panels and electric inverters.