I haven't read the article yet, but I thought I would make some comments about the retirement life here. There is a fairly large expatriate community here, the majority of whom are Americans and Canadians. There are also regular visitors, who come for 3-6 months at the same time every year. The Canadians come around February to avoid the cold and the Texans come in July to avoid the heat. I think real estate used to be inexpensive here (for an interesting view of an American's life in San Miguel, try Nothing To Declare by Mary Morris). This is definitely not true now.

Several years of real estate appreciating 30-40% a year created a huge imbalance between supply and demand and the predictable happened. First, many of the expatriates became builders. They bought lots for $40,000, spent $80,000 building a home and expect to flip it for $300,000 to an out-of-town buyer for cash. At the same time, many Mexican families took advantage of the prices to sell their land and upgrade their living conditions. During the past year, NASDAQ 5000 became NASDAQ 1800, so spending $300,000 on a vacation home may not be as trivial to some as it was previously. So, demand is down, supply has increased significantly and there is more of a balance. As with every market (think Internet), as an imbalance comes into equilibrium, speculators might get hurt.

Having said that, it seems that everything in town is for sale. Properties are listed with every real estate agent in town, while some others spray paint Se Vende (For Sale) on their outside walls. Many properties have been for sale for 2-3 years, some for 5- 10 years. Also, in an economy accustomed to inflation, people like to mark up the price of their assets every year. So, you see homes that don't sell and the owners keep increasing the prices. Very unusual for people (like the Clancys) used to the US real estate markets.

Luckily for us, rent are reasonable. A $300,000 house might only rent for $1,500 a month, including a maid and a gardener. If I can borrow a digital camera, I will post some pictures of a beautiful home that we are renting for $800 a month, plus utilities.

So, it is more economical to rent than to own. And the owner cannot rent a property all year, maybe only for 6 months a year. Then there are marketing and management fees. So people who bought properties for the purpose of renting them might only get an annual return of 3%.

All of this is to say that living in a desirable expatriate community has benefits and detriments. Even something as straightforward as real estate takes time to figure out. We are probably OK for schools but have not figured out a thing on healthcare.

Ed and Sarah in San Miguel de Allende