Why is San Miguel so expensive?

In the VIP Club we have members who are long-time residents, new arrivals, and even people born and raised here. No matter how long you have called San Miguel home, we’ve all seen an increase in cost of living. After having been voted "World's Best Small City" three times by Condé Nast magazine, our beloved little town has gained popularity as a tourist destination, a retirement haven for people from the US and Canada, and also as a desirable place to live for families from other parts of Mexico.

It has without question gotten more expensive over time. I remember vividly in 1994 when devaluation happened and suddenly I had a lot more money. It made this country extremely affordable. But in the last three decades, with the ebbs and flows the Mexican Peso has become more stable, which is overall a good thing for where we live.

International and national economics aside there is a micro-economy in San Miguel de Allende, and several factors contribute to its reputation for being relatively expensive for Mexico:

* San Miguel de Allende is renowned internationally for its well-preserved colonial architecture, cultural festivals, and vibrant arts scene. Something we all know and love. As it has become better known, it attracts a more and more tourists, both domestic and international. The demand for accommodations, dining, and entertainment in the city drives prices up.

* Many foreigners, as well as Mexican nationals, choose to retire or buy second homes in San Miguel de Allende due to its pleasant climate, picturesque setting, and cultural offerings. There is a higher population and a higher demand for real estate which has driven property prices higher, making housing costs relatively expensive, even with all of the new developments (fracionamientos) going up around the outskirts of town.

* San Miguel de Allende offers a high quality of life with its beautiful surroundings, mild climate, and excellent healthcare facilities. This desirable lifestyle comes at a price, as the cost of living tends to be higher compared to other cities in Mexico.

* The influx of expatriates and nationals has led to a change in inhabitants in San Miguel de Allende. As neighborhoods become more popular, prices for goods and services tend to rise to meet the demand of the more affluent clientele.

* More businesses have opened. Some would say competition makes things less expensive, philosophical / economic arguments aside. Many nationals and internationals alike move to San Miguel to make a living only to realize that tourism is a tough business. For many restaurants and businesses, depending on an influx of weekend visitors to make rent is a daunting task. So they, in turn, adjust their prices to meet their needs.

* Due to its popularity that has trended towards the more affluent, San Miguel de Allende now offers a range of amenities catering to a higher priced audience, namely upscale restaurants and imported goods. These amenities often come at a higher price compared to more traditional, local options. San Miguel was international long ago but it had more of a bohemian vibe, mainly consisting of artists thanks to the Instituto Allende, or more adventurous laid-back travellers.

* The dollar has lost strength against the peso. For many foreigners, the dollar to peso exchange rate was always and advantage. Due to a strong economy in Mexico and the actions of the central bank, the peso has gained. It may gain more. This has a positive and negative effect for both residents and restaurants.

If you live in San Miguel even for part of the year, the VIP Club card can help you fight against the rising prices. Local businesses will appreciate you using the card and you will save money.