Why the Costa Rica Real Estate Market outperforms U.S Real Estate
From the Desk of Michael Simons
Broker/Owner RE/MAX Tres Amigos Playa Hermosa
Broker/Owner RE/MAX Prestige Ocean Properties Playa Panama
Broker/Owner RE/MAX Ocean Village Playas del Coco
Number One International RE/MAX Agent 2005, 2006
Caribbean and Central America RE/MAX Broker of the Year 2010
People always ask me how the Costa Rica real estate market is doing, is it stable, did we see a big fall out like the USA? I believe Costa Rica has one of the most stable markets in the world for a couple of reasons.
1. 99% of our clients paid cash
2. There is no formal MLS in Costa Rica
People can blame whoever they want for the crash of the real estate market in the USA. You can say it was greedy real estate agents, pushy mortgage brokers, banks looking the other way. You can blame it on one President or another or the law that was passed to allow easier access to housing which opened the door to non-qualifying loans. And all of these might be true. But the real reason for the decline of the housing market was individuals buying homes, who should NEVER have been buying those homes.
How come nobody blames the buyers? How come nobody takes responsibility anymore? When you sign a contract it is your responsibility to make sure you can live up to that contract. Not the mortgage brokers. He didn’t put a gun to your head. So when those mortgage payments came due, and people couldn’t pay them, they just walked away. Of course, they would, they only had 5% in the game. But when you have 100% skin in the game, you don’t walk away. You are going to be much more reluctant to unload that property. Since almost all of our clients paid cash for their properties here in Costa Rica, they were going to be much more resilient in finding a way to keep it. Since carrying costs are so low here, about 20% of what it is in the USA, people are able to ride the storm out much easier than they would if they owned the same priced property in Florida for example. For that reason, we didn’t see a huge drop in prices and we didn’t have near as many foreclosures to drive the values down.