Costa Rica Real Estate Market Update 2018
January 1, 2018
Well, it is time again for that boring Costa Rica Real Estate Market Update. If you only visit my site and subscribe to my Newsletters so you can live vicariously through my adventures of white water rafting, consumption of alcoholic beverages and chasing beautiful women, then just go ahead and delete this article now. Those of you interested in the real estate side of my life; please read on…
We were extremely busy the last 3 quarters of 2017, after a relatively slow start to the year, having not seen this much activity in a decade. I believe there was the election hangover, and people were not quite sure what to make of it. Some people were in a state of shock; while others were in complete euphoria, and hadn’t taken the bottle of champagne off of their lips for 4 months. Then one day, everyone woke up, and realized that the economy is at an all-time high and they have bundles of extra cash. Sure there were the occasional Trump haters, who vowed to leave the USA and never go back but for the most part, we are still waiting for the droves of Hollywood elites who promised to move to Venus if the election turned out the way it did. I have been selling real estate now through 3 of the most controversial Presidents in our History: Bush, Obama and now Trump. And what I have found is that the majorities of people invest, and make decisions, based on POSITIVE intentions, not NEGATIVE motivation. We don’t exercise because we are worried about getting a heart attack. We do it because it makes us feel better, we like the way we look and it gives us more energy and drive. Same reason people have come to Costa Rica. Sure there is still a tremendous amount of bad news out there; from the Vegas shootings, to the protests turned violent; little Rocket Man in North Korea to the utter breakdown of Socialist Venezuela; but that is just background noise to the concert. People are realizing that living in Costa Rica has many advantages and is an incredible place to call home.
Tourism and airport entries are at an all-time high, as many foreigners are visiting this amazing country for the very first time. Some of these people contact a professional and start their search for a little piece of paradise. Vacation rentals are booming, giving many buyers a feeling of confidence, as they invest in the real estate sector of Costa Rica. Costa Rica has been determined to be the 3rd best country in the world to make money on your rental property (see article here) so there is some actual hard data to back this up.
Most of the FIRE SALES are gone, and we are running out of inventory. This is fueling a surge of sales, as people are feeling the fear of losing out. The target market of $100 -300k condos is almost completely dried up, and ocean view homes in the half million dollar range are dwindling very fast as well, with only a handful of older homes left, most that need some TLC. New spec homes have been the boom lately, as more and more clients are interested in finished turn key product, and would rather not have to go through the efforts of starting from scratch. There had been a gluttony of build-able lots sitting for sale, but over the last few years builders have scooped them up for these homes.
For those interested in building, there are still some great deals to be had, but they too, are disappearing quickly. I cannot begin to tell you how many clients have been in my car for the second or third time in the same amount of years, who comment that very little is left on the market from their previous trip. So they step up their game, and make an offer. Sellers though, who have not been realistic in their asking prices, are still seeing their inventory sit with no offers. If it is priced correctly, it sells; if not, it doesn’t. This is where a real estate professional comes in, to advise you on the value of the property. Non ocean view lots are still in low demand, with many still sitting available.
The second major expansion of the Liberia International Airport has begun, with many new direct flights into LIR. Also there has been a wave of commercial activity, with many new restaurants and businesses opening in town. The street is packed and the stores are printing money.
Costa Rica continues to invest in upgrading their infrastructure, from the new Pan American highway to state of the art internet and telecommunications and more large companies are relocating their headquarters to this country, creating a multitude of jobs and opportunities. The restart of the Sardinal and Las Trancas water lines has everyone excited, as this should mean the completion of a handful of hotels that have been patiently waiting for hookups. Also, there are still a few unfinished projects that now can finally be available for a developer to purchase and finish. A couple large development properties also changed hands this year, for the first time since the crash.
The Canadian dollar, thanks to the focus on North American oil, is slowly starting to return. This is causing many of our Northern friends, who have previously been sitting on the fence, to get back in the game and own a piece of paradise. They are tired of the freezing cold winters, and are back flooding our town with offers; they are just usually having a lower budget than our USA clients.
People that had a $300k budget are just now focusing on properties under $250,000, and so on up the price point ladder. Most Canadians are realizing that their dollar will be devalued for at least the next 2 – 3 years, from what all the experts are saying. Since prices here will ultimately go up 10% to 15% or more during that time, my Canadian buyers are realizing it is better to bite the bullet now, than hope to find a discounted house in 2020. And again, the increase in the price tag is not as big of a concern as the lack of choices at that particular price point.
I want to end by sending my prayers to all those affected by these horrible hurricanes this past storm season. Many of my colleagues at RE/MAX have lost everything, as their islands were completely destroyed. We all wish you a speedy recovery, and a quick rebuild. With that being said; these storms have been FANTASTIC for our country. With so many vacation spots completely wiped out, thousands of tourists have now focused on Guanacaste. We are expecting 2018 to be another record year for hotel and VRBO occupancy. As usually happens, many of these people will start their search for a piece of paradise, after they return from their trips. Also, many retirees, who might have been contemplating the Caribbean, now realize the extreme risks and inherent dangers of living in that part of the world. They are now focusing all of their attention on countries like Costa Rica; a haven amidst all the craziness.
I would encourage all of my clients, that if you are thinking about making the leap and investing in paradise, I would do it sooner than later, as we are definitely seeing the climate change from a Buyer’s to a Seller’s market. Hope to see you down here soon.
Happy New Year.
May 2018 be the best of your life and the year you finally stopped procrastinating, and headed to Costa Rica.
“Come On Down Baby”
Michael D Simons