Costa Rica Real Estate Market Update 2019
May 20, 2019
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 rescuing dogs, consumption of massive amounts of alcohol while peddling Tank Tops Flip Flops shirts and monthly explorations of paradise, then just go ahead and delete this article now. Those of you interested in the real estate side of my life; please read on.
The year 2018 and the first quarter of 2019 was the best 15 months we have had in a decade. With the USA economy at an all-time high, and people sitting flush with cash, much of it has worked its way down to the land of Pura Vida. Many of our clients, had plans to retire, or spend more time in Costa Rica 10 years ago, but were unable to put it together. Now, many of them are setting new goals, and making our little town part of their plan. Also, as the real estate opportunities are shrinking in North America, and with the Canadian market turning downward, investors are back again looking at avenues for cash flow south of the border.
Tourism and airport entries are at an all-time high with many new hubs making direct flights to LIR, allowing many foreigners to easily visit 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. The FIRE SALES are gone, and we are running out of inventory. This is fueling a surge, as people are feeling the fear of losing out. The target markets of $100 – 300k 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 for the last few years, as more and more clients are interested in a finished, brand-new, turn key product, and not have to go through the efforts of starting from scratch. We have seen these go up about 20% in sale price in the last 3 years. There had been a glut of buildable lots sitting for sale over the last decade, but now builders have scooped them up for these homes. If you search my website, you will still see, obviously, some great properties for sale. Many times, the sellers are just “moving on up”, as George Jefferson used to say. They tested the water on their first purchase, with a smaller condo or home. Now that they are more committed to spending time, or living here full time, they put their first property up for sale, and upgrade to a bigger, better place. For the first time ever, we are seeing many 7 figure homes being put under contract. We sold more homes in the last 18 months in this price range, than in all the years combined, in my entire career in Costa Rican real estate. Obviously, this is a direct result in the confidence that people have in the market. For those interested in building, there are still some great deals to be had, but they too, are disappearing quickly. If you find your dream lot, my advice is to jump on it, as it probably will not be here on your next visit.
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. On the other hand, buildable lots, where you can easily walk to the beach, are almost nonexistent. If you find one, buy it.
The continued expansion of the Liberia International Airport has made what was once a little shack on the runway, into an up and coming state of the art facility. This really takes the stress out of traveling here when you can get through customs in a matter of minutes, grab your bags and go. There is a killer Duty-Free shop as you enter baggage claim, so you can stock up WHEN you arrive, and not have to carry it on the plane from your starting point. With more restaurants and shops inside the terminal, it relieves the boredom of having to come 2 hours early and wait for your flight on your departure date. Dude; listen to me; they have Quiznos.
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 finalization 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. Check out the new tanks: they look like small hockey arenas. Also, there are still a few unfinished projects that now can be available for a developer to purchase and finish and we are seeing investors for those, finally pulling the trigger. There are still some developments that do not have legal access to the water and the HOA’s are working diligently to resolve this. Like most things in paradise, it takes time, and is very frustrating to those property owners who are still unable to build. Make sure to have your real estate attorney confirm the situation of the property prior to buying. A couple large development properties also changed hands this past couple year, for the first time since the crash. By the way, the roads in Coco and Hermosa are spectacular!
Costa Rica recently passed a new tax law, where all services and goods have a 13% VAT sales tax. There is also a small capital gains tax on properties other than your personal home. While everyone is quick to complain, as we are programmed to do when people mention taxes, I see it completely the opposite. Compared to what you paid in the USA, our taxes are laughable, and truthfully, I am happy to pay it, because I see it going back into the country and the community. In the grand scheme of things, a few extra bucks here and there is not going to affect the majority of people. If it does, you probably shouldn’t be considering retiring quite yet. And if you live here and are that upset about it, and want to leave, I can recommend a great realtor to list your property. But the reality is, you cannot have first world services, with a third world tax code.
Although the Canadian dollar is still very weak, we are seeing more and more of our friends from the Great White North, turn their attention to Costa Rica. They too are now experiencing some of the political angst that the USA has gone through the last decade, and many of them are looking for a lifestyle with less polarity. As the winters seem to get colder and colder, the sunshine of Latin America calls. As usual, they tend to have a lower budget than our clients from the United States, but there are more of them here now than ever before.
People that had a $300k budget are just now focusing on properties under $200,000, 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, and quite possibly never return to its glory days. 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 2021. 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.
We are expecting 2019 / 2020 to be record years for hotel and VRBO rental occupancy, as each year continuously surpasses the previous. 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 other Latin American countries, now realize the extreme risks and inherent dangers of living in those places. Costa Rica is still the safest country south of Texas and the most stable democracy in the region. On September 15, 2021 we will celebrate 200 YEARS of Independence. Now that is a party you do not want to miss. Put it on your calendar. With massive hurricanes still being an issue in the Caribbean, our calm weather and consistent climate, keeps pulling more and more buyers away from there, and headed our way. We just keep rocking and rolling.
Probably the most enjoyable part about living here, is seeing how many more people are making this their full-time home. Our community keeps expanding, as retirees are making this their permanent residence. What is truly exciting, is seeing how many YOUNG people, are moving here; many families with children, in their 20’s and 30’s. They have the entrepreneurial spirit, and see that opportunities are everywhere, for someone with a vision, some cash in their pocket and a good work ethic. They are relocating here and opening all the services that the Ex Pats and tourists need and desire so badly. Many of them are making more money than they did back home, and obviously having a much better quality of life. What a great lifestyle, to be able to work and live in paradise, put your children in first class bilingual schools, and on your free time, being able to soak up everything this amazing little country has to offer. I moved here when I was 38. I still wish I came at 25.
I am most proud of how the entire community comes together to help the Ticos, their local town and various charities. It seems EVERYONE is involved in one project or another, and the support is amazing. I want to thank everyone who has contributed by purchasing TANK TOPS FLIP FLOPS shirts. We have raised over $35,000 in the last year for various charities, causes, schools, teams, and local projects. GOD BLESS YOU. I always have shirts for sale, so if you want to participate, contact me.
I cannot lie. It gives me a lot of pride to see hundreds of people wearing my LOGO with the two FLIP FLOPS on their chest every day, as I drive through the town. My friend Chad said it best. “Bro, you rock. Only you could get people to help charity, while supporting and promoting your brand. You are a master at marketing.” I appreciate the compliment my friend.
As I tell everyone, I bought a “cemetery plot” so you can be assured that I will be here whenever you get up the courage to come. Just give me a heads up.
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 2019 / 2020 be the best of your life and the years you finally stopped procrastinating, and headed to Costa Rica.
“Come On Down Baby”
Michael D Simons