Costa Rica Real Estate: Downs, ups and not much down again!
Costa Rica Real Estate: Downs, ups and not much down again!
Costa Rica Real Estate has seen a lot of downs and ups and downs in my 7 years in Guanacaste. A prime example are the surf side lots in Potrero. When I arrived they were giving the things away for as low as $7,000 dollars a piece. About a year or so in to my sojourn here the lots started a fantastic spiral along with all of the tourism and vacation style property in the area. Fueled by the equity line of credit craze that has ultimately left America gasping for financial air, prices of these lots zoomed up 500% in as little as a year. Prices in the area took on a surreal Californiaesque notion of scarcity and everybody came down with their imaginary equity and purchased incredibly overpriced real estate. Said lots mentioned above were suddenly $50,000.00 and up and selling like hotcakes. Construction trucks rumbled by daily tearing up the roads delivering gravel, cement, cinder blocks, and metal rods for all the projects taking place.
Well it is now roughly three years after the trucks have disappeared and the roads are holding up pretty well. Unfortunately so are the over inflated prices that took hold in the ‘equity boom at the beach” as I like to call it. As a University of Pennsylvania economist and a former Realtor it has intrigued me that the normal rules of supply and demand have not taken hold here nor have we seen the dramatic decrease in overall Real Estate prices that one would expect in a low demand market. I open the floor to opinions and I am very interested in what people think about this. Especially the old hands that have been through the good times and the bad down here. Of course there has been a slight softening of prices on some level but nothing like I would expect in a market that is achieving next to no sales.
The only thing that comes to mind is that the market is so inactive that the push and pull of supply and demand has not had the expected effect. The other notion that comes to mind is that the people who invested here in the first place were pretty well off to begin with and are just waiting it out. It takes cash to invest in Costa Rica. Bank financing is not a big part of the play down here. So maybe these people are waiting for the inevitable rebound. All will be well as long as those 60 Nicaraguan soldiers don’t overrun the country as has been intimated on the local news.
As far as the Ticos are concerned, well they have always been poor and I notice that they particularly like throwing around big numbers. They marry those numbers and do not want to let them go, I think it makes them feel important which to them is more important than having the actual money. I am not sure about the rest of the country but poor landed Ticos quoting astronomical figures for properties is very common in this area. Kind of makes you think. I actually like their priorities.
This article should really have a big question mark attached to it as I remain perplexed at this market. I welcome second and even third opinions on this. I happen to know that my clients in the central valley are doing pretty well selling to the retired crowd and the well heeled Ticos. But here at the beach business remains soft and prices in my opinion high. As I mentioned there is not much activity so maybe people need to come down and start making offers and begin some active supply and demand economics. To me the stagnancy comes from an almost no demand market but as infrastructure slowly catches up to Guanacaste I think this too will change, and hopefully supply and demand will once again meet in the middle.
Rodgers Bestgen 10/23/10
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VxTMFl It’s spooky how cleevr some ppl are. Thanks!
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