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Wasn’t a “time out” really needed anyway? And when I say “time out” I don’t mean the freefall we’re seeing in real estate in the states. For those of us that have purchased properties and have been looking for others… things were getting a bit out of control. I don’t want to see anyone hurt with this market, but things were well out of hand. Crazy prices that seemed to increase when you showed the slightest interest… net listings… sellers that were dreamers….and so on!
Money is tight right now for those looking to leverage… so that in itself will moderate the market and give us a good idea as to real value. Investors/buyers with hard cash will do well now. Even with the world economic problems CR real estate still has real value from an investment standpoint, but also has the advantage of being a vacation/retirement play as well. There’s not too many places that can make that claim these days.
Now is the time to take a deep breath and see how things settle out. There are bargans… and there are still sellers that are dreamers. The good thing is that those looking to buy should have an easier time telling the difference.
Edited on Mar 25, 2009 12:30
well said Imxploring! I agree completely and Scott you too are correct about the lack of quality housing available and CR certainly needs more of that. I think people should buy now in CR not for investment, but because they really want to enjoy everything CR has to offer.If they shop, they should be able to get a good deal.
My thoughts on the “time out” theory are a little different. I agree that the slow down is welcomed and necessary for sustainable development in that great country. Nevertheless, I don’t think this is a short term “time out” but rather a complete downshift in gears. I think we went from overdrive to second gear in one swift and abrupt correction. A “time out” implies that we will resume an ascent at some point in the not too distant future. I believe that this is just a correction of pricing and that it could take an entire decade (likely less) for things to resume any sort of sustained upward trend.
My reasoning is fairly simple; capital is tight now and will remain relatively tight (or at least reasonably conservative) for the foreseeable future…and much of the CR boom (CR was not alone. Places like Roatan have completely fallen off the map at this point) was fuelled by loose credit in the US. We will NEVER again see such irresponsible/loose credit conditions (cross your fingers). It is no coincidence that as the foolish lending in the US has come to a screeching halt CR sales numbers are down by a minimum of 50%.
So although there will always be “real buyers” (one’s with cash who needn’t leverage their purchase abroad through a financial institution in their native country), the “false buyers” (those who used their homes like ATMs to finance their vacation property) have all disappeared and they won’t be back. However, they will be replaced by a younger group who were originally priced out of the US real estate market and now have the ability to take advantage of incredible affordability and over time watch the value/equity of their home grow. Fortunately, (or unfortunately for CR) they will not be able to use their homes in the US as an ATM as credit approvals will be strict. And even if they do qualify for additional credit…the looming inflation (possibly hyper-inflation) in the US is going to drive rates through the roof from late 2010 or early 2011 through to 2015 and thus it will become uneconomical to do so. Also, lets not forget to factor in the imminent diminishing of the USD due to the quatitative easing Mr. Bernanke has been cornered into.
Furthermore, until the equities markets show any signs of life, many of the “real buyers” will likely be waiting on the sidelines to re-coup a large portion of their net worth. Now I’m not equity market prognosticator…but I do possess a fairly large gut…and it feels that we’re in for a lengthy recovery…just to bring people back to or close to whole…forget profits.
Do I think its a good time to buy Costa Rican real estate? Yeah…its ok I guess…but I think it should be treated as a retirement or vacation home…not an investment as there are certainly bigger yields to be had elsewhere.
grifz77…Come on… don’t tease us… give us all a clue… where might we find those “bigger yields” you mentioned? 🙂 I’m sure there’s quite a few folks here that would love to recover some of the 40% beating they’ve taken! LOL
No doubt the last 5 years have been a very “unique” period that won’t happen again for some time… but history has a nasty habit of repeating itself… so I’ve learned to never say never! It’s going to take some time for things to settle out before ANYONE can give a real view of where things are headed.
That being said I’m a lot more comfortable with my holdings in CR than in the states right now… and with the lower cost to carry them (taxes/insurance/utilities/maintenance) it makes sense that being able to ride out this market is less of a burden with the properties I have in CR. There might be other RE markets out there that may perform better in the short-term due to them not having been overpriced with the big run-up of the last few years… but on balance the properties I have purchased in CR were well priced and not inflated to the point that I have, or will lose. Besides… I get to enjoy them, which as you point out has a value.
I agree with your views… most of us are on the same page… and I for one have always looked at my CR real estate investments as an asset that I can enjoy and share with friends and family… unlike any other investment I’ve ever owned!
Edited on Mar 26, 2009 16:38
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