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It seems like the downturn here in the US has already spilled over there in Cost Rica. A friend of mine said that prices have come down much faster than he had thought.
Any comments/prediction for RE this 2007?
Also, is there a local stock exchange (similar to NYSE or Nasdaq in the US)in Costa Rica?
It would be inevitable for the downturn in the US to affect other markets. If you have cash, the market should turn into a buyers situation and you will benefit. If you’re looking to sell out in the US and move, it may not be as wonderful.
I do believe that Costa Rica has it’s own Stock Market although I am not certain. I remember reading something once but I could be wrong.
As far as your other issue I believe that Costa Rican real estate will have to follow a US downturn only because US investment will slow at best. I have heard mixed results however, I was informed that developers are not dropping prices and in the cases I looked at I was told sales are still strong. I don’t know if that is fact or marketing but I do know for a fact when I asked a developer to lower his price on a Santa Ana condo they wouldn’t and they said buy before the end of January or they move up more. That is based on my own experience with just one developer. My gut tells me if I wait prices will have to drop due to a slow down in sales. I have nothing but my gut instincts to back that up. If I am wrong and I very well may be wrong I will be paying a higher price if I can even get the type of unit I want in the development I want. I will have a much better opinion when I am in San Jose mid February looking at and negotiating with other developers in the area. My gut and instincts are strong for me because I am basing them on US trends and my beliefs they will spill over into Costa Rica but without local knowledge and first hand experiences or a way to see what new sales numbers are it’s just a guess. A guess that may cost or save me money but a guess none the less. I wish I had a working crystal ball or better yet a way to know what is on the market what has sold in the past 6 months and at what prices what the listed price vs the selling price would all be helpfull. I know this also which needs to be stated; while Costa Rica is a small country it has sections that may vary with their market trends such as the pacific coast and the central valley one could have strong sales and short supply while the other may have a weaker sales number and larger supply. All of the above needs to be considered if you are ready to buy in the near future and even in the long term. All just my humble opinion.
Edited on Jan 26, 2007 19:03
Bolsa Nacional de Valores. Literal translation (with a dash of poetic license): “National Goody Bag”. In English: “Stock Market”.
There’s no question that the downturn in the U.S. real estate market, like the earlier downturn in the U.S. stock market, made it difficult for many folks to realize their dreams and plans. How that affects the Costa Rican real estate market, however, may be another matter.
To be sure, a smaller proportion of the U.S. population is doing well enough to pay ever escalating Costa Rican prices, but the explosion of baby boomers in the next few years will create sufficient demand for safe, comfortable and tolerably affordable retirement locations that prices here in Costa Rican can only go up. Consider that if (say) two million families are looking for retirement destinations this year and that half of them are affluent enough to go pretty much anywhere, that means a million potential buyers. In five years, when there are ten million families, a third of whom are equally affluent, that will mean over three million potential buyers. As long as the denominator continues to skyrocket (and it will) the number of buyers and the pressure on the market will increase.
David I have to question your math what makes Costa Rica the primary retirement location for affluent Americans. Based on last years million using your numbers how many eneded up in Costa Rica? Now I don’t have that answer but I know it’s not even close to 20% maybe less than 1% again I am talking without facts or even my opinion just hypothetics. If someone has the facts please share them. I want to be clear David, I am not disagreeing with you for any reason other than the math doesn’t make common sense to me. I hope you are wrong for many reasons one I don’t wish to live with an overcrowed Costa Rica filled with retired expats. I know in an article in AOL finance taking about the most desireable retirement locations outside the US for babyboomers Costa Rica wasn’t even on the list the other day. The estimates I have read about babyboomer retirees living outside the US were less than 1 tenth of 1 percent which is an upward move. Again I don’t have real knowledge or facts and I just quoted 2 different articles that I have read within the last 6 months both on AOL. I don’t know where they get their data and what are just estimates based on the writer’s opinion. I do know that of the US citizens & US expats that bought in Costa Rica in the past few years some were current retired people some were those buying with plans to retire some were investments from speculators some were 2nd or 3rd homes purchased during a strong US real estate market. How that breaks down into the aforementioned groups I have no idea. So it’s just me questioning your rational and your math. If you have real numbers and facts to support what you are predicting please add them I would love to read them to ease some of my concerns and also to assist me in my assumptions which are very flexable this time and subject to change based on good information.
Vegas, I’m not suggesting that Costa Rica is “the” or even “a” primary retirement destination for affluent Americans. What I guess I didn’t make clear is that I believe that Costa Rica will continue to be as attractive overall (or that it may become more attractive) as a retirement destination in the future as it is today.
That said, given the coming explosion of baby boomers heading for retirement, if just an equal percentage of that larger population (as compared to today’s population) heads for Costa Rica, the pressure on the real estate market will escalate.
Let’s just assume that in 2006 five million American families entered retirement and that one-tenth of one percent of them headed for Costa Rica to look for real estate. That would be some potential 5,000 real estate buyers in the Costa Rican market in 2006.
Now if in (say) 2010 twenty-five million American families enter retirement and the same one-tenth of one percent of them head here, the number of potential buyers would increase to around 25,000. That amounts to a huge run-up in the number of American real estate buyers in a country of some four million people.
But let’s say I’m wrong. Suppose only one-twentieth of one percent of retiring Americans head here. That would still be 12,500 real estate buyers in a market that hasn’t gotten any larger.
I think, too, that people who are flat-out destitute won’t be headed here in large numbers. Rather, it will be reasonably affluent middle class and upper class families who do, in fact, have the means to purchase properties. Those are the ones who have a choice of where to live, and it won’t take millions of them to prop up the real estate market in a country this size.
I have said this before, it is to bad more Americans are not more open to the idea of alternative retirement locations. Most are just not flexable enough and think anywhere outside the U.S. borders is “3rd world” especialy places like Costa Rica. Many live just a few notches above poverty in trailer parks etc on S.S. funds when they would have a much higher standard of living in Costa Rica. As the big Multi national chains keep building they will continue to market heavily to U.S., Canadian and European markets attracting more people. A soft U.S. market may actually be good for C.R. as more people take cover and diversify into other markets. And certainly as more become aware of C.R. as a place to safely retire as well as an enjoyable place more and more boomers will come…they have to go somewhere. Costa Rica and the areas that will appeal to most ex pats(in C.R.) is relatively small and will not take a lot of buyers to keep it viable, keep that in mind. If just 30 to 50 thousand ex pats were to want to settle say in the central pacific well that would be a lot for such a relatively small area. And this is a small number of people based on the potential of retirees, thrill seekers and drop outs through out the world. Time will tell of course, but for those who want to live there, specialy boomers in there 50’s or 60’s don’t let real estate cycles determine when, where and how because life is to short and you can’t take it with you as they say.
One small observation. At the height of the US real estate market in 1988, I was a first time home buyer and bought at the top of the market. On my street there were even bidding wars going on and houses were bid up 10% or more over the asking price. Almost immediately after, the prices dropped as much as 15% in my area. As I was in it for the long haul it did not matter all that much to me. Eventually the boom started all over again, with the recent bust beginning in ’05. I recall Costa Rica had a similar downturn in the 1990’s, right around the time of the US bust. It shows there is an interrelationship between the two markets. Real estate is cyclical as many other markets are and a fall in the price of CR real estate would almost be expected. I understand that many more US retirees would seek out places like CR to spend the rest of their years, and this may contribute to maintaining upward momentum. But historically speaking, in the short term, a pullback in prices would be expected.
Good point Lotus, As I was just writing my post above when your’s popped on. I don’t have such a big ego in that I have to be right all the time. Just sometimes would be nice.lol. Because Costa Rica is such a unique situation in real estate it will be very interesting to see how it all turns out. I don’t think any of us owns a crystal ball that would give us a true reading on this. I was pointing toward history, and possibly this time, history will not repeat itself.
If anybody out there does have a crystal ball…Can I borrow it for a couple of weeks!
I think the CR re market will not be very effected by the downturn in the American market. I think boomers (like me) who are ready to retire in the next 5 years are going to be in the market regardless what happens in the US re markets. I’m not worried about my re value because I don’t depend on that for my decisions about CR, and I suspect I’m not alone. If a future retiree has his home about (or fully) paid for, he has the wherewithall to purchase in CR, regardless whether his property is up $50 grand or down $50 g’s. So, I think the push on demand in CR will continue, as David McMurray says, and it will have a push on CR prices. Having said that, it’s just a guess on my part, and my crystal ball is about as effective as anyone else’s. My opinion is worth every penny you paid for it.
Arghhh . . .
My father would turn over in his grave if he knew you were calling me “David McMurray”. It’s “David C. Murray”!! Fer Pete’s sake let’s not start a trend, eh?
;^)>
Edited on Jan 30, 2007 05:26
OmniShare I agree that those who retire and choose to relocate to Costa Rica will do so whether they make a huge profit small profit or negative profit on the sale of their US home. However, I question you and anybody else that is relocating anywhere or even staying right in their same neighborhood do you want to pay higher than the market calls for? I know I don’t with in reason I might pay a few thousand over the market value because I want something specific and this home has it but that’s my limit. None of us has this crystal ball we have all mentioned but most of us have good common sense and good business sense. So if you are telling me you are willing to pay the asking price when it is not justified confirm that to me and I will buy your dream home at the right price and resell it to you at an inflated price. I could use the profit to asist me in buying my home at the correct value. The retirement buyer in my opinion will not be the market makers in Costa Rica the market Value will be based on supply and demand along with time on market. I believe the market will be influenced by investor dollars retiree dollars as well as other factors such as the cost of credit/money inflation cost of living just to name a few. The attraction of Costa Rica to many retirees is the low cost of living if that increases at a faster pace than it has been the attraction may tarnish a bit not that cheaper cost of living is everyones reasoning. Again in my opinion there is a lot more that Costa Rica offers me than just lower living costs. With all that has been written here along with what has been happening in the US housing market and write ups in Costa Rican publications I believe a proceed with caution attitude is the best course of action. If you are buying a primary residence and you are 100% certain that this is where you want to live out your life or even the next five years you may use a little less caution but if you have any reservations that you may be buying and moving to try it out you better be certain you bought right or when it comes time to sell you may lose your shirt and more. Paradise could turn into your financial demise affecting your retirement and forcing you back into the work force. I am not preaching doom and gloom I honestly don’t know what is happening right now or what will happen all I am saying is be cautious do your homework and don’t be pressured by sales people or anyone else. The purchase of real estate is a major purchase for everyone and should be traeted as such. Think of it this way on a 250,000 dollar home if you have to take a 25% loss in sale you are looking at 62,500 dollar loss yet on the same home if you buy it at todays correct value you may save 15% which is a savings of 37,500 dollars. Which position do you want to be in? I know which one I prefer. That’s why I am not running but I am walking slowly keeping my eyes and ears open testing the waters as I am putting a deal together for me. I am still relocating I know this is where I want to live without any doubt and I can sustain inflation and an increase in the cost of living so I just want to buy at the correct value.
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