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Scott are you telling me CR real estate would be what it is today without the influence of American Boomers? Now ask yourself that about the Argentinians, British, Canadians, ___________________ (insert country of choice).
If American’s do not continue to seek CR for second home/recreational property investment/purchase, at the pace they were over the past 15 years (the status quo), I believe overall demand will fall, thus negatively affecting prices…in the near term…some market segments more severely than others.
I understand that there is not a glut of unsold spec inventory. However, with countless projects having been cancelled or postponed…is this not a clear message with regards to what is happening to demand?
Again, the numbers outside of the Americans are not material.
We can agree to disagree. I just do not see the mass exodus that you do. I understand that not all the motives are financial…I think distance the major factor. Thus why we see less europeans than we do Americans in CR…the same reason many people choose, Arizona, Mexico or Bahamas over CR.
You speak of crime…is it much better in CR? http://www.globalpost.com/dispatch/costa-rica/090128/costa-ricas-criminal-underbelly
For relativity, “In downtown San Jose, the increase is even starker: In 2008, the murder rate was nearly 28 per 100,000 inhabitants, up from 18.5 the previous year, a 52 percent increase. Three out of five homicides in Costa Rica are committed with a firearm.” The same rate for 2007 in the US was 5.6.
And if so many Americans move to CR as you are expecting, does it not then become a terrorist target itself?
Edited on Feb 19, 2009 15:53
Imxploring, I agree 100%, the lenders created their own problems by lending money to unqualified borrowers…
I’m fully versed in contractual debt, unfortunately I am also fully versed in integrity, dignity, pride and common sense…qualities that sadly seem to be absent among many Americans.
If it were acceptable sprite there would be no change to an individual’s credit profile after foreclosure, default, etc…whereas if you short a stock your profile does in fact remain unchanged. Similarly if a company performs poorly their rating reflects it, they pay greater bond spreads, etc.
Keep telling yourself that it is acceptable…possibly one day you can join the highbrow scociety you speak of…thanks but no thanks.
After your question of “Whom has he harmed?” I now understand what type of person sits at the other end of the screen and thus I no longer wish to debate this topic with you. Clearly you find no problem in breaking a contract. I truly hope you don’t practice business in Costa Rica or anywhere else for that matter……..
Sprite, I know very well what a mortgage is…and walking away from your mortgage is nothing like shorting stocks. That my friend are the types of thoughts/actions that separate reputable people from scum of the earth.
Sorry Scott, my comments were not intended to initiate resume comparisons. I know you are proud of your accomplishments, as you should be. However, your response in no way addressed why CR may avoid the re-pricing we are experiencing in every other corner of the world. I would be greatly interested in hearing the theories of an indicidual with the depth and experience you have.
“CR has always been a place that people run to to escape trouble (legal and personal)… now we might have to add financial to that list!”
Sounds like paradise…
Those people you speak of leaving the bank high and dry are the scum of the earth, lack integrity and have absolutely no dignity.
Scott, with all due respect, I think you got a little off point with your response. The biggest consumers of recreational property in CR are American boomers. What happens in the UK, Middle East, Argentina, etc. may impact CR net migration but at a very immaterial level.
Obviously the American/Canadian boomers are not all poor…however, I work in the real estate/financial investment world and we have clients that absolutely will not open their RRSP/401K statements in fear of what they expect to find in them. Wealth has eroded/evaporated on a scale I think you are grossly underestimating. Boomers are being forced to work longer, they are travelling less, and when you see retirement properties in desireable locations within the US (a fully developed nation) closer to their children/grandchildren, shorter flights, etc, for the same price or even LESS than what the equivalent property would cost in Costa Rica, staying home in the comfort of an english speaking population with expensive but first class health care becomes not only an affordable but a natural choice.
I guess we shall agree to disagree…at least for the immediate future.
The entire globe is in the process of being re-priced…you have not provided me with strong enough evidence to believe that Costa Rica will be an exception.
Many Americans used HELOCS to fund their purchases abroad, nothing I have read about Obama’s new plan mentioned those types of facilities. In addition, my thoughts are that this is but a mere band-aid…see page 9 of this link. http://www.designs.valueinvestorinsight.com/bonus/pdf/T2_Housing_Analysis.pdf
The indications are that its going to get worse before it gets better. Housing is but one variable in this messy equation.
So Scott, may I ask what you believe “the most catastrophic economic period that the modern world has ever seen” is going to do to CR real estate prices?
Sounds like some of you might enjoy reading Peter Schiff and Jim Rogers. And no I am not Peter Schiff and no I have no financial gain by selling Peter’s books…however, I have profited by reading them.
http://www.youtube.com/watch?v=JGdj3Gx4A8w&feature=related
http://www.youtube.com/watch?v=jv_kLqxbtcg
http://www.youtube.com/watch?v=zSlGmnfADYUI’ve read both his books and recommend them both…definitely not for the faint of heart.
Jim Rogers is another interesting fellow.
http://www.youtube.com/watch?v=qtVX2MfawxcI agree, there are many owners in CR who are not over extended. However, a material number are and unfortunately for those who are not, they got caught up in the same game as those who are, and consequently paid over inflated prices for their CR real estate. There are many different types of players…although they are all playing the same game.
Furthermore, as tourism goes, so does CR real estate. As CR’s largest group of each, tourists and foreign real estate owners, continue to suffer, so will CR real estate.
I understand that many projects have yet to re-price their developments…but my theory is that these groups are simply in denial. They haven’t lowered their prices because their projects don’t make sense if they do. My thoughts are that developers will either lower their prices or walk away. This is not a theory islolated to CR or the US, its simply a global re-pricing of real estate. Again, just my $0.02.
Its pretty amazing that there was such vehement denial of the global financial crisis’ effects on CR real estate prices. When I was in CR in in October and November the real estate community was in complete denial that there would be any fallout in either Guanacaste or the Central Pacific. I think its fairly clear now that these “promoters”, “advisors”, “realtors”, whatever they want to call themselves were simply either wrong or lying…just as those who think CR is near their bottom of this trough are wrong. As fee takers the above camp of “real estate professionals” have no skin in the game so their function is basically that of information control. Due to CR’s lack of an MLS system, all of their optimisim was based merely on survival instincts…control the information being disseminated and you control consumer confidence.
I believe CR is NOWHERE near a bottom of their real estate problems. In fact, I suspect that its about to pick up…dramatically. Here is why, not only are prime loan defaults in the US escalating rapidly but the volume of Option ARM (Pick-a-pay) and Alt-A loan set to recast in 2010 and 2011 is equal to or greater than the volume of subprime resets. Now here’s the kicker for CR…the average balance of these type of loans in over $300,000. (For comparison purposes, the average balance of the subprime loans was approximately $175,000) Thus the “owners” affected in this second wave of foreclosures will be higher income families…families that likely bought a $300,000 house in 2003 with very little down, watched the value of their home double, took out a HELOC, came to CR and purchased a second home cash…and now have to liquidate their second home just to be able to save their US home. I know somebody will respond with the the US government stimulus package as their defense. Problem is that its highly unlikely that HELOCS will qualify for any sort of “bail out”.
Every week I receive five to 10 “Fire Sale”, “Purpule Sale” or “Liquidation Sale” emails from brokers in CR, yet in the next breath they say there is “no problem” with the real estate market in CR. My response is that those “sale” prices are not actually “sale” prices, those are just the “new” prices…anyone that paid more than that…simply paid too much.
Just my $0.02.
