Will US housing slump affect property values in Costa Rica?
Costa Rica has enjoyed a steady increase in property values over the last decade that seems to have mirrored the market back in the United States. Many investors are now wondering if the recent devaluation in property values in the states will be reflected in prices in Costa Rica. There does appear to be a slow down in the number of transactions that are taking place in Costa Rica, and for the first time in several years, prices seem to be leveling out. However, Costa Rica does not appear to be regressing at the rate that is taking place in the U.S.. This is due to several factors that will insure investments in Costa Rica should remain sound. The first important aspect to consider involves the fact that most investments made in Costa Rica by foreigners were in raw land. Land does not have the tendency to lose its value when compared to single-family homes or condominiums. The savvy investor that purchased land in Costa Rica over the last several years might see a period of time in which the prices maintain there current market value, but should continue to see steady increases in value over the next decade. There are a few areas in Costa Rica, like Jaco and Tamarindo, that experienced very rapid growth, and in turn the prices of properties were often inflated. These hot spots will most likely be the areas that do experience anything similiar to the price devaluations that are becoming rampant in many areas across the United States.
The flip side to the housing market slump in the states, could mean that there are many investors who had purchased second homes in Costa Rica that can no longer afford to keep them. We are beginning to see many situations in which you have a North American owner in Costa Rica that has been caught in a bind and needs to unload his investment at a discounted rate just to keep his head above water back home. There was a time several years ago when a knowledgeable investor could locate a great deal on property, buying from a Costa Rican. The trend now seems to be leaning toward the better deals coming from North Americans that have been caught in a financial crisis due to the downward spiraling economy back in the States. The locals seem to have wised up to the value of their pristine lands, and have become patient in regard to selling.
So, is now a good time to purchase in Costa Rica? It would seem that since the prices have levelled out over the last few months, and considering that they never truly reached their pinnacle in regard to value, that with careful thought and research, now may be a great time to pick up that perfect piece of property in paradise. There are going to be many investors and developers that have “bit off more than they can chew” over the last few years, and are going to be looking to dump some properties at great deals just to stay afloat.
Tags: costa rica, economy, housing, investing, property, real estate, US