Let’s face it, so far 2024 has been a bust for the Costa Rica real estate market…
Writing as a full-time Costa Rica realtor, when you go through one of these luckless downturns, it’s easy to start thinking, what the F am I doing wrong?
And believe me, that thought has been entering my mind too damn much lately. And we all know that such negative thinking rarely brings positive results!
I was having a conversation with the Coldwell Banker national director the other day. He told me that sales were down 40% nationwide, year over year. Also, that inventories were up some 20%…
There you have it, sales dramatically down and inventories surging upwards. Or, in economic terms, flailing demand and rising supply.
That translates into what has amounted in 2024 to the Costa Rica real estate market doldrums. At least that’s what most of us have been experiencing lately. Oh for sure, there are some “lucky ones” out there who would take issue, but let’s face it, overall 2024 has SUCKED!
Ok enough of all that negative talk…
I do believe there’s a flicker of light shining at the end of this 6 month-long tunnel and hopefully it’s not a freight train called total market collapse!
Nah, I believe there are some signs popping up that the Costa Rica market might be poised for a rebound…
Like what?, you ask…
Sign 1 - Activity on the Rise
Well, for starters, showings have increased as of late. That’s not to say that there was zero activity during the high tourist season, that lasted from Christmas 2023 to around mid-April. That was immediately followed by a period of stagnation of activity, which is fairly normal. But those so-called buyers were more along the lines of what we call in the trade, “looky-loo’s."
My experience has always been that “low season,” or even “shoulder season,” buyers are more serious than the high season ones, who are basically on vacation and looking for us realtors to give them a free tour.
Showings do seem to be picking up recently and hopefully for buyers who are, well, actual buyers!
Sign 2 - Improvement in Dollar to Colon Exchange Rate
Another positive development as of late is that the dollar has finally begun to rebound against the Costa Rica colon.
Now, granted the expat real estate market in Costa Rica is exclusively in U.S. dollars. So, the dollar-colon exchange rate really doesn’t matter too much in terms of real estate pricing. That being said, the surging colon has motivated some Costa Rican sellers (ticos) to raise their prices.
For the last 5 months the colon has been bouncing around at levels of 500 (or less) to the dollar, which is absurdly low compared to recently historic levels, which at one point surged to almost 700.
The end of May has seen the colon rise to around 520 per dollar. That’s a good thing because it makes living in Costa Rica a bit less expensive for folks who earn their money in dollars, as most expats do.
Costa Rica has been gaining a bad reputation as being too expensive place to live in compared to other Latin American countries. A weak dollar to colon exchange rate only adds to that perception.
Sign 3 - Election Year Social Turbulence
I predicted in an earlier post from last year that as the probability of a Trump election in 2024 goes up, the demand for Costa Rica real estate will correlate positively. So far, I am batting under .300 on that prediction. Once thing I predicted wrongly is that Trump would not go to trial before the election…
Well he has and he’s now a convicted felon - a 34-count convicted felon. However, has that decreased his chances of winning in 2024? Nope, quite to the contrary. It seems to be increasing his chances.
That’s not exactly how I predicted things would shake out, but it does follow my basic reasoning that the turbulence of the 2024 election season will ultimately inure to a trend of rising Costa Rica real estate demand…
I truly believe it will and soon!
Sign 4 - Lower U.S. Mortgage Rates
Inflation and high interest rates have been a problem, both for the U.S. housing market and for Costa Rica real estate demand. You see, Costa Rica for the most part is a cash market. Maybe the wealthiest have the cash to buy, in whatever economic climate. But most of us poor saps don’t. Unless expats can sell their homes in the U.S. to raise the cash to buy, they can’t feasibly purchase real estate in Costa Rica.
Lately mortgage rates have dropped a bit and are now under 7% in the U.S. Inflation seems to be somewhat tamed - although still spooking the Federal Reserve from lowering rates. The downward move in the U.S. mortgage rate is a positive sign for Costa Rica. However, like most of what I’m saying in this post, the jury is still out.
Sign 5 - Lower Costa Rica Real Estate Prices
Costa Rica real estate prices surged as a result of the post Covid real estate boom of 2021 - 2023. That boom has largely dissipated and now prices are coming down, dramatically. Rather than seeing a constant barrage of “sold” notices, my email inbox is repeatedly filled with notices of new listings and price decreases on older ones.
Now, that’s of course a sign of the fact that the market currently SUCKS. But it’s also a reason for buyers to start taking notice that now might be the time to pounce…
If the market rebounds the way I’m (hesitantly) predicting it will later this year, this might be a short window of opportunity for you would-be Costa Rica real estate buyer to take advantage.
It might be finally time to get off that fence and into the ball game!
And I’ll be here to welcome you with open arms!!
