Understanding where you as a buyer stand, in terms of negotiating power, in the Costa Rica real estate market essentially means understanding what type of market you're dealing with.
Just like real estate markets everywhere, there are essentially two types:
Buyers' markets - where supply (properties) exceeds demand (buyers);
Sellers' markets - where demand (buyers) exceeds supply (properties).
What type of market prevails in Costa Rica, right now?
The period from the end of the "Covid year" (2020) until the middle of 2023 was definitely a sellers' market in Costa Rica. Since the latter part of 2023 until now, the market has switched back to the more historical norm of a buyers' market.
Why the switch?
Due to the overheated market years of 2021-2023, a few things happened…
First, a lot of "pent-up" demand was released. Also, an entirely new type of buyer entered our market...
The young "digital nomad" with cash to burn!
That pent-up demand has begun to lose energy in the last year, or so.
Also, a lot of sellers entered the market especially towards the tail-end of the boom. Inventories began to grow, along with prices, while demand gradually declined.
That leads us to where we essentially are now - a market with far more properties to sell than buyers to buy them.
Does this turn from a sellers' to a buyers' market prevail in all parts of the country?
For the most part, yes! It certainly does in my Southern zone. I believe possibly to a lesser extent in the Guanacaste coastal region, which is largely an income property, investor-driven market.
Will the market turn more in favor of sellers in 2025?
I think it might. However, the more likely scenario is a state of relative market equilibrium. That means that supply and demand will reach more of a sustainable balance.
The presidential election has certainly been a factor in the slow down of 2024.
Election years are always difficult. People tend to want to play a waiting game before making substantial financial decisions in election years. Most of the time this is due to unwarranted fears of economic disaster if their guy (or gal) loses.
And this has been an election year like no other in our nation's history!
That has given rise to a high degree of buyer indecisiveness. This has been very frustrating for us realtors in Costa Rica.
Even so, the demand for Costa Rica is still percolating under the surface. Once the election is over, all that pent-up demand might release, much as it did during the immediate post-Covid years.
And no matter who wins, about ½ the country will be pissed off. And many of those disgruntled citizens could be ready to make a move. Many have been threatening it!
If this pent-up demand indeed is ultimately released, it could quickly lead to the specter of another sellers' market in Costa Rica.
Meanwhile, the water is very nice right now for buyers to wade in. There are plenty of great properties to buy and prices have fallen from their 2021-2023 highs.
So, I have to ask…
What are you waiting for?
