5 Reasons Costa Rica Real Estate Prices Will Not Significantly Drop During Pandemic 

So first, some quick background, I’ve been living and working full time in Costa Rica for 15 years in which I’ve been handling real estate sales in the Central Pacific region. Important to note here that this article will be referring to beach properties in Costa Rica. The San Jose market is a bit different so it will not apply quite the same.

When it comes to Costa Rica real estate we always seem to get our share of those seeking great deals on properties. I think a lot of this stems from the fact that we are primarily a cash market (I’ll get back to that more later), and many buyers want to feel they have negotiated a good deal if they are going to purchase real estate with cash. Well, now more than ever, many prospective buyers are speculating that with the pandemic and effects on the global economy that many properties in Costa Rica will sharply decline in price. I’m receiving calls and emails every week of buyers eager in hoping to find some sort of seller desperate to sell.

Unfortunately, these buyers are missing some key factors in evaluating the Costa Rica real estate market. So lets breakdown some of the factors as to why buyers should not expect to see significant prices drops in Costa Rica real estate.

1 – Lack of Mortgages

One of the first things someone speculating about the market tells me is how they are certain there are going to be many property owners who won’t be able to pay their mortgages and be forced to walk away from their property. Anyone who is educated and familiar with our market will know that we are a cash market. Go up and down the beach to every development and you will be hard-pressed to find properties that carry any sort of mortgage. Carrying a high mortgage on a vacation property while being in financial distress can lead to desperate sellers, but in our market, we just very rarely come across those.

Titled, furnished beachfront home under $140 per square foot? Dont expect to prices drop lower.

2 – Affluent and Secure Owners

Since we are primarily a cash market, the typical buyer here is affluent and is not someone who is spending their life savings or final funds for their property. These are the type of people who are typically in good financial position and who manage their money well. There is no doubt there are a lot of people who are in financial distress at this time, but I’d say that the typical Costa Rica property owner is not one of them, in fact, most of them are savvy investors, most American, and I’d gather to say that many of them have actually taken advantage of the US stock market and made money over the past 3 months.

3 – Low Holding Costs

Another factor to take into consideration is that the holding costs for properties in Costa Rica are low. Yes, some Jaco condos can carry HOA fees, but most of those owners covered their bills with rentals in the first couple of months of 2020. Others are offsetting that with aggressive rates or longterm rentals, while the rest don’t seem to be sweating it and can shell out a few thousand dollars over the next few months if needed.

4 – Limited Inventory

By and large with everything said above, will result in sellers holding the line when it comes to prices. Sure some sellers here and there will be more motivated than others, that is always the case in our market, but a few of those sellers are not going to bring down the entire market. It is also important to note that inventory in our market is limited. The Costa Rica real estate buyer is SELECTIVE, with very strict parameters in what is already a market with limited options.

5 – Unwillingness to Let Go

Most sellers are from the U.S., and let’s face it, a lot of people are pretty disgruntled with current events and politics back in the U.S. While many of those people are seeking property in Costa Rica for just those reasons, sellers who already own here are revisiting the idea if they should let go of their property here. At the very least they are starting to be less motivated to sell and the last thing looking to do is give it away.  You also have the emotional and mental state of sellers owning a property free and clear.  Just think of all the things you’ve owned in your life and were just unwilling to let it go, it is much the same with Costa Rica sellers, most often they simply aren’t all that motivated or willing to let go.

Look, don’t get me wrong, there will be some properties reduced in price and some opportunities to purchase a great value in Costa Rica, there are some great opportunities now, there were some great ones before this, the reality is there are always great deals to be had if you are in the right spot at the right time, but it is important to set reasonable expectations. So far we have seen little indication that sellers are showing any signs of desperation. And don’t be mislead by shifty marketing advertising huge reductions on inflated priced properties or reductions on niche properties that have little to no demand. If you are serious about buying a property at a great price I think it is important to deal with a professional who can first educate you in understanding the market so you can know for yourself when that opportunity and timing match up best for what you are looking for.