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Archives for January 2024

Costa Rica – A Land Where the Exceptions Are the General Rules

January 15, 2024 by Costa Rica Guy Leave a Comment

Costa Rica - A Land Where the Exceptions Are the General Rules

I’ve always said that in Costa Rica Murphy’s Law works overtime. You know, the one that postulates that whatever might go wrong, probably will.

That “general rule” of life in Costa Rica is especially true when it comes to trying to move from Point A to Point B, in a car – and the tighter the time schedule the more certain that the law is bound to kick in, seemingly for the sole purpose of delaying your arrival. Which is also why we say in Costa Rica that if you’re on time to an appointment, you’re early – and only if you’re 30 minutes “late” are you effectively “on time.”

I’m sure there are readers with some Costa Rica road experience who would agree – like when you’re barreling along on a lonely stretch of road, only to be impeded by a farmer herding his cows right down the middle. And then there’s the almost endless episodes of “road construction” as workers try desperately to beat back the jungle from taking over the highway.

However, for the most part, Costa Rica is a land where the exceptions are the general rules. That’s one reason I always get peeved about all the wrong-headed advice you read on the countless Facebook groups, where “experts” will tell you how things “really are in Costa Rica” – usually in the form of some anecdote that happened to them.

But the truth is that “anecdotal” advice doesn’t equate to a general rule that anyone can expect to encounter across all the myriad of life situations you will face as a Costa Rica expat.

One recurring piece of advice that really gets under my crawl is the one that states that you should never use a realtor to do a real estate deal, since there is no licensing in Costa Rica and all realtors are greedy charlatans, yada, yada, yada…

Let me dispel this so-called general rule with a logical exception that you’re bound to encounter in the course of your real estate search efforts…

You see, most expats invest in areas where almost all properties are “listed”, er at least the good ones. Thus and therefore, it’s sorta hard to see the best of what’s available if you follow the sage online advice of avoiding all real estate agents!

Here’s another one you hear a lot – it goes something like this…

You need to find a local (non-realtor, of course) who can search for you, talk the lingo, and make sure you don’t get “gringo-priced.” Those that have followed that advice are probably also the same ones complaining about getting ripped off in their real estate deal.

Now so-called gringo pricing can exist in areas like getting your car worked on, or buying a horse. However, real estate is one area where prices are what they are and the best way to get a fair price is to buy a property that has been fully exposed and tested by the real estate market – typically by being listed with, you got it, an f’ing realtor!

Oh for sure, again there’re always exceptions…

For instance, yes there are bad realtors in Costa Rica – usually the ones that are functioning independently and without the required “credentials”, like actually being legally able to work in Costa Rica and being registered with SUGEF (a topic for another post). And yes if you get ahold of one of those bad ones, you can have a bad experience, duh!

Therefore, be careful, but don’t buy into any supposed general rule that “all realtors in Costa Rica are bad and are to be avoided.” A good realtor can be your best asset before, during and even after your deal!

The influx of newly-minted expats, along with the explosion of Facebook groups focused on them and their plight, are giving rise to a corresponding glut of bad “anecdotal” advice. I tell my clients to peruse these groups and glean from them what useful tips you can, but be highly skeptical and suspicious about, well, just about everything you read.

Many are filled with gringos who have either already had a bad experience, or are itching to have one, and they just love to bad-mouth the country and everyone in it, especially the Costa Rican people…

And that leads to the following rule, which I will concede is a “general” one…

The best way to fail in your expat adventure is to come down here and immediately get on the wrong side of the ticos (Costa Ricans). One way I see many doing that is to stupidly, or naively, trust people you don’t know, or can’t even really communicate with, with your stuff and then develop a negative bias about all of them when you end up getting something robbed from you.

There’s quite a bit of petty theft in Costa Rica. You have to be careful and if you’re not, yea, you’re liable to get ripped off. But that event does not automatically lead to any “general rule” that all ticos steal and are not to be trusted.

I’ve lived here over two decades and sure I’ve had some things stolen. And yes I am careful about who I trust. But in my view, all in all, ticos are wonderfully trustworthy, honest, and hardworking people. In general, they are poorer than you and don’t deserve to be taken advantage of by you either trying to pay them less than they should be paid, or quickly accusing them when a fork goes missing!

Bottom line is that in this country the exceptions are much more noteworthy than most of these supposed general rules because, in reality, there are very few of said rules. Just like in the context of traffic law, we don’t have iron-clad rules down here, we have “suggestions.” And I suggest you take head of those, especially the ones mentioned in this post.

Filed Under: Costa Rica Expat Living Tagged With: Costa Rica Rules, Costa Rica Suggestions

Current State of the Costa Rica Real Estate Market

January 1, 2024 by Costa Rica Guy Leave a Comment

Current State of the Costa Rica Real Estate Market
We all had the momentum; we were riding the crest of a high and beautiful wave…

So now, less than five years later, you can go up on a steep hill in Las Vegas and look west, and with the right kind of eyes you can almost see the high-water mark–that place where the wave finally broke and rolled back.

Hunter S. Thompson, Fear & Loathing in Las Vegas

As 2023 comes to an end, I feel an apt way to describe this past year would be somewhat akin to how Hunter Thompson described the end of the summer of love…

For sure we’d been riding high on the crest of a mighty Costa Rica real estate wave during 2021 and 2022. However, that wave seems to have crested, broken and is now receding back to normality —

Or is it?

Granted that my real estate practice is focused exclusively in the “southern zone”, so my opinions will of course be biased by what is going on in my market. Nevertheless, I would surmise to say that what’s happening in our zone will at least be reflective of the rest of the country to some degree.

I’ve always regarded the southern zone as being two distinct markets – mountains and beaches. The beach market is much like other beach markets across the country and is largely driven by tourism and second or vacation home sales. The mountain market is less touristic driven and buyers attracted to it are generally moving lock, stock and barrel to Costa Rica.

I do deals in both of these markets, but honestly I am more focused in the mountains, as that is where I live and socialize. Most of my personal listings are in the mountains. A typical year for me will usually be divided between mountain and beach deals, with a slight majority of those deals favoring the mountains.

2021 and 2022 were record years for me, as they were for the agency I work for (Coldwell Banker Vesta Group). I believe that many agents from other agencies would tell you the same thing about those 2 post-Covid years.

2023 has also been a good year, but not a great one – at least not stacked up against the outliers of 2021 and 2022.

What drove the market to stratospheric heights in those post-Covid years?

Several factors, among them being red hot U.S. and Canadian real estate markets, a soaring stock market, historically low interest rates and basically folks having more cash than they knew what to do with. Coupled with that was the Covid-related phenomenon of folks switching from working in an office to working at home.

Then in 2023 all that red-hotness came to a head with soaring inflation and as a result soaring interest rates. That put a damper on the real estate markets in the U.S. and Canada and with Costa Rica being a predominantly cash market, folks all of a sudden didn’t have the wherewithal to buy that they had in 2021 and 2022.

Things were a bit different in the luxury markets, which remained pretty strong throughout 2023. But mid-market sales did slow down and the slow down intensified in the 3rd and 4th quarters of 2023 as inventories rose dramatically while demand cooled. I have been seeing a lot of price reductions throughout our southern zone market lately.

What’s likely to happen in 2024?

While I am concerned that the slow down will continue into the 1st quarter of this new year, overall I’m optimistic…

And here’s why —

The reasons why folks wanted to move to Costa Rica that drove the market to dizzy heights in 2021 and 2022 haven’t gone away. And the political division that many were trying to escape in those years will only reach its zenith in 2024 with a presidential election looming.

Meanwhile, the economy in the U.S. isn’t really as bad as political opponents of Joe Biden say it is. Inflation has come way down from nearing almost double digits in early 2023. The Federal Reserve is signaling a series of rate cuts in 2024, which will bring mortgage interests rates down. That should shore up the U.S. housing market. And the financial markets are at record highs.

Unemployment is at record lows and the phenomenon of work from home is only growing.

I know many “economists” have predicted recession in 2024, but from my vantage point, it seems that prognostication is becoming less and less likely – barring some unforeseen event like a major shock in the energy markets.

Therefore, if the motivation for moving to Costa Rica remains strong and may even increase and the wherewithal to actually make that move actually gets stronger, why would 2024 be anything but another “good” year for Costa Rica real estate?

Of course, as a realtor I tend towards an optimistic outlook (in order to maintain my motivation and sanity). There are a multitude of ‘risks” looming out there that could create havoc in the world and in Costa Rica, which, last time I checked, is still part of that same world – even though sometimes it’s easy to forget that fact down here in paradise!

One particularly bothersome trend has been this year’s historic appreciation of the Costa Rican colon against the dollar. This is a bit of a head scratcher for me to figure out, but suffice it to say that Costa Rica’s central bank needs to step in and stem the downward slide of the dollar. Otherwise, this will weigh against the prospect of continued growth in both Costa Rican tourism and foreign investment. I don’t think the Costa Rica government wants that to happen, so I’m pretty confident that in 2024 the exchange rate will find more stability.

Oh and another positive development in the real estate world down here is that more and more Costa Rica banks are offering conventional mortgage loans to expats or nonresidents. I know of three banks who have gotten into that game with fairly decent loan terms: ScotiaBank, Lafise, and BCT. If interested leave a comment and I’ll be glad to provide more info.

The ability for nonresident buyers to actually get a loan in Costa Rica, on acceptable terms, (outside of the historically limited availability of short-term “seller-financing”) would be a major boon to the market here.

So, while I’m cautiously optimistic that 2024 will be another good year for Costa Rica real estate, I am also painfully aware that there are risks looming that could result in “flat surf.”

Filed Under: Costa Rica Expat Living Tagged With: Costa Rica Real Estate Market

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