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Costa Rica vs. Colombia – Both Great – But Different

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Costa Rica vs. Colombia - Both Great - But Different

Costa Rica has been near and dear to my heart since first arriving in 2001. However, 15 years ago something happened in Costa Rica that changed my life, forever. I married a Colombian lady named Lily!

And ever since then, Colombia has also been near and dear. I’ve made month long visits there ever since and even before we were married on November 29, 2009.

I’ve noticed that lately Colombia is also being considered as a place for expats to live. So, I figure it was about time I did a Costa Rica versus Colombia comparison post.

Although I have traveled to various parts of the country, Colombia is very large compared to Costa Rica. Most of my time has been centered around the department or province of Antioquia and its major city of Medellin. Therefore, my experience of the country as a whole is certainly skewed due to having spent the majority of my time in that one area.

Nevertheless here goes – I am going to address this country to country comparison along the lines of Affordability, Accessibility, Security, Culture, and Overall Beauty…

Affordability

The word is out – Costa Rica has gotten downright expensive. Now, I’ve written in the past that while Costa Rica is expensive compared to other Latin American countries, it’s not as expensive as the exaggerated claims made on many of the Facebook expat groups. You can certainly live in Costa Rica on a much lower budget than is possible in the States, as long as you don’t spend like a drunken tourist!

Colombia on the other hand is CHEAP! I usually say that Colombia is on average half as expensive as Costa Rica and about a third as expensive as the States. Now, I’ve not done any statistical study to verify that, it’s just my “gut” feeling. But it is way cheaper than either Costa Rica, or the States.

And cheaper in almost every context, such as eating out, groceries, travel, services, medical – you name it…

Here’s an example – my wife had to have arthroscopic surgery on both shoulders a few years ago. We were able to get the procedure done for both shoulders in Colombia for under $5,000. That’s about 1/2 what it would’ve cost in Costa Rica and only a fraction of the cost in the States.

And, yes, I can tell you the surgery went exceedingly well.

The current exchange rate between Colombian pesos and the U.S. dollar is around 4,200. I’m always amazed at how far $100 USD, or 420,000 pesos, goes!!

Colombia certainly has the edge over Costa Rica when it comes to affordability.

Accessibility

I’ve always thought of Costa Rica as the biggest small country in the world. I mean, it’s almost like if you squeezed the U.S. together, so that coast to coast would be around 280 miles rather than 2,800. And the diversity of the country is amazing. And it can all be experienced in the span of a couple weeks!

Forget being able to do that in Colombia. Colombia is 440,831 square miles and has a population over 50 million. Costa Rica has 19,829 square miles and a population of a little over 5 million.

One great thing about Costa Rica is that virtually the entire country is easily accessible, by land or air. Colombia is vastly diverse and there are so many areas worth visiting. However, getting to them can be difficult, and downright impractical by land. The good news is that Colombia has excellent domestic flight options that are surprisingly affordable.

Even so, I have always liked the fact that in Costa Rica you can jump in your car and experience any part of it in a day’s drive.

Costa Rica has the edge over Colombia when it comes to accessibility.

Security

Costa Rica is one of the most peaceful countries on earth and one of the few that doesn’t even have a military. Somehow, it has managed to stay out of all the violence and social upheaval that has befallen it’s neighbors to the north and south.

Colombia, on the other hand, has certainly had its history of violence, including one of the planet’s longest civil wars. The good news, long gone are the days of the Medellin and Cali cartels and the Farc (marxist revolutionary group) has disbanded and reformed as a political party.

Colombia these days has changed from one of Latin America’s most violent countries to one of it’s most peaceful. The city of Medellin, a huge city of over 4 million inhabitants, while it has its pockets of criminal activity, is now one of the world’s safest large cities.

Having said that, I would be dishonest if I didn’t tell you that the influx of tourism and foreign immigration (and yes, I’m talking about expats) in both countries has contributed to gentrification (or social displacement) and a corresponding rise in crime. In my opinion not to levels that should dissuade folks from considering either as a place to move to. But it’s something to be aware of and to take precautions against.

In Colombia the locals like to say, no des papaya, which translates to “don’t be stupid” and invite victimhood.

I would have to say that it’s a toss up between the two countries when it comes to security. Perhaps Costa Rica has a small edge due to the fact that there are not as many large population centers like Medellin, Bogota and Cali, where gang violence and drug related violence certainly exists in some areas. The same can also be said for San Jose.

Culture

I am a nationalized tico (Costa Rican) and I love my fellow ticos and ticas. However, I have often noted that Costa Rica is just not as rich and deep in culture as what you find throughout Colombia. I have heard many explanations and theories for why that is, but I really don’t know if I buy any of them.

I guess you can chalk it up to the fact that as diverse as Costa Rica is, Colombia dwarfs it by comparison. Every part of Colombia is home to a unique culture. And that’s one reason I really love it!

I’ll have to give the nod to Colombia when it comes to culture.

Overall Beauty

This is a tough comparison. Costa Rica is known for its flora and fauna and in being one of the most biodiverse countries on earth – for its size! Colombia on the other hand is the 2nd most biodiverse country on the planet and the first when it comes to species of birds!!

In terms of geographical and topographical diversity and beauty, I find both countries similar. They are chocked full of gorgeous green mountain landscapes, lush jungles, flatlands, and, of course, beautiful coastlines.

Costa Rica probably has the edge when it comes to the beauty of its two coasts, Pacific and Caribbean. Colombia has the same two coastlines, but not nearly as many gorgeous beaches scattered along them. And Colombia’s coastlines are harder to reach than Costa Rica’s.

When it comes to mountains, Colombia has the edge with its many Andean snow-capped peaks. It also has the highest coastal mountain range in the world, the Sierra Nevada de Santa Marta, with its twin peaks of Colon and Bolivar rising to 5,775 meters (18,947 feet) and 5,560 meters (18,2412 feet) respectively.

The cultural edge given to Colombia noted above also extends to the beauty of its architecture seen in its large cities and many small pueblos.

I’ll show my Costa Rica bias a bit and call this comparison a toss up, when the edge “technically” should probably go to Colombia. But seriously, both countries are just without a doubt, drop dead gorgeous!

I don’t like comparisons and I believe both countries to be wonderful and I loath to say that one is “better” than the other. However, I thought this post might be of some assistance to expats who are potentially considering both to make a decision as to which might be the best fit.

Agrarian Parcels in Costa Rica – What They Are & Why You Should Care

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Agrarian Parcels in Costa Rica

There are many considerations when buying real estate in Costa Rica that might seem “foreign” to the investing expat…

One specific area of weirdness are the rules surrounding so-called “Agrarian Parcels.”

For starters, let’s say what they aren’t – say you have your sites on a particular piece of real estate that happens to be directly accessed by or fronting a public road. In that case, everything written below is not a concern for you – your targeted investment is NOT an agrarian parcel.

Agrarian parcels are basically created when a large “mother farm” is subdivided into smaller pieces. Some of those will be on the public road. These lots can be much smaller than the required agrarian parcel size (see below) and are generally not restricted in terms of what you can build on them. However, those interior lots not touching any public road must be given access through what in Costa Rica law is called a “servidumbre agricola”, or agriculture easement. These lots then become known as agrarian parcels and are potentially restricted as set forth below.

So, if you’re buying a lot in a rural area that is accessible via an easement, then the rules I am writing about are more than likely going to come into play. You should proceed with increased caution.

These agrarian rules were first promulgated many decades ago when Costa Rica was still predominantly an agriculture based economy. The rules were originally quite simple and stated basically that parcels could be no less than 5,000 m2 in size and usage for non-agriculture purposes (such as residential) was limited to 15% of the total area of the parcel. So, if you bought a lot of 5,000 m2 you could build a 750 m2 house on it. That’s a damn big house (over 8,000 f2)!

Well, as often the case, Costa Rica loves to complicate things, often more than really is necessary.

By the way, these rules are regulated by the Costa Rican government agency known as INVU (Instituto Nacional de Vivienda y Urbanismo). That’s the same agency that regulates the setbacks for rivers, creeks, and springs, which is a topic for another post.

Nowadays, the 15% limitation has been expanded to 25%, but is further limited as follows:

  • Lots still are generally limited to 5,000 m2 in minimum size*
  • Only 10% of the coverage can be for “residential” purposes
  • And allowed within that 10% is the construction of a main home of not more than 300 m2 (3,229 f2)
  • Plus other dwellings for “workers”
  • Oh, and the other 15% for solely agriculturally related infrastructure and installations.

*Some municipalities, such as my own Perez Zeledon, have increased the minimum size of the agrarian lot to 10,000 m2.

Also, in general, if the municipality where your desired parcel is located is covered by a zoning plan, said zoning plan will take precedence. The way you find out about this is to order the “uso de suelo” for your lot. This is a document that will reveal any restrictions imposed for developing your property.

However, be careful here. I recently had a deal where the uso de suelo for an agrarian parcel did indicate that it was subject to a zoning plan. However, after addressing the issue directly with the muni, we learned that they would nevertheless impose the agrarian limitations! So, even if this document seems to leave you in the clear, best to check directly with the muni as to how they actually apply their zoning plan in practice.

Now these restrictions may or may not be a problem for you. It depends on your intended plans for development. If they do pose an impediment, there are some creative get arounds…

For starters, let’s say you’re buying an agrarian parcel that’s 30,000 m2 in total size (3 hectares). Let’s say for purposes of this hypo that the land is located in Perez Zeledon, where there is a minimize size of 10,000 m2 per agrarian lot. Let’s say you want to build more than a single main home of 300 m2.

Well, you could subdivide that 30,000 m2 parcels into 2 or 3 smaller parcels. Once subdivided the agrarian parcel restrictions would apply separately to each subdivided lot. Also, you would have to further create additional agricultural easements to ensure each subdivided lot has access to a public road.

There is also some leeway in interpretation of what “agrarian use” means. Munis have generally interpreted this loosely by allowing for the project to include a swimming pool as part of the 300 m2 for construction of the main home. In those areas where expat real estate activity is very active, usually you won’t find pushback against including a pool, as long as you’re basically complying with the spirit of the law and keeping things within the required size limitations.

Another area that could be interpreted loosely is that of ”worker’s houses.” Could that also include what would actually be intended as a guest house? Again, as long as you’re complying with the spirit of the law, probably yes. For instance, when submitting your plans to the muni for permits, your “guest house” could be labeled instead as a “caretakers” house. It probably wouldn’t hurt to throw in a green house and an area for cultivation of fruit trees as well.

While these agrarian parcel restrictions might seem a bit silly and outdated in today’s Costa Rica, they do serve the useful purpose of allowing Costa Rica to regulate development in a way that is consistent with Costa Rica’s general interest in sustainability. This is important in that it supports the prime reason millions want to come here, some just to experience the country as tourists, while others to actually live.

It was only back in the 1980’s when rampant clear cutting of forests to create pastures for cattle reduced Costa Rica’s total forest coverage to around 25%. After putting into place better laws relating to forest management and the cutting of trees, Costa Rica has managed to more than double it’s total forest coverage in the last few decades. Along with that, Costa Rica has been a model for sustainability throughout the word with practically all energy produced via renewable sources and over 25% of it’s total territory set aside for conservation.

These days Costa Rica is undergoing what could be described as an expat invasion and real estate developers, smelling blood in the water, are trying to grab as much land as possible to create more buying opportunities for expats, usually at prices the locals (or, “ticos”) can hardly ever hope to afford.

The agrarian laws, while they might seem to be a pain in the ass (believe me, they’ve killed a few of my deals!), are an important aspect of keeping Costa Rica green, clean, and pristine (as well as relatively affordable for its own people)!

5 Signs the Costa Rica Real Estate Market is Poised for a Rebound

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Costa Rica Real Estate Market is Poised for a Rebound

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!!

What Exactly is “The Real Costa Rica?”

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The Real Costa Rica

I had an interesting exchange with a fellow realtor the other day. This realtor had reached out to me about “farms” in the mountains of Perez Zeledon. She’s known me for a long time and knew that I usually have a good inventory of these types of properties. She said her clients were looking for properties with altitude, privacy, a nice home and room to grow their own food…

So, I proceeded to tell her about several that I have that match her clients’ criteria…

Then later I get a response from her telling me that all of those properties were “too far.”

“Too far from what?”, I asked…

“From the beach”, she replied…

Then she offered this – “these clients don’t want to be anywhere near San Isidro.”

“Ok”, I shot back – “I guess that would be a little too much Costa Rica for them?”

I’ve lived in Costa Rica for almost 24 years now. I’ve always chosen to live in areas that are more local than touristy. For the first ten years that was the Central Valley, around the capital city of San Jose. For the last 14, it’s been my beloved Perez Zeledon, near the southern zone gateway city of San Isidro de El General. That place that my fellow realtor’s clients don’t want to be anywhere near…

And I wouldn’t consider living anywhere else – I love it here. When I was contemplating a move away from the big city of San Jose, I made a list of what I wanted. I wanted to live in the mountains, near a sizable city and still be within an hour from the beach and waves. I was still surfing quite a bit 14 years ago. I quickly discovered that Perez Zeledon and the city of San Isidro de El General had literally everything I wanted! So, I moved here. And I’ve never looked back, nor been happier!!

So, it kind of got my dander up to read such a disdainful expression that her client seemed to have had towards my adopted town!

It is always very interesting to me what expats think is the “real Costa Rica.” You invariably will hear them tell you that they are moving to Costa Rica to “live like a local amongst the ticos.” That they want to learn the language and the culture. That they don’t want to be surrounded by “foreigners.” Oh, and of course they don’t want to pay “gringo prices.”

Then once they arrive, they immediately opt for exactly the opposite – like it appears that realtor’s clients are indeed doing.

So, let’s address the question of what exactly is the “real Costa Rica.”

Perhaps the best way to go at it is to address what it’s not…

The real Costa Rica is not a place where signs and menus are in predominantly English.

The real Costa Rica is not a place where prices are mainly expressed in U.S. dollars.

The real Costa Rica is not a place where most people you meet in bars, restaurants and other gathering places are mainly from foreign countries.

The real Costa Rica is not a place where ticos have been driven out in order to make way for living options they could never afford.

I could go on, but I think you might be catching my drift.

You see, what confused me about the sentiments of this realtor’s clients is that San Isidro, the place they don’t want to be anywhere near, is indeed the “real Costa Rica.”

I guess that wasn’t what they were looking for?

Whereas those places the realtor mentioned that her clients didn’t want to be too far from, well, they generally just aren’t.

The reason I am ranting a bit about this is because I believe there’s a lesson to be learned for my readers in this exchange…

You need to decide which Costa Rica YOU want to live in…

The real one, or one that is built around a fantasy of what foreigners believe Costa Rica should be like because it’s what they experienced once (or twice) while on vacation.

The real Costa Rica isn’t flashy. It can be a bit dirty, chaotic, unorganized and noisy. Living and entertainment options in the real Costa Rica might not be up to your standards. The real Costa Rica can even be a bit dangerous in the wrong places and times. The real Costa Rica is a confusing place for expats who don’t yet know the language, the customs, or culture.

Living in the “real Costa Rica” is generally not about an investment opportunity, or maximizing ROI, or property speculation and flipping for a quick buck.

Yea I get it…

I can understand why expats would often opt for locations that simply aren’t the real Costa Rica. It certainly can make the transition for them a bit softer and easier. It might be more in line with their financial expectations of exploiting the country’s incredible beauty to make money.

But you have to ask yourself, in the long-run what kind of existence do I want in this country. One in which I am sequestered and sheltered from reality, or immersed in it?

I can tell you after 24 years of being immersed in the real Costa Rica that I’m glad I opted for reality and I would eagerly do the same again!

I guess it’s a good thing that Costa Rica can offer both options for folks considering this country as a place to live.

However, what expats who think like me don’t want to see is for the “real Costa Rica” to disappear. And in some areas, it is in fact disappearing.

For me, the real Costa Rica is a beautiful and fascinating place. Oh sure, I enjoy going down to tourist fantasy land and imbibing from time to time in the fancy, flashy and ridiculously expensive options that abound down there…

But I’m always happy to be able to come back home…

to reality.

Costa Rica Real Estate Market Distinctions – Income versus Retirement Markets

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Costa Rica Real Estate Market Distinctions

Often times you’ll hear or read generalizations made about the Costa Rica real estate market as a whole that might just not hold true in all cases.

In fact, I even wrote a post about the fact that in Costa Rica, the exceptions are the general rules.

One reason that these generalizations might not hold true is because they fail to take into account certain distinctions between market types…

Such as the difference between a predominantly income market and one that is more of the retirement, or expat living, variety.

What exactly do I mean by that?

Well, let me give you a few examples…

Take a market like Tamarindo, for instance. I would place Tamarindo in more of the income market category. That’s because a prime motivator of the real estate market in Tamarindo is the potential for a particular property to generate income for the owner.

And that will hold true for most markets that are in tourism intensive areas. Other examples would include markets like Jaco, Manuel Antonio, and even areas of my Costa Ballena, such as Dominical, Uvita and Ojochal.

Granted that certainly there are situations in which real estate purchases in these “income driven” markets are made for the purposes of living there and not just investing for income and appreciation. Nevertheless, I would say that on average it’s the potential rental income generating possibilities that will be a major driver of price in these markets.

For examples of retirement or expat living markets I would include the so-called bedroom communities around San Jose and even to a large extent the entire Central Valley. This is an area that tourists generally try to avoid. However, due to the weather and many amenities of living near a big city, like health care and shopping/dining options, the Central Valley is a prime location for expats moving lock, stock and barrel to Costa Rica.

Other areas included would be those like Grecia, Sarchi, San Ramon, Atenas, etc. All of these are within an hour or so from the big city and have many of the qualities expats are looking for in a place to live full or part-time.

Another area I would certainly place in this category is my very own home of Perez Zeledon.

The reason I am drawing this distinction is that there are certain characteristics of these diverse markets that are important to keep in mind when analyzing them.

One of these is time on market. Many who are considering a real estate purchase in Costa Rica will use “time on market” as an indicator of whether or not a particular property is over-priced. Many will make this analysis with a U.S. time on market frame-work in mind.

However, the typical gauge for time on market used in the U.S. of 3 to 6 months doesn’t work so well down here. And that’s especially true in the retirement or expat living type markets. There reasons are pretty logical…

In the U.S. a person looking for a home to buy is usually either someone in the same city looking to move up in home size or quality, or perhaps moving in from another city or state. However, that’s far different than someone moving to Costa Rica from another country!

I often work with buyers for a year of more before they ever buy anything. When I list a property, the initial activity on that property is usually from buyers who aren’t in the country, or maybe have never even been to Costa Rica. Also, when a buyer is considering a particular area as a place to live long-term, they may opt to come and spend a few months in that area before buying.

All this can translate to a longer time on market. In fact, the average time on market in my area of Perez Zeledon, historically, has been around 18 months!

Now, when it comes to a market that is income driven, the time on market calculation can be more compact. After all the income potential of a property can be shown quickly on paper and doesn’t require someone to experience the property, or the area where it is located, in order to have a good sense of it’s potential income.

So, time on market as a reflection of correct pricing is a good consideration, but you have to take into account both the differences between Costa Rica and the U.S., as well as the distinctions between the diverse markets of Costa Rica.

I would venture to say that time on market as an indicator of correct pricing is quite different in Perez Zeledon as it is in, say, an income market like Tamarindo.

The other major distinction in these markets is the level of pricing in general. Income driven markets in Costa Rica are always the most expensive. These are the tourism intensive areas where you’ll find not only higher property prices, but a higher cost of living.

In the retirement or expat markets you can find a similar quality and quantity of property at a much more affordable price. You might have to look a little harder, but they’re out there! Granted, these type markets are generally more inland, mountain, markets, Therefore, you won’t have ocean views or walking distances to a beach. But what you do have are breathtaking mountain vistas, a much more agreeable climate, and usually it’s a more authentic tico (Costa Rica) culture that will prevail in these markets.

The real estate market in tourism intensive and income driven markets are usually more vibrant in terms of the level of activity. There you will find many of the top brand name real estate brokerage franchises operating and tons of real estate agents. The so-called general advice of many “experts” in these Facebook expat groups of never using a real estate agent won’t work in these markets because the majority of the good properties are going to be listed exclusively with an agent.

In the retirement or expat living markets you’ll fine a combination of listed properties and for sale by owner (FSBO) properties. You might have to spend a little more time looking in these markets as they generally will be less “efficient” than the income markets.

Even though there will be overlap in these markets the above general distinctions I believe will hold true for the most part. And it’s a good idea to keep them in mind when considering where to buy in Costa Rica.

The Costa Rica Real Estate Market – Let’s Talk About Gentrification

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The Costa Rica Real Estate Market - Let’s Talk About Gentrification

I feel a bit trepidatious to broach the topic of the dreaded “G” word…

After all, if you mention “gentrification” in one of the myriad of Facebook groups where wannabe expats go for advice and humiliation, you’ll be met with sneers, snickers and anecdotes about how this or that person knows a tico who’s benefiting from it.

Of course, there are ticos in a position to benefit from it. But just because you happen to know a tico builder of homes, or a tico who owns a pool service business who’s raking it in due to the rampant development and soaring costs along Costa Rica’s hot tourist and expat enclaves, that doesn’t necessarily mean that the vast majority of them are as well…

Because, truth be told, they aren’t.

Costa Rica has long been alluring for tourism due to its flora, fauna, two gorgeous coastlines, incredibly hospitable culture and stunning panoramic vistas. Since I started coming here back in 2001 tourism has grown exponentially and now consumes close to 10% of the country’s gross domestic product.

And whenever you have that kind of stunning growth in a sector driven by inviting outsiders into your paradise, what generally follows is growth in the real estate market. Because of course many of those outsiders (or “tourists”) are going to want to actually buy property and live here and become at least part-time expats.

And usually they end up buying and living in areas that they initially experienced while on vacation, sometimes aspiring to a life that looks less like the mundane existence of “back home” than it does a perpetual holiday.

And then along came a virus named Covid…

Covid took what was already a recurring phenomenon of folks who initially experienced the country as tourists and then transitioned to Costa Rica expat retirees and turned it into an invasion of sorts.

Part of that is because Covid added to the mix of foreign invaders, I mean investors, young families who had found out that working in an office was no longer a requisite of gainful employment. The so-called “digital nomad” was birthed by this airborne disease that claimed the lives of millions and continues to change the lives of millions more.

I’ve written about the real estate boom that came in the aftermath of Covid, mainly during the years of 2021 and 2022. That boom has dissipated as of late to some extent, but I believe it is poised to reignite, this time not due to a respiratory disease, but due to an infirmity of the political variety.

Costa Rica stands to benefit from this, but…

In areas where expat growth has been the strongest, prices have been rising and rising. You’ll also read on the aforementioned Facebook expat groups that Costa Rica isn’t “cheap” anymore…

Well, truth is that it hasn’t been “cheap” for a very long time.

It is true that prices in touristic areas, where expats tend to want to invest, have risen to astonishingly high levels. I’m not talking about only eggs and bacon, but also the price for places to live, either for buyers or renters. In many of these tourist and expat enclaves, the typical tico, whose work could be as a construction worker, housekeeper, property caretaker, or in some tourism service business, can’t even afford to pay the soaring costs of living in areas where he or she might have grown up.

While the Costa Rica economy does have socialistic idiosyncrasies, for all intents and purposes it is a “free market.” And gentrification can be and often is a hallmark of a free market economy…

Wait a minute, I keep bandying about this term gentrification and haven’t even stopped to tell readers what the hell I’m talking about…

What is the basic definition of gentrification?

A quick Google search reveals this one:

Gentrification is a process of urban development in which a city neighborhood develops rapidly over a short time, changing from low to high value. A neighborhood’s residents are often displaced by rising rents and living costs brought about by gentrification.

For instance, along our Costa Ballena coastline, this displacement of sorts has definitely occurred. Well, it didn’t occur over such a short time period, but lately the process has greatly accelerated. This displacement might be relished by those benefiting the most from it. However, it is alarming to others who are either experiencing said displacement or observing it with heartfelt concern.

Gentrification not only gives rise to prices, it also gives rise to resentment and that can and often is followed by a rising crime rate…

That is definitely beginning to be the reality along our Costa Ballena and I would venture a guess that it’s happening in other areas of rapid gentrification as well.

Ok, yada, yada yada – so, where are your proposed solutions, Señor Bleeding Heart?

Well, I believe those of us who are promoting this phenomenon and continuing to benefit from it, need to take a step back and ask ourselves, what the hell are we doing?

Are we doing more harm than good?

Do we really need to promote this country as a playground for the rich and famous? I’m talking in particular to myself and my fellow realtors.

And shouldn’t we be trying to seek out those types of clients whose desire is more to immerse in the Costa Rica that already exists, rather than insist that it become something that caters to their tastes?

After all, this is not “our home”, it’s theirs. You would never enter as a guest of someone’s home and start changing things to suit yourself, without any thought as to how your host might be affected negatively, would you?

And neither should we come to Costa Rica as guests and then quickly begin to treat those who welcomed us as foreigners in their own land, insisting that they pony up to our standards of living – socially, culturally and economically.

I’m no “policy wonk”, nor am I smart enough to propose concrete solutions to this very complicated problem. However, burying our heads in the sand and pretending this is not a problem will only make it grow worse. Ticos could always get fed up to the point of settling this matter at the ballot box – by electing someone not so friendly towards expats and their luxurious playgrounds …

This post is to promote awareness of this issue, nothing more, nothing less.

Costa Rica Real Estate Market in 2024 – Election Year Blues

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Let’s face it fellow realtors, U.S. presidential election years are not generally friendly to real estate markets anywhere, be it Costa Rica or worldwide!

And this is an “election year” like no other in history.

Now I’m not going to get political by disclosing who I’m pulling for. I believe many of my readers already have a good idea about that…

However, I will make a few predictions and if you read on you will see why I think they will have an affect on the Costa Rica real estate market in the near future…

So, here goes…

First, I believe Donald Trump will have the republican nomination wrapped up by mid-March…

Second, I believe the Supreme Court’s ruling on his immunity defense claim will likely mean that there will be “no criminal trial” prior to the 2024 election…

Third, I think the recent age-related remarks made in the Special Counsel’s report on Biden’s classified documents scandal probably means that Biden is finished as a potential winner in the 2024 election.

Put all those predictions together and you can easily see that there’s a growing probability that Donald Trump gets re-elected as president of the U.S. in 2024.

These days all the buyers we realtors are driving around (for free) to show all this stunning new product on the Costa Rica real estate market are hemming and hawing like Taylor Swift at a Monday night matchup between the Eagles and the Chiefs…

No one seems ready to make a damn choice!

However, here’s another prediction for ya – that’s all going to change very soon due to the – yep, you got it, growing probability that Donald Trump will win the 2024 presidential election.

Point of clarification: I’m not saying Trump will win the election. There are way too many variables between now and November to make that bold of a prediction. I’m just saying that as the probability that he might win grows, the climate for real estate in Costa Rica will correspondingly grow hotter!

Election years are always difficult ones for real estate because they create buyer indecision. Buyers just don’t know what’s going to happen and that uncertainty is reflected in their equivocal behavior towards making life-changing decisions, like buying a new home. And that’s even more understandable when the decision involves something as momentous as buying in and moving to a foreign country!

Back in late 2020, when Costa Rica reopened its borders in the midst of the Covid pandemic, we experienced a 3 year seller’s market like none other in the history of Costa Rica real estate. That lasted through about mid-2023, when high inflation and high interest rates began to take their toll.

Buyer demand waned as inventory surged. Prices have only now started to tumble from their 2023 heights. There is a plethora of new product on the market now just waiting for demand to surge again.

And I really believe we are poised to see that happen.

So, you might be asking yourself, should I stay, or should I go now?
If I go, there will be trouble…
And if I stay, it will be double…
So come on and let me know…

Should I stay, or should I go?

OK, lyrics by the Clash aside, what does all this mean for you, would-be Costa Rica real estate buyer?

There has been a surge in inventory lately and I am seeing much of what’s on the market now experiencing price reductions to help stimulate demand…

And all of us realtors are experiencing frustration with this current crop of indecisive buyers!

So, does that mean playing a waiting game could pay off?

Possibly, but waiting could backfire as well.

Just like trying to time the stock market, when a market takes off it all can happen very fast. If you’ve already been eyeing a particular opportunity that you think is a good fit, playing the waiting game could pay off, but it’s a risky move…

You might find that property under contract, or off-market, in the blink of an eye. I have some sellers who are beginning to express frustration to the point of just pulling their properties off the market entirely rather than deal with a constant stream of look-y-loo’s, who are very willing to waste everyone’s time and then never be heard from again.

Now I don’t want to brag, but if you look back on what I was writing in the midst of the Covid Pandemic (before the market took off) you’ll have to admit that I was pretty much “on the money.”

And I believe I’ll be proven correct again with the predictions I am making in this post.

When will it happen?

That’s a more difficult prediction, but I don’t think buyers will wait for the 2024 election to be electorally decided. Rather, I believe that as soon as they become convinced of the high likelihood of a Trump victory in 2024, offers on properties that they’ve been considering will be forthcoming.

We already have plenty of buyers down here looking – showing activity has surged since the turn of the year after being very slow in the last few months of 2023. It’s just that no one seems willing to actually make a decision right now.

I think that’s going to change very soon, perhaps by the end of March when the probable outcome of this election year becomes clearer.

And Costa Rica is definitely on the radar screens of scores of American citizens (as well as those of other countries) as the place to seek haven when the proverbial shit hits the fan. And for many people (millions even) another Donald Trump presidency will definitely be interpreted as la caca golpeando el ventilador!

I even recently saw a clip of comedian Bill Maher making fun of wannabe expats expressing their desires to leave the U.S. with a (stupid) joke about moving to Costa Rica!

I honestly believe that it might be a foregone conclusion that in the coming months and years Costa Rican could be one of the world’s strongest real estate markets…

The next question I guess I need to address is – can the country handle the surge?

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

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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.

Current State of the Costa Rica Real Estate Market

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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.”

Introducing the Coldwell Banker Vesta Group – Perez Zeledon Team

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Introducing the Coldwell Banker Perez Zeledon Team

The Coldwell Banker Perez Zeledon team and office is officially open for business and ready to serve buyers and sellers in the mountain (and beach) markets of the southern zone. Here are profiles of team members…

Scott Bowers

Associate Broker

Scott is a naturalized citizen of Costa Rica, who first arrived (from the U.S.) in 2001 to broker a deal that sold one of the country’s premier private universities to a U.S. publicly-held education company. From 2004 to 2015 he arranged eco-intensive Costa Rica vacation tours to locations throughout the country, as well as Nicaragua, Panama and Colombia. In addition to serving as an agent with the Coldwell Banker Dominical Realty team since 2015, he offers Expat Consulting and conduct guided Expat Tours.

In his former life, prior to becoming an expat in Costa Rica, Scott practiced tax and corporate transactional law in the Carolinas. He has extensive experience as a business valuation consultant and mergers and acquisitions advisor to companies in a wide variety of industries.

Scott is married to a Colombian born, but Costa Rica naturalized, wife since 2009. They are the parents of seven grown children. Scott loves exploring the nature of Costa Rica and is a life-long surfer. Scott has been a blogger about all things Costa Rican for the past decade and published the popular eBook entitled The Definitive Guide to Costa Rica Expat Living.

Ana Rodriguez

Agent

While Ana is the official ColdweIl Banker agent, she and her significant other, Johnny (pictured), work as a dynamic team in the Perez Zeledon market. Ana is a Costa Rica native originally from Colombia, fluent in both English and Spanish. She has a diverse background, including prior roles in consulting, accounting, and concierge services.

Johnny, originally from Colorado, with a background as a real estate broker in the United States, embarked on a life-changing journey to Costa Rica, driven by his deep appreciation for its natural beauty and lifestyle.

Their journey in Costa Rica real estate began with project management and the management of Airbnb properties. This hands-on experience allowed them to gain valuable insights into the local market and property management.

Ana and Johnny are committed to leveraging their local expertise to help you find the perfect property. Their deep roots in Costa Rica, combined with Johny’s real estate background and Ana’s diverse skill set, make them an ideal team to guide you through your real estate journey.

Pablo Fernandez

Agent

Pablo is a passionate real estate agent with 7 years of experience in the exciting world of real estate. His stated mission is to help you find the perfect property that suits your needs and dreams.

Being a native of Perez Zeledon, Pablo possesses a deep knowledge of the market and an unwavering commitment to customer satisfaction. Here is eagerly available to guide you every step of the way in your search for an ideal home or investment. Pablo hopes to have the privilege of working with you and making your real estate goals a reality!

Our office is located at Centro Medico San Isidro, one block west from the popular Delicias cafeteria and the central park of Perez Zeledon.

Stop by and see us sometime…

Oh and check out our new Instagram page, where you will fine upates on new listings and other team related stuff…

Pura Vida!

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