Hi everyone, it's been a while since I gave you a real estate market report so I thought it would be a good idea to update you on our situation here, in Guanacaste.
Real estate markets are inherently cyclical, characterized by periods of expansion and contraction. Moreover, it's not unusual for local real estate markets, such as ours, to be influenced by wider economic conditions and trends. Last year, in May-June, the stock market experienced a downturn and interest rates rose. Within just a few days, we observed a significant slump in the Costa Rican real estate market. This shift was perceptible not just here, but throughout North and Central America, and likely across Europe as well.
The majority of our buyers on the north Pacific Coast of Costa Rica hail from the United States and Canada. While these buyers have diverse profiles, most have been leveraging a line of credit, obtaining a mortgage on their existing properties, or using their stocks to finance purchases here. Interest rates can profoundly affect the real estate market. When these rates rise, borrowing becomes more expensive, making it challenging for individuals to secure mortgages for secondary homes abroad. Typically, retirees utilize funds from their stocks and/or retirement plans, which have also been dwindling since last year. These economic factors reduce demand for real estate, leading to the current slowdown in our market.
The slowdown in the market led many to believe that sellers would be compelled to reduce their prices - and indeed, some did. This was especially true for property owners outside popular tourist areas, who noticed a decrease in viewing requests. There were also minor price reductions within tourist areas, but these were fewer and less significant.
Nevertheless, in certain locations like Playa Junquillal, Playa Avellanas, Playa Langosta, Playa Tamarindo, Playa Grande, Playa Flamingo, and Playa Potrero, we're still seeing a higher number of buyers than sellers. These coastal towns continue to be in high demand and likely always will be. Their idyllic weather, stunning beaches, and laid-back lifestyle are attracting many to relocate or invest here - it's easy to see why life here is so appealing! Therefore, if you're looking to buy or sell in these areas, now is a good time. Sellers can take advantage of the limited inventory and potentially achieve higher prices than before, while buyers should act promptly, as prices are no longer falling. They've stabilized, and negotiations are minimal, if not completely absent. This applies across the board, to all types of properties and price ranges.
Time is not on the side of buyers looking for properties within walking distance to the beach in the aforementioned towns. Given the scarcity of available properties in these areas, prices are likely to rise, and choices will likely dwindle over time.
If you are looking to buy or sell real estate, it's important to work with a knowledgeable local real estate agent who can provide you with up-to-date market information and guide you through the buying or selling process. I am always here to assist AND you can always count on me to get the true answers to your questions.
See you soon :)
Isabelle Emond, Broker/Owner