Costa Rica's real estate market keeps increasing popularity, mainly as a retirement and tourist destination and particularly among North Americans and Europeans. This surge in demand, especially in coastal and tourist-friendly areas, has led to an upward trajectory in property prices. The stable political and economic climate in Costa Rica reinforces investor confidence, attracting foreign investments into the real estate sector. This increasing demand has resulted in elevated property prices in our area. Examining potential catalysts for future increases in housing prices, ongoing infrastructure development emerges as a key element. Projects such as enhanced roadways and expanded utilities in rural areas can enhance the appeal of these locations, ultimately contributing to higher property values.
Costa Rica's commitment to environmental conservation and its global reputation as an eco-tourism destination attract a niche market interested in sustainable living. This interest has the potential to drive up prices in areas known for eco-friendly developments. However, it's crucial to recognize that the rise in prices may not be uniform across all regions. Areas with strong tourism appeal, such as the Pacific Coast or those in proximity to urban centers, are likely to experience more significant increases compared to remote or less developed regions. Conversely, factors that could lead to a decrease in housing prices include the global economic environment. Worldwide economic downturns could diminish investment flow and housing demand, resulting in a decline in prices. Regions heavily reliant on foreign investment and tourism are more likely to feel the impact of global economic shifts or policy changes, while areas with robust domestic demand may exhibit greater resilience.
Our market report of September 2023 mentioned: "The aspiration of buying a property abroad has been overshadowed by a series of challenges throughout this year. Factors such as inflation, historically high mortgage rates, and a limited housing supply of "close to the beach properties" have collectively created a difficult path for prospective homebuyers. As of September 2023, the 30-year fixed-rate mortgage in the US has surged to its peak since 2001, standing at 7.25%." Interest rates and inflation level have not changed in the last few months. We are still facing the same issues, making the buyers a little nervous to invest in a vacation home but have seen, in February, a large increase of demands for showings and tours.
The real estate market in the coastal tourist areas of Costa Rica generally shows stability, influenced to some extent by the overall economic conditions but typically maintaining a steady range. The pristine beaches, abundant sunshine, and the Pura Vida atmosphere is immeasurable for many, including myself. There is a constant influx of individuals seeking to relocate, change their lifestyles, engage in activities like surfing, swimming, fishing, or simply live in a tropical paradise. Some are also exploring opportunities to diversify their investment portfolios abroad.
While we currently observe a temporary decrease in committed buyers for properties, we do not anticipate a reduction in prices. Looking ahead to 2024, a significant event is the U.S. election, we expect a surge in interest from Americans – a major demographic in our real estate market. This influx is motivated by various reasons, often tied to personal beliefs and political views. In the ongoing high season, there is a notable presence of individuals exploring Costa Rica, dreaming of potential relocations or investments. Despite the palpable excitement, there is a hesitancy among buyers in the 0 to 1 million dollars bracket. However, the commercial real estate sector has seen a recent uptick, indicating a healthy economy with a keen interest in future investments. Hotels, bed and breakfast establishments, large homes, and restaurants are selling rapidly, reflecting a positive trend.
Please feel free to contact us, we will gladly connect you with one of our agents for more information.
Isabelle Emond, Broker/Owner