How would you describe the current “crisis” impact on the local economy and on Costa Rica real-estate in general?

Yesterday I made the trip up to San Isidro de el General to take care of some things. I was to meet Rod and Lindsay for lunch at “Mexico Lindo”, an amazing genuine Mexican food restaurant there, run by a bona fide Mexican Armando and his lovely wife. I have known them for years and used to frequent their little taco hole in one of the off-the-beaten-path streets of San Isidro years ago. Now they are located right on the central square and my, how things have changed since those days of long ago. I don’t think that there was a single empty table there, and at least 50% of what I heard was English – my, how things have changed.

Running the gauntlet of greetings as I made my way back to Rod and Lindsay, I looked up to see a couple who are particularly good friends, but that I have not seen for awhile. I greeted them with something like “how are you guys doing in this new world in which we live?” (reference to the economy), to which they responded, “what is going on?”. Working in real estate provides one with an interesting position in life. I didn’t realize it for a long time, but it is now clearer than ever. This industry is at the very foundation of life. We all need to live, play, and work somewhere. I received the above question in an e-mail from one of my clients just yesterday, so I heard the question a total of 2 times over the course of the day, and that wasn’t an unusual day.

Here’s what I think

We have lost a lot of buyers due to the economic crisis. We are gaining some buyers that we wouldn’t have otherwise had. It may look something like the graphic there to the left. It means a slow down for us here in Costa Rica, but not death. I have a client/friend/partner that is a high output kinda guy. I’ll call him Steve, a lawyer in Florida. He purchased a piece of land from me 3ish years ago. Subsequent visits have given us the opportunity to forge a friendship. Steve had a plan.

• Sell his beach condo that he bought for investment
• Sell his main home
• Let the lease on his Porsche run out
• Finish up obligations at the firm
• Set up some means of income in Costa Rica
• Move to Costa Rica

Steve LOVES Costa Rica. This is home to him. Every visit here confirms it to him. He just needed to get the ducks all lined up in a neat row prior to making the move. This is a common scenario. Life was fine. Plans were being made. Then, it all changed. Steve’s plan now

• Present an offer to the bank for the beach condo that is below what he owes to see if they’ll take it. They probably will.
• Sell the main home at a loss but skim what little equity out of it that he can.
• Look into ways to have some income in Costa Rica.
• Move to Costa Rica.

The absolute and revolutionary changes to the world as we knew it make it impossible to know what is going to happen. I responded to my friends in the restaurant yesterday that “I think that we’ll know in a few years”. Steve’s example indicates and interesting response to the changes. When things were “normal”, there was a requisite comfort level that had to be reached prior to moving to Costa Rica. Now, it would seem, that level has not only been changed, it has been eliminated for some. Keep in mind that Steve’s business of lawyering is doing well and he could stay put with all the security that offers. His decision is largely predicated on a live-life-now motive, instead of waiting for the “right time” to make the move.

Another Type of Buyer:

I read in an on line newspaper the other day that the sale of 0% T-bills was increasing.

Earlier this week, the U.S. government sold $32 billion in four-week Treasury bills at a yield of 0%, meaning that investors were willing to lend the government money for nothing except the assurance their principal wouldn’t decline. I think that Costa Rica real estate can compete with 0%”, especially if the buyer takes advantage of one of the distressed sales that are popping up with regularity. It is hard to imagine that buying a piece of land in Costa Rica will not show some gain in the coming years from the levels that it can be bought at right now. I’ve been talking around a bit lately with my peers (read – competition) in the business and it seems that everyone is busy. Prices have sagged some and there are the odd distressed sellers. Apparently the time is perceived as ripe for buying. I agree. So this second type of buyer would be the folks who have cash and are looking for something besides a coffee can to store it in.