In many areas of the U.S., the real estate market is red hot. A good number of those who sell their homes are making a handsome profit. For example, this is what a good friend in California recently told me after selling his home for top dollar and a long bidding war between potential buyers, “I sold my house for silly money (big money) and was shocked at what I received.”
However, on downside, everything is not so rosy since many potential home buyers now finding themselves priced out of the market.
To make matters worse, ‘It’s highly unlikely that home prices will plummet,’ according to economists and real estate pros on what to expect home prices to do in 2022. Inventory shortages mean home prices may keep rising. High prices and demand for new housing in the U.S. has never been better but there is a lack of product.
The supply of homes available for sale is so low that even a big dent in demand as a result of higher rates will not transform this into a buyer’s market, pros say.
Home prices will keep going up because there aren’t enough houses available to meet demand, and the combination of rising home prices and elevated mortgage rates means fewer people will be able to afford to buy.”
“Rapidly rising mortgage rates have had a negative impact on demand for mortgages since the start of the year, but there’s no indication that demand has plummeted. Barring some sort of large-scale mortgage defaulting that triggers massive home selloffs like what we saw prior to the 2008 financial collapse, or mortgage rates suddenly climbing to the double-digit levels they were at in the early 1980s, it seems like high home prices are here to stay.”
So what does one do?
Some are now looking to invest in more affordable foreign countries like Costa Rica. Those who live in countries plagued by major political uncertainty and potential social unrest, are also turning their eyes toward Costa Rica because of the country’s enduring stability (Costa Rica is the longest standing democracy in Latin America).
The result: Costa Rica’s real estate market is flourishing has become a viable investment option. As expected during the pandemic there was a lull in home sales here. But during the second half off 2021 and to date, there has been a real estate boom in the beach areas like Guanacaste, Jacó, and Dominical, in the Central Valley in outlying towns as Atenas, Grecia, Puriscal and San Ramón which are all experiencing a large influx of foreign investors including retirees. In southern Costa Rica, San Isidro de General has become an attractive option.
Imagine! In some places there is no product to be found because of the country’s attractiveness , affordable real estate options and overflow from the US market.
It is said that “when the US sneezes Costa Rica catches a cold.” Which demonstrates that what happens in la larger market can directly affect a smaller one which is happening here.
In Costa Rica you can purchase a 4 bedroom / 3 bath, 2000 square foot home for around $300 to $400 thousand dollars. In parts of the U.S. like California you might find a condo for that price but certainly not a home in a nice area.
Also it is important to take into account that home taxes here are a fraction of what they are in the U.S. and Canada, a further inducement for purchasing a home here. My annual taxes are about $500 dollars for my home in Heredia.
In closing, I’d like to point out that besides expensive home prices and inflation in the United States driving potential retirees and investors to Costa Rica, our wonderful lifestyle is a compelling factor:
An impeccable reputation, one of the best year-round climates with lack of air conditioning or heat in the Central Valley, excellent and affordable health care, friendly fun-loving people, inexpensive living once you get settled, good communication systems for business or staying in touch with loved ones abroad, low home taxes and no threat of terrorism or domestic violence are major factors that combine to drive the local housing market.
About Christopher Howard
Christopher Howard is Costa Rica’s foremost relocation expert and has been conducting monthly relocation/retirement tours to Costa Rica for over 30 years. See www.liveincostarica.com. He is also the author of the 20th edition and one- of-a-kind perennial best seller, The New Golden Door to Retirement and Living in Costa Rica — the official guide to relocation and the Guide to Costa Rican Spanish. Both may be purchased through: www.costaricabooks.com www.costaricaspanish.net or www.amazon.com