Understanding the Real Estate Market
I have over 30 years of combined experience as primarily a real estate attorney, in both Canada and Costa Rica, and also a law degree from each jurisdiction (English common law and Roman civil law, respectively), and a notary and registry degree from Costa Rica. During my time practicing law in Costa Rica, I have seen several real estate market cycles completed.
U.S. economic effect
From a residential and commercial real estate point of view, these real estate market cycles are largely driven by the state of the U.S. economy at any given time. There is a lag-time of approximately 18 months to have an effect on the real estate market in Costa Rica.
Due to the COVID-19 pandemic, particularly its impact on travel, Costa Rica’s real estate market has been slow for property sales, making it a buyer’s market price-wise. However, there is evidence of a market uptick, as travel becomes more accessible again. There are also a number of properties available where owners have been forced to sell for economic reasons at below market price.
Effect of the U.S. presidential election
There is habitually an exodus of U.S. citizens from the U.S., from the losing side, following any presidential election. I expect that following the 2020 election, a number of disgruntled Republican voters will be seeking greener pastures somewhere outside the U.S. I have witnessed this pattern previously following U.S. presidential elections, but expect it will be amplified this time around because the latest election was more emotionally charged and politically divisive.
Expats considering a real estate purchase in Costa Rica must be aware that this country’s legal system is different. Roman civil law applies here, not the English common law system that is dominant in the U.S., Canada and British Commonwealth countries. Many requirements differ between the two legal systems.
Also, there is no regulation of the real estate industry in Costa Rica and no formal MLS system to provide information on both the availability of properties or market price comparisons.
Accordingly, it’s very important to choose a realtor with good credentials and references, and good local knowledge of the area where you wish to purchase property. Choosing a knowledgeable and competent real estate attorney is equally important, to undertake the legal due diligence requirements necessary in a property purchase transaction.
Taking into account the U.S. economic lag-time factor, the expected availability of various COVID-19 vaccines and consequential economic recovery, along with the increase in travel over the next few months and U.S. election results aftermath, my prediction is that the Costa Rica real estate market is on the cusp of changing into a seller’s market, beginning in mid-2021.
Accordingly, current property prices will most likely rise, due to the increased buyer demand, consistent with the seller’s market cycle arriving.