Days on market in Costa Rica is not an indicator of the health of your listing. But how do we reconcile this idea with our international buyers who are used to days on market being an important indicator of real estate market health? Why does Costa Rica not advertise the number of days on market?
There are a number of reasons why ‘days on market’ in Costa Rica has very little bearing on real estate market health. Firstly, it is important to mention that the Costa Rica real estate market does not have a centralized MLS system. Zillow, Trulia, and other real estate database companies that feature multiple listings systems have not made it into Costa Rica because their market reports would be inaccurate or incomplete for lack of data. Because there is no shared MLS system across the country or even within a small district, it is nearly impossible to create a salient real estate market report.
Real estate brokerages like ours do the best we can to emulate an MLS system. We send and receive listings between our local brokerage houses and choose whether to list properties on a case by case basis. Generally, we list any viable property for sale that is brought to our attention. There are cases where legal water concessions have not been established or a property has a very visible flaw that we know will make it difficult to sell. In these cases, we may likely choose not to list such a property, however another agency may choose to list it regardless.
To facilitate this end goal of selling properties in Costa Ballena, we use all of our knowledge of local and international real estate markets and economies to anticipate the best positioning for any properties that we list at Osa Tropical Properties. Our goal is to work with our seller’s needs, to price, position and market the properties we list in such a way that our clients feel satisfied that we are giving their Costa Rica real estate investment the best chance for success.
We do not under- or over-value properties as a strategy. Instead, we aim to match our suggested price as closely to recent comparable solds as we can. As an office, we are lucky that we have had a number of solds recently at a variety of price points so we have a great idea of how buyers from all over the world are valuing local properties. At the end of the day, it is buyers from international markets who determine the number of days a property in Costa Rica will spend on market, not us.
Why do some properties sit on the market for longer?
Aside from fatal flaws, like a lack of water concession (meaning that the property owner cannot receive a building permit), what keeps some properties on the market for longer? The shift in the economic climate 10 years ago went from a major boom in this region to nearly no action overnight. The 2008/9 Global Recession hit Costa Rica hard and many of the property buyers at that time were paying a premium price after years of growth, which has been difficult for then buyers/now sellers to recoup for many years. Thankfully, we have reached a new hot market where travelers are falling in love with Costa Rica’s wildly beautiful aesthetic and it’s uniquely peaceful ethics.
Even though we have entered into more of a seller’s market as of late 2018, there are still a number of segments of the real estate market that are hotter than others. Buyers come to our South Pacific region of Costa Rica from all over the world, from a variety of economic climates of their own. Some of these buyers, like from parts of Canada, are coming from hot seller’s markets, too, but their dollar exchange with the US Dollar (Costa Rica real estate’s unofficial currency) is low. As such, buyers from Canada are often on a smaller budget than the average buyer from California, which is also in a hot seller’s market.
The same goes for many international buyers visiting our region who are finding themselves much more comfortable in the lower price points due to foreign exchange rates. The result is a surplus of buyers in the under $500k segment, regardless of view. These buyers are coming for the pura vida lifestyle and the less stressful and less expensive way of life. Much less money is spent here on day-to-day life (groceries, utilities, travel) and less is spend on annual expenses like property taxes, also.
Luxury real estate segmentations
When it comes to listings over $500k, the market action takes a significant dip down as the price goes up. In saying that, there has been a sharp increase in new properties coming onto the market hovering around the $1 million mark. These new developers appear confident that the luxury property market is growing in our Costa Ballena region, thanks largely to the growing number of services and amenities serving the luxury tourism market, coupled with the incredible beauty, peace, and privacy that can be enjoyed in this region. Our office has seen a rise in buyers over $500k in the last year and we are excited for our luxury property sellers, hoping to close the gap in the number of days on market that they spend.
‘Days on market’ at the end of the day
Speaking generally about Costa Rica and real estate, we have to keep in mind that this is a destination for most potential buyers. Although a potential buyer may be certain that they want to move to Costa Rica one day, the fact is that they actually have to make the time to plan a trip and get here to take a good look around. This is getting easier every year with the consistent additions of more direct flight routes to and from Costa Rica from international hubs all over the world. It has reached a point where some buyers might make 3-5 short trips in a year to see different properties before selecting the one they want to buy. But more often than not, when a buyer finds a property they love, they jump right on it. In this and other ways, it is difficult to anticipate how many days on market a property might spend in Costa Rica.
At Osa Tropical Properties, we produce regular quarterly market reports that feature the number of “tourists” (and potential buyers) coming through the country, what the Costa Rican government is doing to promote Costa Rica internationally, what has been selling in our region recently, and what we anticipate for the future of the local real estate market. We do a lot of hard work researching statistics that can easily be found by anyone using a service like Zillow in North America. We know that clients want to have the best possible understanding of the local real estate market before they invest and it is our goal to provide as much information as we can to our exclusive clients. Please reach out to our office if you have any questions and we’d love to help you better understand what to expect from you Costa Rica property venture, no matter where you are in the process. Pura vida!