Less Coastal Construction Means More Mangoes in Costa Rica!
Prices of vacation homes being sold to foreigners on the Pacific Coast of Costa Rica have fallen by 40 percent according to the online classifieds website encuentra24.com, which displays over 10,000 real estate listings posted by owners and real estate companies.
With the decrease in prices all along the Pacific Coast, residence homes that were once being sold for $640,000 are now going for $400,000. The decrease seems to stem directly from the hardening of home loan requirements in the United States due to the mortgage crisis as well as economically crippling inflation around the world. These factors, combined with the decrease in the construction of new residences, seem to be the cause of the demise of the Costa Rica real estate boom and consecutive years of growth along the ever so popular Pacific Coast.
It is projected that for the end of 2008, less square meters of construction will be completed than that of last year in the provinces of the Pacific. According to the study conducted by La Republica newspaper, using data from the Costa Rican Construction Chamber from the beginning of 2008, both Guanacaste and Puntarenas will experience a perhaps much needed decrease in expansion and construction.
Guanacaste is expected to experience a fall of 21.5 percent and Puntarenas is predicted to experience a 10.5 percent decrease. Although local Costa Rica real estate agencies have not confirmed that less construction will be a result of the decrease in prices, the joint-owners of Encuentra 24, which is also dedicated to listing Panamanian real estate, goods and services, did. Unlike Costa Rica, the prices in Panama have been maintained because the “hole” in the real estate market is being filled with Venezuelan and European buyers.
Boris Metraux, co-owner of encuentra24.com, believes that “the sale of second homes or vacation residences for Americans has fallen, and this has resulted in a decrease in prices”.
Another associate of encuentra24.com, Wendy Jordan, explained that prices in Tamarindo last year were unattainable. Now, she said, “they are a lot more accessible, according to what we have gathered from our web page”.
Jordan was also able to confirm that the reduction in price in the transactions performed through their web page has oscillated between 20% and 60%, which is how they obtained the average of 40%.
Many seem to believe that the drastic decrease in Costa Rica’s pacific coast real estate developments and their price tags is a good thing as the possibility of over-developing the land decreases and a once unaffordable vacation home becomes a dream come true; if you’re not the seller that is.
The buyer is not the only beneficiary from the decline in prices! It is expected that as construction decreases, the amount of labor available for the agriculture industry will increase. The industry, which entails coffee, mangoes, melons, pineapples and bananas, requires a total of 750,000 laborers a year. Over the past two years, as many people have turned to jobs in Costa Rica construction, they have left over 75,000 vacant positions in their wake. This leaves farm and plantation owners with no choice but to mechanize certain jobs or lose money as not all of the harvest can be brought in. The decline in construction does come at a great time from this perspective as some of the biggest harvests are yet to be brought in in the second half of the year!
As for the real estate industry, they better start opening their sales up to a broader market, or risk being forever dependent on the U.S. economy; a position where no one wants to find themself at the moment.
|Written by Keyea Caullette|
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Filed under: Business on August 26th, 2008