After venturing through the early days of real estate in Costa Rica, this is to say, the beginnings of what led up to the current market conditions in parts 1 & 2, we now embark on the boom before the crash.
Let’s say that a couple acquires their home by the usual means; scraping for the down payment and then struggling to make the payments. One day, they find themselves able to refinance their home and lower the interest rate. Along with the lower interest rate, they were able to pocket a considerable sum from the equity value of their home. (Sorry for the over-simplification of this matter, but it’s close). This resulted in the couple having an unexpected windfall of cash. “Honey, let’s take this $100k and go to Costa Rica and see if we can get us an ocean view property”. Hence, the high demand on the somewhat limited supply resulted in the spike of property values in the pre-recession Costa Rica.
I think at that time there were about 4 or 5 real estate offices in Dominical and none in Uvita. Discussions among us real estate agents were about the amazing press of buyers. Buyers were discussing the difficulty in finding an available real estate agent. Agents were discussing if there was any available inventory to show the buyers. We would joke about installing a Baskin Robbins style “take a number” system in our offices.
Over time the fincas got sub-divided, services installed and roads improved. The lots and houses got snapped up and prices continued to rise.
The majority of buyers would enter the office asking for an existing house to buy. Due to the newness of the market, there really weren’t many houses on the market. And of the few houses that there were, they were difficult to sell, at best.
The Zone was on the edge of the known universe. For those who felt compelled to venture down to Costa Rica’s southern Pacific zone, and who
left their homeland behind, well… this was for the robust adventurer. “Individuality” and “non-conventional” are a couple of descriptors that come to mind and that I feel, well describe them (us?). It’s funny to write these words because I was here at the time, but don’t see myself in the same school as these guys. But the evidence to the contrary may be compelling.
Aside from the point above about leaving one’s homeland, once a person got to Costa Rica, they would have an arduous trip just to get to The Zone. There were 2 ways to get here: 1 by the coastal route and 1 by the PanAmerican that runs over the Cerro de la Muerte (pass of death) down the middle of the country.
Note: the name of the pass is not based on the danger of driving there but is reputed to be based on the former practice of farmers conveying their produce from the fertile San Isidro de el General valley to Cartago & San José. They would travel over the pass on horseback, necessitating an overnight stay in the elements. Some of these farmers were reputed to die from exposure. I can’t say for sure whether this tale is true but it is part of the local lore.
Whichever route one would choose, pot holes were a constant threat. On a highway, a well placed pot hole can break an axle, or at the very least, pinch-pop your tire. When you come from a developed land, the thought of not being able to auto-pilot your way down a highway was foreign – inconceivable actually. So it was always a concern as the rather smooth paved highway would lull one into an 80 km per hour rate of travel and then – WHAM! – a sharp edged pot hole would abruptly remind you that you are not, in fact, in Kansas anymore.
The coastal route was pretty good but was the lesser of the two choices at that time. This was primarily due to the stretch of “highway” between Quepos / Manuel Antonio and Dominical. It was un-paved. Depending on how recently it had been graded, you were in for a washboard bonanza of a drive. The roughly 25 mile stretch of road would take between 1 – 1 1/2 dusty hours. I always felt that some enterprising Ticos should open a plaza at either end of this stretch offering a car mechanic, a dentist and a therapist. After driving this stretch, your car would be beat to hell, your teeth would be loosened, and you would be in the preliminary stages of PTSD.
The PanAmerican route was my family’s preferred route to San José. It remains an extremely lovely drive, but a moderately dangerous one. It is 2 lane with essentially no shoulder. There are lots of blind curves. It was, at that time, the primary artery between Nicaragua to the north and Panama to the south, so there was a good bit of semi-truck traffic hauling products through Costa Rica. Some of the curves are tight enough that the semis have to swing wide into the oncoming lane to navigate the bend.
All of this in addition to the fact that we are in a 3rd world country. The people here, especially at that time, weren’t accustomed to cars, traffic and driving. Some would acquire their drivers license by paying off a government official. Many simply didn’t know how to drive. Passing on a blind curve, despite being contrary to conventional wisdom, was a common practice. To this day, I tell my clients who ask, that the Cerro de la Muerte route is something to see, but to do so cautiously. Always expect to see someone coming at you in your lane around a blind curve.
The point being that The Zone was not a place for the faint of heart. The difficult access to The Zone served as a small-pored filter, a fine screen. The “type” of persons that would find their way down to The Zone were hardy, adventurous and individualistic.
And so, dear reader, you came here looking for a better understanding of Costa Rica real estate. And instead, you get a stroll down memory lane for this aging blogger. Well, from where I sit, the forgoing is helpful and indeed, integral to understanding real estate here. These elements and conditions we are considering here happened a long time ago in wherever you’re from.
Let’s take San Francisco California. How long ago was it that S.F. was all large parcel holdings? Heck, I don’t know. Let’s take the historical marker of the California gold rush starting on a specific date of January 24, 1848. San Francisco was a muddy-road port town with the surrounding areas providing the produce and animal products necessary for life. Fast forward to now. What we have is every square inch of usable land is used. The intervening 170 years saw the real estate progression from agricultural large parcels to smaller and smaller properties, to where now what we see are the ultra-high-end homes, with their eaves stretching out to the property line, nearly touching those of their neighbors.
Costa Rica’s southern Pacific zone is in the early stages of its real estate development. It isn’t ancient history here to recall when there wasn’t electricity to many of these areas. My family and I would come to the coast for a Dominical beach day every week. Occasionally we would consider seeing if we could get to Uvita to go to Playa Chaman or Ventanas or some other. It wasn’t guaranteed that we could get there due to having to drive through a river or two, and the road was not paved. This was in the early 2000’s.
The advent of improved access to The Zone has had tremendous repercussions on life here. The filter now has larger pores. The Zone has become much more accessible to a much broader type of person. However, the Zone’s real estate market is still very much in its… hmmm… what to call it. I can’t say “infancy” but perhaps “toddler-ship” would be apt. The Zone is perhaps the last frontier of early buy-in opportunity in Costa Rica. This stuff can be hard to see when it’s happening. It is usually in hind-sight we get the 20:20 vision on where we’re at. Consider the real estate cycle of progression in any area, and we now have our crystal ball. We can see the future.
However, some of The Zone’s appeal are conditions that continue to require that one be somewhat robust. There are some incontrovertible conditions here that will now and forever affect growth. For making an investment in a property, it will help to see the big picture. The large parcels have been sub-divided. The initial sub-divisions have been further sub-divided. As always, with the ways of our money-loving world, there is concern about over-development and its impact on Costa Rica’s diverse and glorious nature. Where is this all going?
Let’s return to our pre-recession time and we’ll discuss some of these conditions.
Photo by Artem Bali and Ramdan Authentic on Unsplash