It’s 3:10am Monday. We went to bed last night at about 8:30pm. Like the night before and the night before that. Because there is no TV and no internet here, nothing to keep us awake. When I woke just now, I was dreaming I was in rush hour on a train. It was one of those dreams where no one spoke, all action, moving from one event to the next with no in-between stuff. Like snippets of time. We (strangers and I) got off the train and starting moving quickly up a big hill, in a hurry to get somewhere. Everything was kind of damp, like it had been raining for some time. Not wet. Damp. Like here in the southern Pacific zone. At
the top of the hill, Richard Gere was in full Ju jitsu dress, doing a demonstration. Then he started teaching me. Then he fell in love with me. What can I say, it happens. I woke up before any really good stuff happened, still married to Hellboy. More on Hellboy later.

You know how you pull a pendulum all the way to one side and let go? It swings high to the other side, hesitates at the top of the swing, then falls. The swings get smaller and smaller, the hesitation less and less, till it comes to rest. That’s how my mind works when I’m investigating: YES, NO, YES, NO, YEs, No, yes, no, y… Maybe because I’m a Libra, but my mind does “on the other hand” ad nauseam till the bob comes to rest.

Oro is Spanish for gold. They call this 25 mile stretch of Costa Rica real estate, from Dominical to Ojochal, the Gold Zone because the market has been so hot the past three to four years. You could argue it runs down to Golfito. Even including the Osa Peninsula. This market will likely go flat before the Osa is all dug up. As Kim pointed out in her comment, booms go longer than you ever think they will. But one can hope.

Speaking of comments, if you’ve commented in the last few days, I haven’t seen it because there is NO INTERNET HERE BUT DIAL UP. Zero internet at my cabina and only dial up along the gold coast. ALL of it. How you can have a multi-million dollar real estate boom in an area without hi-speed internet is beyond me. I.C.E. (the gov’t monopoly power company) is rumored to be bringing hi-speed to everyone just any ol’ minute. One of many promises you need to be taking to the bank.

Costa Rica is famous for promises that never get off the ground, projects that take years and years and years of starting and stopping… they are just as likely to get completed as not. Like there is promise of a new international airport so you can fly direct from Miami to Ojochal. This airport has been promised since the ‘80s and so far nada. But Costa Rica’s government is big on the gold zone, so it might actually get built.

Construction of the brand new 85,000sf hospital is practically complete. (Hopefully, someone thought of affordable housing for the staff. And where will the doctors and nurses will come from?) The zone already got a miraculous stretch of highway about five years ago, so maybe this other stuff will come about.

The electricity still goes off and on regularly. It’s 4:05am and
the juice has been off and on four times already. Since I can’t get online here, I visit
an internet cafe (it offers wireless on a dial-up connection with
electricity going off and on – ohmygoodness, that’s a good time) to post and check my email. I have a ton
of pictures and a totally enthralling video of miles of empty highway
to put up, but posting just words on this connection takes for frickin’
ever so the visuals will have to wait. Besides, I’ve still got real estate to
visit and information to gather today, gotta keep that pendulum in motion.

This morning, my gold zone pendulum is on the no side. Even though I’ve fallen in love with the place, this boom is making me nervous. It’s palpable.

On one hand, Uvita, Dominical, Ojochal are tiny sleepy gringo-surfing/tico-fishing villages. The only paved road is the highway; all the other roads are goat-track-river-bed dirt roads. ALL the other roads. I am so sick of bumping around in our car, I can’t tell you. All the businesses are mom ‘n pop stores, no big franchises (except real estate offices). The “towns” are about two blocks long and well off the highway. Down a goat track. When Hal and I first arrived, we drove right past Dominical, had to turn around and go back to find “downtown.” We expected with all this multi-million dollar real estate boom going on, there would be a town… au contraire. Far from it.

On the other hand, there is a land grab in full swing. Today’s buyers are not people who’ve fallen in love with this place staking out a claim, making a life. That happened a couple of years ago. What’s happening now is land speculation, like in Miami in the early 20’s. Buy a bunch, cut it up, sell it off. Name your price: people from all over the world will buy it. What fueled this is what fueled Miami’s: easy credit in the home country and a world awash in paper money. Signs indicate this boom has peaked.

Like I just spent the weekend looking at property in a development with three other couples. ALL of them were looking at buying properties as speculators, not as end-users. Not one of them was looking at a property to use and enjoy. A market with a shortage of end-users is a big bad sign.

Like inventory is at an all-time high. Everything is for sale and everyone is selling it. I am not exaggerating. We haven’t met a single person who doesn’t have at least two lots for sale.

Key West’s bubble went so high almost everyone was priced out of the market. That’s happening here, but it’s a double-whammy for Costa Rica. Developing nations and third world countries (Costa Rica in particular due to its stable government and no military) have always been retirement and run-away destinations because of one thing and one thing only: price advantage. If you can buy or rent a similar property in your home country, with its services, its familiarity and your family nearby, for close to the same money as you’d spend in a foreign country without services and family… why would you? Affordability is a huge part of the equation.

At first glance, the gold zone sounds affordable: buy a mountain-top ocean-view lot for $135K, put up a house for $75/sf ($90,000 for a 1200sf house with no high-end finishes). Add in appliances ($5,000), furnishings ($25,000), pool ($20,000), misc. ($5,000), travel ($5,000). Done in a year for $285,000 cash. Great for an end-user wanting a home in a remote jungle with an ocean-view out over the mountains.

For a flipper, it’s kinda high. If there is a 20% increase in value over the year you are building (said 20% return each year forever being promised by sellers here – I’ve heard the words), your selling price is $342,000. As long as there are end-users when the time comes to sell, selling expenses are 10%. Which leaves 10% to you. Why wouldn’t you rather put your money in a 6% cd and be done with it?

From everything I’ve gleaned, speculators far outnumber end-users. There have been 20%-5000% (that is not a typo) increases in value over the last several years, depending on who paid beads and who paid actual money. This kind of appreciation is not sustainable, not even the 20%. To start with, buyer’s incomes are not increasing like that.

Can someone make me an argument that this rise in prices will continue besides the “people have a lot of money, they come here and fall in love with it and can’t wait to spend that money no matter how much it costs” argument? That one worked for awhile in Key West, but it just doesn’t hold water anymore.

If and when the promises become reality – the international airport is completed (which has not been started), the hospital is staffed and open, the road is paved from Quepos to Dominical, banks start offering financing (today, you have to have cash to buy), electrical service gets reliable, hi-speed internet gets here at all, plus amenities like a good grocery store and more than two good restaurants… if all this happens, if promises are fulfilled, these will keep this market going. Credit will give it a huge boost, but even that is years away. Can all this happen fast enough? I don’t know. I do know that people continue to surprise me.

Oh: Hellboy is Hal in the middle of his efudex treatment. Efudex is like chemo for your skin: it’s a white innocent-looking cream you apply over a three to four week period that burns off skin cancer cells… it gets wicked ugly. No worries: Hal’s in there somewhere. I may have dreamed about Richard Gere, but he can’t have me. I’m still in love with Hellboy.