NO to short-term speculation. Unless you can live with your money tied up for longer than you hope. OR you are looking to buy huge parcels, can be patient for the REAL deals to come along, spending serious money in the process. And can live with your money tied up for longer than you hope.
Prices are too high for a flip and have escalated at such a breakneck pace, they could be in for a correction. Even a small one could stymie a small-time speculator. Think stock market: would you throw your life savings in now for a couple of years?
Jackie and Doug, one of the couples at the development tour, are thinking of buying two lots, building a house on one, then selling it while building the second one. If that went well, they'd do it again. Everyone knew Hal and I were there as agents, researching for a buyer, so were grilling us like we knew something. Jackie made the rocket launch motion with her hand and asked if I thought prices were going to take off, could she double her money in five years? I said no, making the heavily laden airplane take-off motion with mine. This market already did the rocket-launch. This market at this moment is more likely to take off like a fully loaded airbus: slow steady rise, possibly a stall now and then.
Jackie will buy at least one lot, she says. Even if it doesn't
sell, they can get some rental income and they will always have it, she
reasoned. Excellent plan B. They loved the area as much as we did. They wanted to own something there. You can't help but want that…
Five to 10 years ago, nobody wanted land along the gold coast. If
you think land values will go up 20% a year forever like some agents
there told us, by all means, dive in.
YES to buy and hold. If you want it, you can afford it, you are buying for the long haul, say 10+ years, then buy it. I would. In fact, I may go back down there and look around. Even having lived on an island for over half my life, having lived by the ocean everyday, lived in that heat and swore I never would again… I could spend some time in Uvita. It'd be great to have a little getaway there… I've never been anywhere since Key West that caught me like that place has. If Hal said, "Let's move to that area for awhile," I'd start packing.
What makes property appreciate in value is an influx of people. If the airport gets built and when the road
between Quepos and Dominical gets paved* (right now it's a two hour
hellacious goat track)… life will change along the gold coast. Right
now, getting there is too difficult and why go further south than
Manuel Antonio when you can get so much beauty, so many monkeys, so
much peace right there?
*I selfishly and feverishly pray that road will never get paved, that the gold coast will remain a lovely quiet place. But since we've lived here and Don Óscar has been president, the roads everywhere have improved dramatically. On our drive home over Cerro de la Muerte, there were road crews on almost every square inch of that road. El Presidente is all about the roads, as well he should be.
In thinking about who is going to buy all this land for sale, I don't think I've given enough credit to the hordes of people wanting to leave where they are. We didn't leave the U.S. to escape life in such a developed nation, at least not for good. But now that we have, we wonder why we didn't think of it sooner!
People who can leave their COO are leaving. They write from all over the world about their plans to move to Costa Rica. Although 99.9% of them are from the states, I met plenty of people from other countries. My favorite was the guy from France who did not speak English and spoke lovely Spanish with a heavy French accent. We ate lunch at his restaurant – don't remember the name but I will find it. FABULOUS food. Now our two favorite restaurants are in Uvita.
My consideration to this phenom is that, while there are hordes wanting to leave, I personally know several families who have not been able to sell their stateside property to make the move. Four families in Key West and a few in other areas. This is a sign of a bigger problem. But, hey, I don't have a crystal ball.
The big question is the money supply. As long as other countries keep taking U.S. dollars in exchange for the products they manufacture (TVs, barbeque grills, lawn ornaments, shoes, the list is endless), as long as The Federal Reserve (which is neither) keeps churning out dollar bills, this bubble will deflate desperately slowly, choking the life out of all of us along the way. And eventually out of the countries who are now taking them.
Those countries are actually lending us the stuff because all they are getting in return are dollars. Which are worth… what? The dollar is just a piece of paper backed only by a promise of value made by the U.S. government. Nothing more.
Please read that sentence again. If this doesn't scare you, you are not paying attention.
will be up when those other countries who are now gamely taking dollars realize that dollars are only paper, backed by that promise, which is really worth no more than a wink and a nod. It's only a matter of time. Those countries are not staffed by completely stupid people… they know the game, they will play as long as it's profitable. The minute it's no longer profitable – and that day is coming right along when the dollar Ponzi scheme is revealed – all hell will break loose.
When you look at property appreciation historically, the U.S. sees 5%, taking in all the ups and downs. But that 5% just matches inflation. There hasn't been a price appreciation in excess of inflation except for the last few years. You are
getting more for your housing dollar these days, thanks to improved building
materials and techniques, but housing itself hasn't increased in price
any faster than inflation until just the last few bubble years. Will
that bubble continue? That's the question on everyone's lips. If you
are looking at investing in real estate, I hope it's on yours.
The other question is the housing market in the states. If that goes south for much longer or much lower, it will have a detrimental affect on the Costa Rica market.
For now, I'm sick to death of being the real estate naysayer. Online there are other people who are simpatico. But in real life, you are alone in your madness. Especially in a place like the gold coast where real estate is the ONLY topic of conversation. We were the ONLY ones who didn't think prices would continue to skyrocket, at least 20% a year forever. People look at you like you must not be feeling quite right and decide they need to be patient with you. You can see it in their eyes.
I wondered if we'd gone down there just to hang out for a couple of days and relax, not for real estate, would our perception be different? Hal said, "We wouldn't have met anyone." That would have been a drag! We so enjoyed all the people we met. There's a great expat community down there. When all you've got is each other, you stick close. Although, it'd be nice to talk about something besides real estate.