After a tepid 2012, the housing market in Costa Rica got off to an auspicious start in 2013. Construction starts picked up considerably in the first quarter, and healthy demand for commercial properties gave a major boost to the economy during most of the year. Activity in the residential market was lukewarm at the beginning of the year, but by September it had become the best-performing sector of the economy.

The current housing market conditions indicate that the sector is heating up and will soon approach the levels of activity last seen circa 2007. There was a bit of concern at the beginning of the year due to a slowdown in construction, but by June the sector had already completed as many projects as it had in 2012 and was actually facing a labor shortage. This was mostly evident in the Guanacaste region, where real estate firms have been quite busy welcoming foreign buyers who are looking to scoop up the last few bargains left.

International news media outlets are once again interested in Costa Rica real estate. The New York Times recently published a listing for a sumptuous golf villa at the Westin Reserva Conchal in Guanacaste: Four bedrooms and five bathrooms built on a Mediterranean revival style for $1.49 million. This may cause sticker shock for some buyers, but it will seem familiar to home shoppers who were looking around from 2004 to 2008.

There is a sense of urgency among home shoppers in Costa Rica, particularly foreign buyers, to get the last few good deals left in Guanacaste. Although prices have gradually recovered from record-low levels last seen in 2010, there are many bargains to consider. Mari Brenes at Palm Real Estate in Playas del Coco recently shared the following listing with the Costa Rica Star:

Two-bedroom furnished and decorated townhouse with 1.5 bathrooms and rooftop terrace for $118,000. This property is located in Tropical Dreams, a quiet residential community located just five minutes away from the beach. That is  five-minutes walking, not driving.

Who is Buying?

The buyer demographics in Costa Rica have shifted as well. According to a recent article published by international real estate site World Property Channel:

Baby boomers will be a larger demographic this decade – significantly larger. There will be more of them and they will no longer see Costa Rica as just a great place for investment ROI or for a second home. Instead, they will look for a place they can relocate full time, attracted by low cost of living, affordable healthcare, proximity and good weather. Most of these boomers will not be looking for a million-dollar villa, but a plot of land with an existing house or space to build upon, in an accessible area with good amenities.

As expected, many real estate buyers come from the United States; according to the New York Times, they make up 65 percent of house hunters in Guanacaste. Canadians are now showing more interest in Costa Rica real estate thanks to the new Daniel Oduber Quiros International Airport in Liberia. Local buyers, however, may soon overtake Canadians.

Real estate observers in Costa Rica are predicting that the middle class in Costa Rica is going to take advantage of new mortgage opportunities en masse. Banks are making their loan terms more attractive, and regulators are relaxing their previously tough stance on home lending. Mutual-style credit unions whose account holders share financing risks can now offer 50 percent loan-to-value mortgages to Tico families without having to worry about getting a government guarantee; instead, members of the financial institution will assume the risk of the remaining 50 percent, which is tied to the residential property as collateral.

According to Mari Brenes, Guanacaste will sing a stronger siren song for foreign buyers in 2014. As the top sales and rental professional in Guanacaste, her office in Playas del Coco is currently very busy and thus was unable to provide the Costa Rica Star with regional statistics in time for this article. She did, however, have time to wish readers a warm and happy holiday season.