As we approach the end of the year and the end of a decade, it is feeling like the appropriate time for a thorough recap of what’s been going on in our Costa Ballena real estate market. We are proud to report that our office and the region as a whole are closing out the 2010s showing significant incremental growth in the number of properties sold year-on-year and their combined value. Our office has worked diligently all year to collect as many details as we could about what is happening in our local Costa Rica real estate market, for our sake as much as yours, and you may not find these numbers easily available anywhere else. Below, you will have a chance to read many of our office findings, including trends and threats we’ve noticed in our market to-date, general buyer profiles of investors in our region, what property seekers are looking for in Costa Rica, and the preferred terms of the transaction in Costa Rica real estate in 2019.
An Overview of the Types of Properties Sold in 2019
As is the case every year, homes in Costa Ballena are the most popular category of real estate listings being sold in 2019. But it was hard to miss the particularly quick turnover of newly-built modern luxury homes with fantastic ocean views in 2019. There is a growing number of high-end property developers in our region who are attracting buyers over $1m USD. These international real estate investors are looking for well-built, brand new properties that require very little maintenance off the bat and will rent for a good return. Our Costa Ballena region has seen a significant uptick in renters and rental prices in recent years, especially on the most spectacular luxury properties. With the rise in the number of luxury developers building in this region, older luxury homes are sitting on the market for longer than in years past while newly-built constructions are being sold before completion. Just under 4% of the properties sold in the Costa Ballena in 2019 were turnkey businesses like B&Bs, hotels, or restaurants.
One of the most popular preferences that we noticed in 2019 buyers was the request for moderately-sized homes. Many of today’s buyers are looking for no more than 3 bedrooms — something not too big but that they can still host guests. Other features that topped the 2019 list of buyer preferences include the property having a pool, ocean view, and acreage. Buyers notably continued to request privacy in the listings that they wanted to see, as well as the typical tropical amenities that most visitors want to enjoy, like some type of water feature and A/C.
Mountain views and river views were still very popular, especially in the mid-range price brackets for homes and lots. And new, beachside developments saw a rise in the number of properties built and sold in 2019. Small developments like Villas del Sol in central Uvita have been incredibly popular in 2019, thanks to its prime location — just a 15 minute walk from gorgeous Playa Chaman. Location is a high-priority item for adventure travelers who want to participate in multiple activities while staying in the Costa Ballena and central Uvita is ideal for this growing market of renters.
The most popular listing price range in our office in 2019 continued to be properties under $100,000. This bracket encompasses the majority of lots for sale in Costa Ballena. Vacant lots represented a third of the number of transactions to go through our office in 2019 but only 8% of our total sales. The majority of homes sold through our office in 2019 were valued between $300,000-$400,000 and we saw a growing market of buyers in the $600,000-$700,000 range over previous years.
Our office continues to predominantly represent properties in the Ojochal area. It is no surprise to us to note that the majority of the properties sold by our Osa Tropical Properties office in 2019 were in Ojochal. Within this popular international expat community, Phase 10 and the entrance region of Calle Soluna/Calle Estrellas represented our biggest grossing regions. And Calle, Perezoso, Calle Tucan and Phase 5 were also favored. Buyers like the price range in the Ojochal area, as well as the great diversity of restaurants, shopping, and services.
General Client Profiles in 2019
A wide assortment of people found themselves interested in purchasing properties in Costa Rica in 2019. And of those drawn into our laid-back coastal and mountainside villages, the majority seemed to find a connection in their affinity for nature, peace, and community. Many new travelers to Costa Rica fell in love with our region of the country this past year and called into our office to say so. It is a story that we’ve heard numerous times over the years: they’ve been all over the world and as soon as they arrived here, they knew that this was where they want to be. They received a friendly welcome in a beautiful location and the pieces aligned. Now, every time they come back, they want to stay longer. This is the story that keeps us engaged and excited to be ambassadors for these adventurous souls who want to claim their part of pura vida and 2019 felt like a great year for the number of prospective buyers who felt inspired to live a life here.
US buyers appear to be particularly drawn in by the social system in Costa Rica. They are finding that the highly-rated universal health care in Costa Rica is a great alternative to expensive health insurance rates in the US. Many others told us that they want to get away from oppressive political turmoil happening in the US and elsewhere around the world. As a bastion of peaceful living, in harmony with nature, Costa Rica, and the Costa Ballena especially, is a breath of fresh air. Our strong communities are made up of active individuals who want to make a difference. And this ethic continued to inspire others, especially as Costa Rica’s president graces the cover of Time Magazine, representing the positive influence that this environmentally-proactive country aims to have over the world.
A surprising number of Canadians came through our office in 2019, thanks to windfall gains from some of the stronger Canadian real estate markets. Canadian investors are finding good value in Costa Rica real estate despite the strength of the US dollar. We also noticed a rise in the number of buyers from the Asia-Pacific, with more Australians and Chinese arriving in 2019 than in previous years. 2019 saw clients arriving to our office from Scotland, Holland, Austria, Germany, Sweden, Switzerland, Belgium, France, China, Australia, Qatar, Mexico, and from all over the US and Canada.
A significant number of “prepper” investors seeking the ultimate in privacy in real estate in Costa Rica found what they were looking for in 2019 in the less developed parts of the Costa Ballena. Those looking to buy 50+ acres with special features like private water sources and waterfalls found the self-sustainable properties they were looking for in our fertile and temperate location. Many of these undeveloped properties were still priced in a desirable range in 2019, between $300,000-$400,000. These types of buyers, in particular, appreciate that the Costa Ballena is less busy and greener than other parts of Costa Rica.
Most buyers in 2019 were in their mid-50s, in pre-retirement age, looking for a good investment that they can also potentially enjoy in the future. And a few more buyers with elementary school-aged children came into our office in 2019. Those with teenage children continued to feel a deficiency in finding adequate schooling for their older kids, especially if they do not speak Spanish. English-language high school is still developing in our region and there are few options available for US-accreditation.
Trends in Costa Ballena Real Estate
In 2019, our most popular months for receiving offers at Osa Tropical Properties were at the height of the high season between January and March. Most new listings were released on the market toward the end of 2018 in time for the biggest rush of visitors to Costa Rica. Other brokers in the region reported the majority of their 2019 closings happening in the months of April, June, July, and September. We don’t have information about when their offers came through; however, our average office closing time in 2019 was 1¾ months, indicating that the majority of the offers from other real estate offices in the Costa Ballena occurred at the start of the year as well.
We saw our biggest lull in offers between July and September, which picked back up again in October. This may be surprising since October is traditionally the rainiest month in the Costa Ballena. But this is a real estate trend that holds true annually. Many price reductions happen around mid-year to take advantage of the early season buyers who start arriving in late September and early October as soon as the kids are back in school and as the winter cold approaches. This is the time of year that buyers of Costa Rica real estate get serious about making offers. And it is, in fact, the time of year that we had two 2-week closings in a row — some of the fastest on record in our region.
The average sale price in 2019 for homes in the Costa Ballena was around $550,000, which has held steady compared to 2018. However, the number of total sales in the region increased year-on-year, telling us that more homes are selling in the lower price brackets compared to years past.
Our Osa Tropical Properties agents have reported that close to 50% of real estate transactions in 2019 have been with investors wanting a rental home. Those not ready to retire still want to buy now and rent their homes until they are ready to move here more permanently. They predict that Costa Ballena’s real estate market will continue to grow in the coming years and that now is a good time to invest.
A growing number of buyers from the US in 2019 also chose to use their IRA to invest in Costa Rica for a great return. Some of our past clients have reported a 6-8% return on investment in the last year, with one luxury home buyer telling us that they’ve earned a 10% return on investment in the last 8 months, seeing an average of 70% occupancy rates in their 3-bedroom, modern, luxury property. Another set of our 2019 sellers used their IRA to build a stunning, luxury, three-bedroom house that they built and sold within the year. And they were also able to use their IRA to pay for all of the home’s fixtures, furniture, appliances, and interior design, making this transaction an easy and clean return on investment that they plan to emulate again in 2020.
Cash offers were still preferred by sellers in 2019, but more were willing to offer private financing as an option to sweeten a deal. This option paid off quite well for sellers who did not need to liquidate all of their Costa Rica property assets right away. Many sellers in 2019 chose to accept the first offer they received if it was close enough to their asking price, especially if their property had been on the market for over a year. But low offers were generally countered or rejected this past year and higher offers were subsequently accepted. Particularly in the case of a listing that were less than 6 months old, a low offer typically meant that the potential buyers were testing the flexibility of the sellers and not necessarily that they found the property to be over-valued.
The listings that stayed on the market for longest tended to be homes that are at least 10 years old and properties that are without the more attractive features, like ocean views and privacy. And the fastest closings were on homes under $400,000, especially those really great deals under $200,000 that had something unique, like a great location or a really spectacular river view. In saying that, not every home valued lower than the rest on the market sold quickly in 2019. Buyers were almost always looking for something unique; either that they can market to the lower-budget rental community, or some great quality that they themselves could enjoy.
Trends in Costa Rica Property Investors
Costa Rica continued to experience significant increases in the number of tourists coming through the country in 2019. More airlines inaugurated direct flights to Costa Rica from all around the world than in many years past. And in the Costa Ballena, our ecotourism industry is attracting more visitors every year. Restaurants in the Costa Ballena began advertising high season hours around June and July of 2019, taking advantage of the influx of tourists that we received to our region during that time.
September and October felt quiet for tourism, which appears to be our region’s annual downtime. But we did notice more buyer leads contacting our office with inquiries around that time over previous years. Most of these buyer leads arrived around November and December to view properties and a number of offers came in just before the holidays.
Some 2019 investors were feeling so excited by the market that they purchased multiple single-home properties in strategic locations. They will undoubtedly be looking to hire or even create their own property management company to look after their roster of rental homes. The need for more, good-quality property managers is a major trend that we have been noticing year-on-year in the Costa Ballena. Vacation rental sites in 2019 frequently experienced a shortage of quality rentals in the most popular markets and this inspired investors to put more of their money into the Costa Ballena.
Threats in Costa Rica Real Estate
Sellers in our market typically rejected low offers in 2019. Sellers held firm to keeping close to the replacement cost of their property, even when it was not a prime listing for the current market of buyers. This inflexibility in the market pushed away some less committed buyers in 2019 who were hoping for more favorable terms from a more desperate market.
Those with overpriced listings were finding themselves shopping around different realtors in 2019. Unrealistic expectations and bad advice led to some great listings still sitting on the market going into 2020. Osa Tropical Properties agents always evaluate the comparable listings that have been recently sold in our market before quoting a potential client on what we think their home is worth in today’s market. Nevertheless, more property sellers took to marketing their home privately in 2019 through avenues like Facebook and other online marketplaces, though largely unsuccessfully. For Sale By Owner homes represented a minuscule fraction of the total properties sold in Costa Ballena in 2019 and foreign buyers in Costa Rica still want to hire a local representative who can vouch for the quality of a property and its value.
Buying a property in Costa Rica with a good water source also became increasingly important in 2019. Water concessions have become critical to obtaining a building permit in Costa Rica. This new variable accounted for the decrease in the number of transactions that came through our office in 2019, with less expensive lots not selling because buyers would not be able to obtain a water concession under the current requirements within a comfortable time frame or budget. As a result, very few great ocean view lots with a valid water concession were left for long on the market in 2019.
Why Clients Choose Osa Tropical Properties
We are noticing that many more visitors are coming to our South Pacific region of Costa Rica to explore real estate in our Costa Ballena communities on their own. 2019 was a great year for this because of our regions improved roads and signage. GPS programs like Waze and Google Maps have become more reliably detailed on even the smaller roads in the Costa Ballena, making it easier for potential buyers to explore the feeling of our different communities. And more of those adventurous investors ended up calling or driving to our office in 2019 when they were ready to ask us more detailed questions about the area, having seen our property sign or an ad in one of our local magazines.
Based on our research, our office’s biggest lead source for buyers in 2019 was our Osa Tropical Properties website. Many clients and friends in the area have commented that our website is the best version on an MLS in the whole of the Southern Zone. We work hard to create great resources for buyers and sellers of real estate in the Costa Ballena: helpful articles, 360 videos, drone videos, property walk-throughs, interviews, testimonials, and more. Our office also increased advertising for our exclusive listings in 2019, spending more money on global MLS services, which helped us sell some of our most challenging listings of the year.
When it all boils down, though, most big decisions will come down to numbers. Our Osa Tropical Properties office total number of transactions in 2019 may have been less than in 2018. But the value of those sales was far greater year-on-year. Our office experienced a gross increase in sales of 37% over 2018, which had already grown by 24% the previous year. Out of the over 60 real estate agents in the Costa Ballena, our four Osa Tropical Properties agents represented around 14% of the total listings sold in the Costa Ballena in 2019. Value-wise, this accounted for almost 25% of the total sales generated in our Costa Rica real estate market. We attribute this success to our excellent reputation with our clients, which continued to extend out into the world thanks to their great referrals. And more of our past clients received referral fees for recommending buyers to our office than in previous years combined.
All in all, 2019 was a great year for our office and for many sellers in our Costa Ballena region. There are still challenging listings that fit into some less-popular categories. But with the growth in the popularity of ecotourism and luxury development in our region, it feels like only a matter of time before the rest of the world catches on to one of the best kept secret places to live.
If you are interested in working with our highly-recommended expert team of realtors, contact our office in Coronado de Osa, 3 miles south of the entrance to Ojochal. Ask us about any of the figures quoted in this article and we will be happy to provide more information about how we obtained them, as well as more detailed breakdowns of our South Pacific Costa Rica real estate market in 2019. And sign up to our Osa Tropical Properties weekly newsletter below if you haven’t done so yet to stay up-to-date with what’s happening in the Costa Ballena real estate market.