Understanding Real Estate Cycles: Insights from Costa Ballena in 2025

This week at our Osa Tropical Properties team meeting, our broker Kevin Champagne shared valuable insights into the real estate cycles shaping the Costa Ballena region. He reflected on recent conversations with current sellers who purchased properties during the peak of the market two years ago, at the height of the COVID-19 boom. During that time, inventory was low, and demand was unprecedentedly high as people sought safer, more peaceful places to live and invest.

Fast forward to today, and the market has shifted dramatically. We now see higher inventory levels and lower general demand, although certain types of properties remain highly sought after. This evolving cycle underscores the need for a nuanced understanding of real estate trends—a topic we’ll explore further in our upcoming 2024 market report, where we’ll analyze the trends that defined the past year.

The Cyclical Nature of Real Estate in Costa Rica

Kevin’s reflections remind us that the current market isn’t an anomaly but part of a repeating cycle that has played out over the years. He drew comparisons to 2004, a year when demand for Costa Rica real estate skyrocketed due to a booming property market driven by both local and international factors. During that period, many raw land properties were sold, either for future development or as speculative investments. The Costa Ballena region, with its stunning natural beauty and growing reputation as a peaceful haven, became a hotspot for buyers seeking a tropical escape.

At the same time, the strong global economy—particularly in the United States and other developed nations—played a significant role. Low interest rates, rising property values, and increased disposable income allowed many international buyers to invest in Costa Rica. For many, it was an opportunity to secure their piece of paradise while capitalizing on favorable economic conditions. Political fatigue and a desire for a more tranquil lifestyle further fueled demand. This cycle reached its peak in 2008 before being disrupted by the U.S. market crash, which had ripple effects globally, including in Costa Rica.

The pattern repeated in the years that followed, with periods of growth and downturn shaped by different economic and social factors. Understanding these cycles is crucial for buyers and sellers looking to navigate the market effectively.

Price Reductions: A Sign of the Times

Out of the 821 properties listed on our website across Costa Ballena—encompassing Dominical, Uvita, and Ojochal—15 experienced price reductions in the first 10 days of 2025. This is a clear signal that today’s saturated market is overpriced for current buyers. While this doesn’t mean prices won’t rebound in the future, it’s evident that this is not a market for top-dollar sales.

Properties commanding premium prices today are brand new, exceptionally well-built, and situated in prime locations, offering stunning views, proximity to attractions, and ample privacy. However, the broader trend of price reductions affirms the cyclical nature of the market. For instance, one property recently saw a $400,000 reduction, nearly 30% off its original price. On average, price reductions since the start of the year are around 10% even before offers are negotiated, and many properties sell for an additional 10% below the reduced price.

Coaching Sellers in a Challenging Market

Interestingly, many significant price reductions come from agents who lack the experience to properly educate and coach their clients. Amateur agents may “buy” listings by agreeing to unrealistically high valuations, only to drop the price weeks later when market realities set in. At OTP, we prioritize transparency and client education from the outset to ensure fair pricing and informed decisions.

The Road Ahead

As we navigate the current cycle, it’s clear that trends will continue to evolve. The Costa Ballena region’s enduring appeal—its natural beauty, tranquil lifestyle, and sense of community—will always attract buyers. For now, understanding and adapting to the realities of the market is key for sellers and agents alike.

Stay tuned for our 2024 market report next week, where we’ll dive deeper into the trends shaping this year and beyond. Whether you’re buying, selling, or simply curious about the market, there’s much to learn from the stories these cycles tell.