There is no doubt that Costa Rica Real Estate market will be impacted to some degree on what has happened last week. That came right out of left field.

Since their is no mortgage crisis here and our Country is not tied to the major USA financial institutions, we stand a good chance of weathering this storm quite well, in fact better than others. We need to focus on good Costa Rica Real Estate value for our clients. (that applies to all price ranges)

In case you didn’t see this article from our Tico Times, I have published it for your viewing.

Special to The Tico Times….. also read below this article on value in Costa Rica

As world financial markets whirled from the latest crises in the U.S. lending and insurance sectors, Costa Ricans’ recent eschewing of Wall Street troubled sectors appears to have paid off.

Following Monday’s bankruptcy filing by investment bank monolith Lehman Brothers then Tuesday’s near demise of insurance giant AIG, stock markets in the U.S., Europe, Russia and Asia dropped to decade lows as central banks funded billion dollar bailouts.

Costa Rica, meanwhile, was calm.

“The Banco Nacional doesn’t have any investments with Lehman Brothers,” says Violeta Fernández, the bank’s corporate relations director, underlining Costa Rica’s financial independence.

Some international banks linked to Lehman have recorded multi-million dollar losses.

“Costa Rica is lucky,” says Rudolf Lucke, an economist at the University of Costa Rica. “We’ve been slow to get involved in the American stock market, and that’s why we’re not in this hurricane. Chile, Argentina, Brazil and Mexico will be more affected. They’re much more linked to America’s financial market.”

Eric Vargas, strategy director at Aldesa, an investment consultant firm in Costa Rica, says that he has steered investors to more low-risk, long-term investments like Procter & Gamble, Colgate, Wal-Mart and U.S. treasury bonds.

“Since the credit crisis began in August 2007, we’ve been advising our clients to stay away from American financial stocks,” Vargas says.

Lucke is also realistic. “The possibilities are very high that certain Costa Rican institutions have investments related to Lehman. But that’s not something you talk about,” he says.

On Tuesday, the Costa Rican Stock Exchange (BNV) rose 0.34 percent. “We haven’t seen a direct reaction in the BNV,” confirmed Silvia Zúñiga, the press secretary at the BNV.

“The BNV is affected more by the domestic interest rates than by the American stock market,” says Lucke.

“One possible consequence of the crisis will present itself if international investors abandon emerging market debt (EMD) bonds for more stable instruments,” predicted Zúñiga. EMD bonds are issued by companies in developing countries, like Costa Rica. They are traded on the BNV.

Second round effects of the bigger markets’ troubles, however, are inevitable. Costa Rica’s economy depends largely on North American investment, trade and tourism. The U.S. is Costa Rica’s No. 1 market for exports.

Domestically, the lending market has never been very liquid, but now, as the Central Bank tweaks the interest rate to catch up to an estimated 15 percent inflation – the highest since April of 1997 – borrowing money is expensive.

Yet a conservative monetary policy may have saved Costa Rica from the speculative lending crisis in the United States. Here, stringent limits have been set on the amount of money banks can lend in proportion to their reserves. Costa Rica’s federal reserves, for example, total about $3.9 million. This is the highest they’ve been since December, when they were at record levels.

Vargas expects to see even more spending paralysis. Currently, domestic interest rates are lower than inflation. Consumers feel they are better off spending their money than saving it. This can create inflationary pressure that, coupled with an undervalued dollar, leads to more importing than exporting. This threatens the Central Bank’s reserves. The Central Bank’s reserves diminished about 20 percent in the last five months. Foreign direct investment – fast becoming a precarious last resort – had helped fill this gap.

Vargas envisions higher interest rates and an adjusted exchange rate, measures that might help bridge this discrepancy in the long run but will likely have short-term malignant effects, like a recession.

“It’s cleaning up everything that was wrong in a very harsh manner,” says Lucke of the financial crisis.

 Costa Rica Retirement is still a very viable option for many countries in the world. People are going to be very selective in their purchasing in that they now have models at home of what can be deemed opportunity properties and serve as a guide as to what they feel is a good deal in Real Estate in Costa Rica. Further, if it is owned by a Bank in the USA, they probably can make their own deal.

We have excellent Costa Rica Real Estate value here but one has to know where it is.

There are many things that combine to achieve value. A lot of buyers look to the surface and go no deeper than the price. Others are caught up in the hype that they have to be careful or you are going to loose your shirt here. Losing one’s shirt usually only happens if you take short cuts. There is too much marketing play on this based on stupid experiences of greedy people in the past.  They have stories that rival the Titanic.  In a lot of these cases they never needed to occur in the first place and usually are associated with greed, lust and not adhering to practices used in their home country.  No need to go  into detail on these cases here as I am sure you can guess the profile.

We are not living in the stone ages here anymore and if you put yourself in good hands with a good Costa Rica Real Estate firm , outline clearly your objectives and state your level of interest in real value not just price, you won’t go too far wrong.

I personally feel we are going to have to be patient and see where things are heading. Markets are dictated by the perception of the buyer, not what people build and make pretty thinking it will sell for that reason.

 

Admittedly, we have a lot of projects that do not have the professionals to do the proper studies before the planning. These projects could succeed in spite of themselves in the past. They are going to meet with some serious competition now and if the amenity doesn’t match up to the price, then you may see some of the claimed serious discounts in price that people have mentioned. That still doesn’t mean they will sell if they are not what the market wants.  You are probably not going to buy something that doesn’t come close to you personal and lifestyle needs.

 

I see projects advertised at so called discounts now that fail to meet the criteria for the Retirement buyer or even the investor. These can be dangerous endeavors. “If it looks like a duck“

 

Be wary of the  construction for $50 per foot if you are leaving a beautiful $400,000 home in the USA or Canada that was built for $275 per foot. Value?  I don’t think that is you.  Look to $85 in this case.

 

There is a lot of Costa Rica Real Estate underway  that is looking to do pre construction sales. The buyer today  is going to be conspicuously absent in the coming months unless he can see proof of completion of a project or unless the money goes to Escrow until he is satisfied.

 

Value is not hard to find if that is your business.

 

One project we are involved in is kicking off in November despite all the gloom we hear,  It is offering a nice mountain community in a great location with killer ocean views and amenities. However, it is fully funded and will only take Escrow deposits to reserve a home site and you don’t pay anymore until the water, paved streets and electricity are at your property.  That is my idea of not losing your shirt and good value.

 

That is what we feel comfortable with these days.

 This article was reported by Jo Stuart  of AM Costa Rica and is a very accurate good guide for costs of  living in Costa Rica.  It did not include some Costa Rica Real Estate benefits such as annual taxes which are very low as well.  A home in Cariari that is valued at $450,000 can be as little as $250 per year.
Pleas read on for all details of cost of living in Costa Rica by AM Costa Rica.

 As the belts are tightened in the United States and elsewhere, more eyes turn to Costa Rica as a cheap place to live.

 

The first question usually is what is the cost of living there. And there is no easy answer.

 

Retirees range from the person squeaking by on $700 a month in U.S. Social Security to someone who can write a check for a $450,000 oceanside condo.

 

But those short on funds usually want to know how low can you go.

 

Because Costa Rica is a socialist country, great attention is paid to the costs of public services. In simple terms, they are a steal. And they will continue to be.

 

Want a cell phone? The Instituto Costarricense de Electricidad will charge you a base rate of 3,375 colons or about $8.10 a month. A land line will cost 3,220 colons or $5.88 a month.

 

Basic Internet hookup can be had for 8,350 colons a month or $28.25. But then there also is the charge for using the telephone to connect to a server.  The alternative, a cable hookup, can cost about $18 for basic service which usually is sufficient for one household. And there is an obligatory purchase of cable television. The price also depends on which company has the service contract for the specific geographical area.

 

Columnist Jo Stuart frequently mentions prices in her Friday column. She also is an astute shopper at the various weekend ferias where vegetables and other agricultural products are sold far below supermarket prices.

 

Even in the supermarket, some products are price controlled. Milk is 1,430 colons a gallon or $2.61.

 

Those who simply have to have imported U.S. goods will pay handsomely. They shop at Pricesmart.

 

Jo Stuart also notes that the best seats in the Teatro Nacional for a major orchestra performance can be just 8,000 colons or about $14.60. But she usually goes a little higher in the building for a whole lot less. The cheap seats are 3,000 colons ($5.50) and all tickets are subject to a 10 percent discount for senior citizens.

 

The ciudadano de oro card is accepted universally and can mean deep discounts. To get one, an expat has to have a pensionado, rentista, inversionist or residencia cédula.  

 

The government has decided to dispense with the bus coupons for the elderly. They were subject to resale and caused a lot of woe. So shortly seniors will simply have to show an identification specifying their age, including the ciudadano de oro card, to get a discount.

 

The bus fares are a steal to begin with. The fare from San José to Tamarindo on the far Pacific coast is 3,055 colons or $6.23. That’s nearly an all-day ride. And in the city few routes are more than 250 colons (about 45 cents).

 

Taxis also are a deal, although recent increases have Costa Ricans unhappy.  The first kilometer of a taxi ride is 420 colons or about 77 cents. Additional kilometers in the city are still 380 colons (69 cents). Those are definitely not New York City prices.

 

There are the apartments. Even after paying the informal tax levied on those who do not speak Spanish well, a decent two-bedroom, secure unit can be had for $450 a month. An A.M. Costa Rica reporter just vacated a one-bedroom with loft where the rent was $275 a month. And this was no slum.

 

Electrical and water bills are designed for the low-end user. The Compañía Nacional de Fuerza y Luz rates favor low use. The current rate is 43 colons (8 cents) for each kilowatt for the first 200 kilowatts of use. Each of the next 100 kilowatts is 66 colons (12 cents). Larger consumers pay more per unit.

 

The government water company just got a 25 percent overall raise but the actual rates have not been set yet. Company officials promise to favor low users.

 

Then there is free. Like nearly all the country’s beaches from high water to 50 meters inland. And the parks. And frequent entertainment.

 

Again, prices and use of utilities depend a lot on where the expat lives. Air conditioning can add a lot of an electric bill. So can alcohol or cigarettes. Remember, socialist countries like to control your bad habits.

 

Beer is about 800 colons a can, about $1.45. Local beer is cheaper by the two-liter bottle, but still it is no bargain.

 

On the other hand, a glass of decent Chilean or Italian wine in a four-star hotel restaurant will cost between 3,100  and 3,500 colons (from $5.66 to $6.39). Better to buy by the bottle (4,000 to 6,000 colons or $7.30 to $10.95) except for infrequent sprees.

 

Bars that cater to expats will reflect that in their beer prices where 1,200 colon beer means nearly $2.20 a bottle.

 

The big ticket items here are automobiles because the government levies a gigantic tax. So an expat can figure paying twice for what a vehicle costs in the States. But the insurance is very reasonable, again based on coverage and type of vehicle. But $100 a year is possible.

 

A lot has been said about the Costa Rican health system. And one must accept the fact that most U.S. medical benefits do not extend outside the States. An exception is the health plan for retired military and some federal employees.

 

Patients in the government system probably do not have their own assigned physician. And the waits are legendary.

 

However, older patients of the ciudadano de oro category usually get to go to the head of the line. Expats find they can obtain very reasonable health insurance from the only provider, the Instituto Nacional de Seguros.  Some group plans reduce the cost even more.

 

Costa Rican employees are covered because the Caja Costarricense de Seguro Social takes 10 percent of their gross pay as a salary deduction. Employees add to the total.