There is one thing that buyers, sellers, and curiosity seekers all have in common when it comes to the real estate market in Escazu and Santa Ana: everyone wants to know the answer to the most frequently asked question: "How is the market?"
When I meet a seller, or they call the office, it is inevitably the first question that they ask. They want to balance their interest in selling with gaining a better understanding of what is going on in the marketplace.
When I meet a buyer, they either ask the question, or I know they are thinking about it. And why not? It makes sense to want to understand the market in which they are about to embark.
When I am at a cocktail party, dinner, or my child's birthday party and I am introduced to someone as a real estate broker, likewise, regardless of their immediate interest in buying or selling, they, too, want to gain clarity on the current conditions.
Ever heard of a loaded question? However, I never avoid the question, nor will I attempt to skirt it in this dialogue. It is important for any participants in the market to gain a clear picture so as to be better equipped to make educated decisions. While each market is unique, whether buying or selling a condo, a luxury estate, a commercial property, or land for development, there is a common thread at almost any time in any market. In Escazu and Santa Ana, the area has been blessed with dramatic growth and market appeal for the past two decades. The combination of the ideal climate and dramatic mountain backdrop, convenience both to the city, airport, and coast, as well as an abundance of conveniences including international schools, restaurants, and entertainment, has converted this area into the indisputably most desirable place to live in the Central Valley. That is, of course, a bold statement, and some may argue in favor of La Sabana, La Guacima, or even areas like Heredia or Curridabat. Those areas, too, have their merits; however, the above statement is simply a reflection of the numbers and is a reality about the percentage of buyers seeking one destination versus another.
So, nice try avoiding the issue and selling the area, right? Wrong. Just an important backdrop to the history of growth in the area to better understand the present. As this growth grew over decades, spurring a combination of luxury gated communities, condominium towers, and impressive mixed-use lifestyle commercial centers, investors and residents alike prospered as appreciation seemed to be the only consequence of investing. The result of such impressive cycles in a real estate market is unfortunately blinding to those who have never lived on the other end of the cycle. As prices hit an all-time high, the US-driven financial crisis hit, and slowly made its impact here in Costa Rica. In any real estate market, this is a normal correction. Demand slowly drops, and to spur demand, sellers lower their prices to drive that demand back to desirable levels. There is no exact definition of the correction, other than moving the market until it responds. With such low comparable carrying costs, combined with the lack of an MLS in Costa Rica, these corrections did not take weeks or months, but have taken years to come into effect. In the US, an MLS (centralized database where all properties, and their historical prices, reductions, and sales prices are recorded and accessed by the public) creates a much more immediate correction. If your number is correct, everyone on the street starts to correct in order to compete in the marketplace.
In Costa Rica, that data does not readily exist to the public, neither buyer nor seller. Therefore, proper correction requires proper education. That education inevitably should come from your real estate professional. A real estate broker or agent should be carefully selected in order to not only lead you through the process, but also tell you, as a seller, the often hard truths of the realistic price on your property. Likewise, if you are a buyer and have hired an agent as a buyer's broker, you should rely on your agent not just to show you properties, but to provide insight on where true market values are, where past markets were, and where he or she views the future of the market. Real estate brokers and agents are guides in the process, and in a buyer's market, their role is even more critical....so, there is that term again: Buyer's market. What does that really mean?
A buyer's market is a commonly used term when the supply outweighs the demand, therefore, placing the buyers in the driver's seat of the transaction. A buyer's market tends to provide the buyer more leverage in a negotiation, as with a large supply to choose from, sellers are more likely to engage in a negotiation to keep the attention of that buyer. The reverse of this phenomenon is a seller's market. This occurs when the demand outweighs the supply, creating favorable conditions for sellers to achieve likely higher prices or better conditions for the sale of their property.
Back to the market in Escazu and Santa Ana....as the real estate market boomed and then was affected by the crisis, it left a wake in its track. Many property owners paid extremely high prices for their property, and faced with a sale in today's market, inevitably seek to profit from their investment, or at least recover what was once invested. However, buyers in a real estate market do not pay attention to what the previous buyer paid, nor do they invest. They establish the market either by comparables in the marketplace or simply by what the property is worth to them. While it is certainly a seller's criterion to accept or reject this notion, it is a reality that any seller in a buyer's market must face before coming to the market. Therefore, when I get a call from a seller in today's market, I am very clear with them about the market, advising them that there are buyers in the market. However, they are acting with caution, of course, to ensure their investments, and as a seller, it is important to understand that while quality, location, and distinguishing factors of each property will draw the buyers, price will most definitely be a determining factor in order for it to sell.
Likewise, when a buyer in today's market calls, I am likewise very open with them about the conditions and ensure them that it is a good time to buy, as the market has likely reached the bottom and is digging its way out. This creates an opportunity for the buyers to select from a larger portfolio and often negotiate from a position of strength due to the market conditions.
Escazu and Santa Ana are proven residential areas, which continue to make them very safe places both to invest and, of course, to live. The above insight into the market is not meant to alert sellers to something they do not already know, nor to alert buyers to run out to purchase anything that comes their way. It is simply meant to provide a peephole into the general market conditions, understanding that, like any real estate market, Escazu and Santa Ana will go through a cycle, and when the cycle reaches the top again, those who have invested wisely will be in a very strong position for the coming years.