Costa Rica Goes Pop?

Costa Rica… the long time favorite second home destination for many Americans. An ocean view home here will cost you less than half (or even a quarter). Take this Costa Rican three-bedroom, three-story home with stunning views for only $245,000. For a similar home in North Tustin, we’re talking $1,125,000.

Just like we saw in Orange County, Costa Rica experienced a housing boom starting a few years ago. Partly due to the baby boomers retiring and pushing past the typical Florida retirement communities and down even farther south to Central America. Back in August 2005, Coley Hudgins posted on these “boomer gringos”. Here’s an excerpt:

Costa Rica is experiencing a housing boom that rivals anything here in the U.S. and is driven in part by new boomer retirees. Two or three bedroom homes that were selling for $270,000 in December of last year are now selling for $350,000 and $400,000 in some parts of the country. While coastal areas may be experiencing their own version of a housing bubble, there are still very reasonable prices for many boomer retirees.

Sounds eerily similar to what we were hearing a few years ago in Orange County. So… will Costa Rican real estate meet the same demise as Orange County real estate?

Messages boards are alive with discussion about the fate of Costa Rica (e.g. “Who is STILL buying real estate?“). I like the Palos Verdes (”insightful commentary on the Costa Rican economy and business climate”) post from yesterday: “The Next Bubble“. The post focuses on how deluded some people are in believing the U.S. real estate market will have no affect on the Costa Rican market and dissects these “naïve to the absurd” arguments. I have to agree with most everything said in this post. People are foolish to think that such a market will not be affected by the U.S. market. And with the large development efforts and the decreased liquidity from potential buyers abroad, I’m sure we’ll be hearing the “POP!” from their bubble bursting all the way up here.