The COVID-19 pandemic has realtors the country over quaking in their flip-flops. Not so much from fear of contracting the virus, but from fear of never seeing another contract for sale of a property again, or at least not for a while.

And that fear is probably well-founded. Nevertheless, perhaps there’s a COVID-19 and Costa Rica real estate silver lining that’s being missed here…

How so, you ask?

Let me caution you first by saying I am an eternal optimist. There’s a fair degree of hope baked into my analysis. So, take the following opinions with the grain of salt they are due…

One can’t be an entrepreneur for as long as I have (22 years and counting) and not be an optimist, or at least a realistic optimist. And that’s especially true for one who has seen as many dark clouds pass overhead as I have, with dot.com bubbles bursting, twin towers falling, great recessions, and now a freaking pandemic the likes of which hasn’t been experienced since 1918!

Important Note: This COVID-19 and Costa Rica real estate analysis is specific to the “expat real estate market.” It does not necessarily apply to the vacation/rental home market, which operates according to different dynamics and is highly dependent on tourism. Please see caveat lector at end of post!

I don’t know about you (speaking now to my fellow Costa Rica realtors), but most of my clients have been (and I believe will continue to be) retirees. I looked back and verified that just before writing this. For sure, the vast majority of my deals have been with retiree buyer clients.

How will retirees be affected by this crisis? Well, for starters they can’t really lose their jobs, now can they? The thing we keep hearing most about is the “Great Depression” level of unemployment that could result from this crisis, if it keeps dragging on much longer.

Most of my retiree buyers have been from the U.S. or Canada. I’m not going to say anything about Canada, because, heck, I’ve never even been there! But I can tell you that I feel strongly that this crisis is not going to cause U.S. retirees who were contemplating Costa Rica moves before COVID-19 to (permanently) change their minds now. I wrote a post when this whole crisis began stating that this thing will probably only deepen the hostility and political division that exists in the U.S. And from the news reports I’ve been watching and reading about, I’m only more convinced about that.

This morning I read an article by Yuval Noah Harari (the author of Sapiens). Harari believes that this crisis will embolden governments world-wide to create surveillance states. I can easily see what he warns about actually coming to fruition, especially in the U.S. But not here in Costa Rica. Not a chance.

But will they have the financial means to do so?

That’s a good question. Perhaps not, but I believe enough of them just might. Between February 12 and March 23 of last month, the Dow Jones fell from a high of 29,551 to a low of 18,592, a drop of 10,959 points, or 37% off its high point. That’s scary. However, since then it is back up to 23,719, a recovery of 5,127 points, or roughly 1/2 of the previous losses sustained.

But we are nowhere near the end of this crisis…it only seems to be worsening. So, what does the stock market see that the rest of us don’t?

I read another article about this and what it comes down to is that corporate America is awash with cash. There’s plenty of cash out there and the U.S. government seems intent on increasing it even more, deficits be damned. It seems to be the one thing democrats and republicans have been able to reach agreement on.

One thing that might cause my beloved Costa Rica interested retirees to put on the brakes is if their nest eggs begin to drastically shrink in alarming proportions. That happened in the immediate days of the crisis and I indeed lost deals as a result. But that trend seems to now be reversing and I believe the U.S. government, headed by none other than Donald Trump (who happens to be up for election later this year), will do everything in its power to keep cash pumping in and the market going up.

This crisis is different from the 2008 crash in that it is an artificially imposed economic downturn. In other words, we’re doing it to ourselves, on purpose (to keep millions from getting sick and a percentage of those from dying). The 2008 crash was preceded, and in large part caused, by an underlying collapse in the housing market. That’s not the case this time around. At least so far, the housing market in the U.S. seems to be in OK shape. Now, there is a real risk of another collapse, if we begin to see a rush to dump properties in order to raise cash to meet living expenses, as well as widespread foreclosures, but so far we haven’t. And, again, I believe the U.S. government will do as much to prevent a dreaded housing collapse as they will to prevent one occurring in the stock market.

Now, a lot of this COVID-19 and Costa Rica real estate analysis depends on what happens with the virus here, in Costa Rica. And actually, so far so good. Costa Rica has taken some fairly draconian measures to prevent spread of the virus and those seem to be working. As of this writing we have 558 confirmed cases and 3 deaths. 90% of the cases are in the densely populated area around the capital of San Jose, with the rest of the country so far generally un-infected. If that maintains and Costa Rica is able to escape the threat of country-wide out-of-control infection, then I believe it will be viewed as a safe-haven, all the more attractive to wannabe expats in places that haven’t been so fortunate, like the U.S.

What about the economic effect on Costa Rica?

Well, this is going to hurt tourism, pure and simple. Whether or not that will be short or longer-term damage remains to be seen. Costa Rica has had a travel restriction (denying entry to foreigners) in place since March 16. It was initially imposed through April 12, but that has been extended to April 30. Tourism represents 6 to 7% of Costa Rica’s economy. I hope Costa Rica does as much as it can to save this vital industry, just like the U.S. will do anything it can to save the stock and housing markets.

Property values in Costa Rica will more than likely go down as a result of this. It will be that healthy dose of reality that many sellers of properties in Costa Rica perhaps needed. How far will they go down? That depends on how long this crisis drags on and supply continues to exceed demand. The point that I have made in this post is that, hopefully, we’ll begin to see a turn around in the supply/demand relationship in the near future. I believe in the meantime, there will be good deals out there and sellers are probably going to have to get more creative in offering financing to buyers. This actually could bode well to attract that influx of retirees I am opining about here.

When will this influx of retiree expats from the U.S. begin?

Any serious answer would require a crystal ball that I simply do not possess. However, I believe it could start as early as the second half of 2020. The next few months are going to be tough for us realtors down here, so best to just hunker down and ride it out. Hell, there sure ain’t much these days to spend money on. It pays right now to keep “overhead” to a bare minimum, while we wait for this hopeful influx to begin showing up. I know that I’m already getting a lot of online interest that bolsters the opinions stated herein.

Remember, even though we don’t have clients in country right now, there are plenty of potential clients at home on their computers, dreaming about Costa Rica. So, even though property showings are very light these days (to put it mildly), we can be dangling that carrot of Costa Rica expat bliss on the computer screens getting stared at during these boring stay-at-home days.

COVID-19 and Costa Rica real estate – Caveat Lector: Due to its heavy reliance on the tourism market, the high-price luxury vacation rental home market in Costa Rica may be in for difficult times. It remains to be seen how much ongoing affect COVID-19 will have on people’s willingness to travel unnecessarily. Unless and until a viable vaccine is available, tourism the world over could suffer. However, I don’t believe getting on a plane to start a new expat life can be placed in the same category as “tourism.” This article should be read as applying only to those homes and locations within Costa Rica that are attractive to expats who want to actually live in Costa Rica.