The Effect of Covid-19 on the Costa Rica Real Estate Market
March 13, 2020
The world faces one of its strongest global pandemics of the last decades. Covid-19, commonly known as Coronavirus, has infected 128,000 people to this day. It has killed almost 5,000 to date and the number keeps growing. This new global pandemic has had a strong impact in global economy and the majority of its branches due to investment fears and containment measures. The real estate markets are taking a major hit worldwide with China’s residential real estate market completely plummeting after the outbreaks, as well as New York’s property market experiencing severe setbacks with stocks plunging globally over the past few weeks, and even more after the New York Stock Exchange resumed all trading for the day in March 12th, 2020 after a 7% decline only hours after opening.
Property markets all over the world might go through similar setbacks, and the impact and duration of these will be determined by factors such as how fast the virus spreads and how the governments manage it. Stock investors as well as buyers and sellers in the real estate market are on-their-toes with the news and any information about the virus, which makes both markets more volatile as investors act and react based on Covid-19’s behavior. A good example of that is the dive in stocks all over the world after this March 11th, 2020 when U.S President Donald. J. Trump decreed a 30-day travel ban from Europe to U.S.A that prohibits flights from 26 European countries. All of this in an attempt to simplify the process of controlling the virus.
The tourism industry has also taken a big hit worldwide with reservation cancellations for up to 3 months ahead of time, which not only affects the countries and communities with tourism as their main source of income, but also causes fears in some real estate markets. It is not clear yet how much this will affect the Costa Rica housing market. We have a lot of clients who successfully got out of their stock market investments and are now looking to invest in real estate as a hedge against a potential recession. We also have other clients interested in selling for a lower price, for fear of the recession coming so we have buyers taking advantage of it. We also had a few cancellations of showings because of trips cancelled but also have clients coming anyway because it's warm and nicer here than in the northern countries! It's hard to assess yet but the next few weeks will be interesting and will tell us more about the coming months.
We are living through a historical economic and health event and must stay alert, follow instructions and act with a cool head through it all. At the end of the day, humanity has seen worse. In the meantime, let's not forget to wash our hands, keep a distance between each other and appreciate the break we are giving to mother nature by having less traffic and pollution :)