Costa Rica Real Estate News

Costa Rican consumers are paying higher prices for nearly all of their necessities today. Noticeable differences in the cost of weekly grocery bills, trips to the gas station, and purchases of everyday items are common among Costa Rican citizens, and now it is anticipated that housing prices will be increasing as well.  This forecasted rise in housing prices largely stems from the recent spike in steel prices.

Within the past few years, steel prices have jumped about one hundred percent, with nearly sixty percent of the total increase occurring since January 2008.  Additional increases are expected by the end of December 2008.  Steel, along with aluminum and glass, require an enormous amount of energy to produce, and with the recent escalating fuel prices, the cost of these products, especially steel, has skyrocketed.  Depending on the size of the home, the cost of steel for construction can be up to twice as much compared to the cost in recent years.

Home builders have attempted to shield buyers from the steep steel price increases by shouldering the bulk of the price hike.  Home prices in the past few years have not reflected the builders’ cost of construction steel, but this practice will probably be coming to an end in the near future.  Trying to retain their established Costa Rica real estate market shares, home builders have taken less of a profit on newly constructed homes in order to keep their home sales prices competitive.  This once workable solution is becoming more difficult to maintain as the cost of steel continues to soar, and consumers will begin to see escalating house prices, particularly for new home construction.

The cost of steel production is only part of the picture of rising costs to home builders.   Worldwide fuel price increases have certainly been a factor in the inflated prices home builders have incurred.  The steel manufacturing process is heavily dependent on large amounts of fuel, and the steel producers themselves are seeing steep price hikes for steel fabrication.  These additional costs are passed on to Costa Rican home builders, but there are even more charges associated with the delivery of steel to new home construction sites.  Distributors are feeling the effects of rising gasoline prices and are imposing higher fees for delivery services.

The Costa Rica real estate market has seen impressive growth in the past decade, as more home buyers have become interested in Costa Rica as a retirement or relocation choice.  Investors have also been attracted to properties in this tropical country in recent years.  The combination of a downturn in worldwide markets and consistently rising home construction costs is beginning to put the brakes on the recent flourishing popularity of Costa Rica real estate.  Although Costa Rica is still a favored real estate property spot, sales have begun to level off as prospective buyers around the world are exercising more caution in their real estate purchases.  This will become even more of a reality when home builders begin transferring the rising cost of construction to the consumer.