Credit CrisisYesterday I watched a documentary on what exactly caused the financial crisis and how it affects the real estate market. Costa Rica has begun a slow transition into these recession times which has been as good as it gets, yet people have started to get worried.

 

Apparently the whole credit crisis not only is affecting everyone, since home owners and investors made terrible financial choices: in one hand the real estate investors want more money ad the banks need mortgages to buy and sell so they just gave home loans to people who were not really the capacity of paying their debt, therefore their properties are foreclosed. When a bank or financial entity has too many foreclosures and not so many paying customers there is really nothing they can do, so other investors leave them hanging with undervalued properties in foreclosure that are not really good for anything.

 

People no longer own their homes, banks are not receiving money, investors are not seeing their investments work therefore there is really nothing beneficial to anyone going on. Costa Rica real estate did not see that issue coming as big as it is since banks were usually very careful about home loans and mortgages, but not anymore. In Guanacaste for instance, getting a home loan for a local is close to impossible, since it translates into several trips to San Jose and loads of paper work, most people just rather deal with private investors and companies to make things easier for them, although the price is much higher.

 

As you can see, not only the real estate market in Costa Rica is having it rough, this same credit crisis is the one affecting the United States and all the little countries that are under its wings as well. I just wanted to share some financial knowledge with all of you, hope it helps.