Baby boomer retirement suggests upswing in rentals demand

The Economist Magazine indicates that 78 million Baby Boomers will start retirement in 2011.  Assuming that this trend runs over the next 10 years, that means approximately 10 million per year in the first few years since the bulge is bigger in the front years.

Where will they go and what will they do is the big question mark about the effect they will have on real estate values.  Reading a recent major newspaper from a city of several  million in the South of the U. S., the rental market seems to be in a crisis with ad after ad offering free move in, no deposit, utilities included, special discount, etc. etc.  In the rental market we follow closely here in Escazú and Santa Ana, the rental prices are not in the same crisis mode.

We have more requests for rentals than we have availability and while prices have not increased much they certainly have not gone down.  Sales prices may be stagnant for house resells but land in the central valley has continued steady if not gone up.

Which brings me to comment on all the anti- and pro-letters you are receiving about Costa Rica from the Gringo market.  Supply and demand are always fundamental to real estate values.  A.M. Costa Rica has published various articles from our company ( about the several methods of valuation of real estate appraisals for those who want to see them.

Upon reflection, this market in the Central Valley of Costa Rica has never been in the type of crisis that exists in the  U. S.  There are many reasons why, but the three main ones are:

1.  Banks here almost never loaned excessively;

2. The large amount of money that flowed out of Venezuela;

3. Continued immigration from other countries than the U.S., especially Canada and several European Countries.

Recent visitors indicate to me that what we are attracting is a higher class of people to Costa Rica for retirement, etc. which includes PhD from Michigan State University, PhD from Western Illinois University, PhD from Cal Tech, Harvard MBA, 30-year member of the New York Stock Exchange, one of the largest shopping center developers in the U. S.

Look at the numbers of high rise buildings around the Sabana and the planned 28-story high rise on Paseo Colon. Why is this investment being made?

Back to the numbers just for the U. S. If just 1/10 of 1 percent of the Baby Boomers come to Costa Rica each year, that is 10,000 per year. I highly doubt there exists adequate Gringo-type rentals to meet this need in the Central Valley. This is where I think the demand will be, not at the beaches.

It is quite conceivable that the rental market will boom over the next five years and, if it does, then sales prices will follow along, although this may lag a year or two.
Of course, our country has inefficiency and other problems but has never been in the real estate crisis of the U. S., Europe, and Australia etc.

Why do people come to Costa Rica?

The climate of course, but one of the big changes will be the drastic decrease in quality in available health care in the U. S. if the prognosticators are correct. Here you can obtain quality medical care for 20 percent of the cost of the U. S. in a private hospital. The new rules for residency directing people to join the Caja for as low as $25 month is an afterthought. The INS, our insurance company, offers a health insurance policy for $120 month or lower with small deductible for those who want a private hospital.

There may be a surprise in many more people coming than leaving sooner than most consider possible.

* Among other qualifications, Ms. Jiménez is a professional appraiser and licensed architect.

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