MANAGUA – An expected surge in U.S. home sales in the coming months in response to the U.S. government’s expanded tax-credit plan for home buyers could be a harbinger for a trickle-down recovery in the Nicaraguan market, according to Ronald Phipps, president of the National Association of Realtors (NAR), which represents 1.2 million members in the United States.
“As the originating market in the United States becomes stronger, it will have a ripple effect here,” Phipps told The Nica Times during a visit to Nicaragua last week. “I think the market here benefits from recovery in the United States. People need confidence fundamentally, and then they will invest elsewhere if they are comfortable in their own environment.”
Local real-estate developers originally hoped that financial troubles in the United States would be an opportunity for emerging markets such as Nicaragua, as people looked for alternative places to put their money. That clearly didn’t happen. Instead, as the U. S. financial system and housing markets tanked, Nicaragua fell right along with them. But now as housing recovery beings in the United States, Phipps predicts that stabilization will be “an important precursor to investment” here.
“People have less money right now so they are being much more cautious. But as we pass into recovery, things will be much better and I think this region will have an advantage because the value is so transparent,” Phipps said.
He added that the real estate projects here are “special in a global sense,” because “they cater to comfort level and expectation of American buyers,” and a price affordable to more buyers.
Phipps said in the United States there is “clearly more interest” in the Central American market than there was in the past. “The interest started pre-crisis, then there was a pause, and now I think you are going to see it start increasing significantly,” he said.
Some of that trickle-down might already be happening, according to Mike Cobb, CEO of the Gran Pacífica project on the central Pacific coast.
“The number of inquires is way up,” Cobb said. “And what’s interesting is the change in philosophy of the potential buyers.”
He said three years ago there were many speculators inquiring about the project, but “now it’s people who are asking true consumer questions – questions that indicate to me that they want to plan to spend time here.”
This, Cobb said, is very welcome news following the crisis in which his business fell 80 percent in two years.
“There are two types of developers out there,” Cobb said. “The ones who are not doing much business and the liars.” However, Cobb said, Gran Pacífica was saved by its efforts three years ago to keep speculators out by requiring that buyers start building within two or three years of purchasing a lot. As a result, Gran Pacífica started 13 homes last year during the worst of the crisis.
Gran Pacific now has 32 homes and condos completed, 10 more being built, and eight to 10 more expected to start construction later this year. Plus, next door, the 42 condos at the Milagros del Mar project is scheduled to be completed by March or April of 2011.
“We’re not building a ghost town here,” Cobb said.