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Because of the Covid virus Panama’s real estate market took a nose dive. Real estate offices have been closed.. some may never open again. Most notary offices have been closed so you can’t go to a closing. Many contacts were cancelled too. Rentals sat vacant because Panama’s borders were closed and the quarantine prevented anyone from being away from their house for more than 2 hours to buy groceries. So, what’s the future of Panama’s real estate once Panama opens their borders again?
The basic principal of supply and demand indicate that Panama will have much more supply than demand for the next 3-5 years. To make matters worse, in 2020 there has been a big increase in properties and businesses for sale which will add to the already overloaded supply.
For this report about the future of real estate in Panama, I consulted with trusted real estate agents, the biggest developers in Panama and researched what the Panama’s association of real estate agents have to say. I’m also drawing on my 30 years of experience as a real estate investor who monitors real estate trends in Panama and in the United States.
Let me state up front that we at Panama Relocation Tours encourages you to rent for at least 6-12 months before you consider buying any property in Panama. Twelve months will give you time to make sure you like living in Panama. Twelve months will give you time to experience both the rainy and the dry season which can be dramatically different in some areas. Twelve months will give you more time to understand the “right” price for houses versus overpaying. In twelve months, you’ll know if you’ve picked the right area or if you need to keep looking at other locations or elevations in Panama.
It is easy to buy in Panama but it could take many years to sell. So, you should not rush to buy something regardless of how good you’ve been told the price might be.
WHY DOES IT TAKE SO LONG TO SELL A HOUSE IN PANAMA?
There are a lot of reasons that it takes many years, sometimes 5+ years, to sell a property in Panama. Most people selling real estate, including real estate agents, in Panama have no previous experience in real estate so they don’t know how to do marketing. We do not have a widely used MLS (multiple listing service) in Panama so it is very hard to determine the right price to list a house at and most sellers/agents start at a price that is WAY too high. Beware that some foreigners selling or renting real estate do not have a work permit so they are working illegally in Panama. Always ask to see their work permit.
Another obstacle is financing. Financing is available at banks but they will require 20-30% down and it could take months for the financing to be approved. Banks will require that you get a life insurance policy naming them as beneficiary just in case you die before paying off the loan. And banks loans must be paid off when you turn 70 which prevents many retirees from getting financing. You will probably not be able to get fixed rate financing.
Some developers offer short term, less than 5 year, financing for new construction.
The other reason it takes a long time to sell is because there is a mismatch between the price point that most buyers are looking for and the price of the inventory that is available for sale. Ninety-seven percent of the people who come on a Panama Relocation Tour are looking for homes under $200,000. But much of the inventory of homes for sale are prices at $250,000 or more. There are not enough buyers in the higher price points so it takes much longer for those properties to sell. Properties in good condition priced under $200,000 tend to sell quickly if they are in a good location.
GROWING INVENTORY = LOWER PRICES
During the 2008/2009 real estate crash, Panama saw far less drop in prices than other countries. But the Covid-19 impact is different. The borders of Panama have been closed so no foreigner buyers could come in. Even people already living in Panama cannot buy houses yet because real estate offices have been closed since mid-March and the notary offices, where you would go for a closing, have mostly been closed too. According to the Panama’s Association of Real Estate, sales are down 90% in Panama at least.
Construction projects were stopped during the quarantine too.
The president of the Association of Real Estate (Acobir), Frank Morrice Arias, stressed that, “in addition to this (covid-19), previously, they had already been facing a market hit due to the decrease in prices in the last four to five years.”
Prices in many areas in Panama were going down before the Covid-19 virus. And now, with even more inventory, we anticipate that prices will need to go down more if a seller really wants to sell.
Morris announced that, “in the residential sector, it will take about three to four years to absorb all the inventory they have and it will be necessary to carry out strategies to mitigate the situation; In the case of an office commercial, where for several years they had excess inventory, it will take five to seven years to recover.”
Elisa Suarez, executive director of the National Council of Housing Developers (Convivienda), explained that “… We are going to face a market where the demand will be quite contracted and where the supply will definitely have to be restructured. This leaves me to think that there is definitely a tendency for prices to fall in order to leave the inventory that we have so far.”
Jordan & Kaylee from @The Nomadic Movement talk about why they decided to settle down in Boquete Panama after traveling in their van for more than two years. They originally planned to ship their van to South America but when they found Boquete Panama they fell in love with the natural beauty and decided to stay and pursue their dream of building an off-grid community. They share their challenges and accomplishments on their YouTube Channel @The Nomadic Movement.
For anyone, at any age, who is looking for a new start and new opportunities, Panama is the answer!
Are you thinking of moving to Panama? Get our FREE guide to discover what life in Panama could be
Since 2010, Panama Relocation Tours has been offering monthly 6-day 7-night all-inclusive relocation tours of Panama. We’ve completed over 120 tours! During a tour you’ll see a variety of different areas, meet expats and learn all the things you need to know to make a super easy transition to living in Panama. Learn more at:
Not a group tour kind of person?
We now offer the ONLINE Panama Relocation Guide to help you learn all the things you need to know to have a smooth and easy transition when relocating to Panama. You’ll be able to avoid costly mistakes when you get access to our reliable immigration lawyers, honest real estate agents/property managers, where to buy heath insurance, how to get your pets in to Panama, and much more.
It’s hard to watch all the violence going on in the United States. The whole country is so divided.
It makes me appreciate even more that I live in Panama – a Safe Haven!
If you’ve had enough and just want to get away from it all for awhile, you should know that you can come to Panama as a tourists for 180 days (6 months). You don’t need to get a Visa. All you need is a passport.
It is easy to find a rental now. Many landlords are very negotiable. Most rentals come completely furnished with furniture, sheets, towels, dishes, cookware, coffee pot, tv, utilities… so you only need to bring a suitcase with some clothes. Of course, you can buy clothes in Panama too!
You can also bring your fur baby but that will take some extra steps. Read this article about bringing your pets in to Panama.
Panama’s Tocumen International Airport (PTY) is opening June 22 so there should be some flights in to Panama (PTY) shortly after that.
You can get access to cash at ATM machines in Panama using your debit card. Just make sure your bank knows that you’ll be traveling in Panama. Some stores take credit cards. So you can get by in Panama without opening up a Panama bank account.
You can even get travelers insurance to cover you for the 6 months you are in Panama.
Panama could be your Safe Haven until things settle down in the United States. You may recall the article I wrote last August about What’s Your Plan B: Safety Insurance! It’s not too late!
If you’re thinking about making a more permanent move to Panama, you’ll need to need to know a lot more details about getting a Visa, a Panama driver’s license, buying a car, getting health insurance, etc etc etc. Our new Online Panama Relocation Guide will teach you all the things you need to know to have an EASY move to Panama and a smooth transition to an expat lifestyle in Panama.
Last week we received this three reviews about the Online Panama Relocation Guide
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Come see how you can live BETTER for less in Panama!