Building a home during a recession can feel like uncharted territory. Especially if you started designing your dream home while the housing market was more stable, an economic downturn can be scary. 

That said, is building a home during a recession really a bad time? Or is it actually the perfect time?  

The SARCO team is here to share our insights on whether going ahead with a construction project during a shaky economy is the right move for you. 

In this article you can expect to learn:

• Whether it’s better to build or buy during a recession 
• What to consider if you go ahead with your build 
• The benefits of building during a recession 
• Construction risks during a recession 
• What next steps are the right ones for you 

Should You Build During a Recession or Not?

The short answer is if you have the funds available to create your ideal home, we don’t see any reason to hold off!  

Especially if you can get hold of a reputable project delivery team with a proven track record in delivering custom homes and design excellence across the board, a recession could actually be the perfect time to build. 

Remember: If you’re building a custom home you intend on using yourself, it might not even matter what the Federal Reserve system is doing or what interest rate you can take advantage of — less stress, more experiences, and quality time with your friends and family in places like Costa Rica can be invaluable!

What Are the 3 Top Benefits of Building During a Recession?

Building a luxury home in Costa Rica can take time — but with the right support and advice from a great project delivery team, there are several advantages. 

While we understand that there can be an element of fear when building a home during a recession, there are in fact some great opportunities to take advantage of if you have the funds to save and invest in real estate. 

1. Better availability of top contractors

With project cancellations and housing demand dwindling, a recession can increase the number of good-quality contractors and builders available to take on your contract.  

Because of this, you can optimize the design of your home and get significantly more value for money than you’d have gotten the previous year.  

Even award-winning architects will be more available due to schedule changes, so be on the lookout for opportunities to get more from your design. 

2. More competitive pricing

A recession can allow you to take advantage of better pricing on everything from labor costs to the price point of building materials. As a homeowner, prices during a recession are generally more negotiable, so be sure to brush up on your bargaining skills! 

If work for contractors suddenly slows down, they may even have building materials in stock that are just left sitting there. These contractors would much rather utilize these materials than waste them, so ask contractors if there are any particular materials you can get a good price on if you’re ready to build now. This way, you get lower rates and less risk of time delays, and your contractor gets to keep their cash flow moving.

Roderick Anderson, CEO & Design Director at SARCO Architects 

3. You have more time to focus on your project

During a recession, the general fast pace of working life will slow down for many. This often results in property owners actually being able to be more involved in the design process.  

With access to a greater range of contractors and the likelihood of a better deal on your investment, there might be no better time to build. 

At SARCO, while we never advise cheap skating, we do believe in optimizing value wherever possible. 

Some other advantages of building homes during a recession include: 

• Less competition for prime plots of land 
• You’ll be more in control of establishing value for your property with the ability to ‘shop around’ more easily 
• Potential for a good return on investment when the market recovers 
• With less demand for construction, there likely won’t be a feeling of jobs being rushed or not appropriately finished (Note: At the same time, be aware of contractors trying to drag out jobs. Only select firms with a proven track record for being trustworthy)  

Are There Risks When Building During an Economic Downturn?

With any construction, there will naturally be challenges. From delays and construction costs to risks associated with bad design and development decisions, there’s no ‘risk-free’ time to build a property.  

While home prices and interest rates before, during, and after might place a little more pressure on home builders, it’s also vital not to allow unpredictable circumstances to stand in the way of something you’ve wanted to do for a long time. 

Especially if you have the funding ready for your build during a recession, your risks will be almost identical to those during more economically stable times.  

However, there are still some factors to consider when building a home during a recession. 

They include: 

• Interruptions to the supply chain (resulting in delays) 
• Contractors going out of business 
• Non-reputable firms trying to sell cheap materials as quality goods 
• Longer processing times for permits and financial applications 

As always, risks associated with building a luxury home in Costa Rica (or elsewhere!) can be mitigated with the right delivery team and consideration for the process.  

Our main tips for mitigating the risks associated with building during a recession: 

• Nail down the full scope of your project early to ensure you can find reputable contractors willing to take on your project 
• Don’t price up materials (for budget reasons) until you feel ready to commit — costs can change rapidly in a volatile market 
• When you’re ready to commit, get orders for building materials in early to counteract issues caused by delays or allow you time to find replacement materials 
• If building in Costa Rica, select a location that will always offer value in terms of scenery and quality of life 
• Be patient with the process and allow additional time in your schedule for delays 
• Opt for a firm that also offers design-build services 

Most of all though, if your property is for personal use, ensure you’re adding features that make a difference to you and your life. This way, you’ll gain value from your property regardless of whether the market recovers quickly or not.

Questions to Ask Yourself Before Building During a Recession

With everything from higher home prices to unpredictable mortgage rates, it’s only natural for homeowners to feel cautious about investing in real estate during uncertain times. However, the reality is that for every person turning away from housing construction when the economy looks bad, there are also people leveraging opportunities.  

Especially in Costa Rica, there’s a lot to be said for the natural environment you’re building a home in. Even when the stock market and home prices feel erratic, you’ll always have the comfort of beautiful surroundings that almost feel like a safe haven from the stress most people endure in times of uncertainty. 

But, we want to make sure you are truly in a position to design and build a home in Costa Rica, even during a recession. So here are 3 questions to ask yourself before starting your project. 

1. Are you building a home to enjoy or to sell?

With the housing market taking a hit during times of recession, are you the type of person who wants to ride out the waves designing a custom home you’ve built from scratch and will enjoy and benefit from it for many years to come?  

Or, are you someone looking for fast home sales and a better deal on your ROI, so you can move on to your next build? 

If you’re building a luxury home in Costa Rica purely to enhance the quality of your life or create a sanctuary to escape the hustle and bustle, then there is likely no reason you should let a recession stop you. 

However, if you’re considering construction for profit, it’s worth considering that the market might not be in a great place when you are ready to sell. 

Tip: If you’re considering flipping property during a market downturn, be on high alert for people trying to offload properties with hidden problems.  

As architects, we naturally lean towards developing properties we know will be built with care from start to finish — but if you choose to purchase an existing property and redesign it, ensure all necessary condition checks are carried out first! 

2. If you’re investing, how soon do you need to see a return?

Building a home from scratch and even remodels can take a lot of time. From building permits to settling on the details of every square foot, designing and developing a quality home can be a long process. 

If you have the ability to sit on a project for a while and wait for the market to recover, then go ahead and start now. 

If you need to be able to sell the house quickly for a profit, then you might want to wait.  

3. Do you have the funds available to build now?

Ultimately, the biggest question we ask our clients considering housing construction during a recession is: Do you currently have the financial resources to do so? 

If the answer is yes, we’ll always suggest striking while the iron is hot. Whatever function or purpose you want your build to serve, the sooner you initiate the process, the sooner you’ll be able to reap the rewards. 

Whether it’s a recession or not, if you have the financial resources to afford to build the exact type of house you want, the Costa Rican lifestyle you dream of will more easily fall into place. 

Don’t Let a Recession Stop Your Dreams

Whether it’s a recession or not, one way to get your build off the ground more stably and reliably is to hire an architectural firm specializing in design-build services.  

With design-build services, the same contract team will take care of your entire project from start to finish. This means all the services you need, from architecture to interior design, will be under one roof.  

With multidisciplinary skills and the additional security of dealing with a single project lead throughout the process, your luxury home in Costa Rica can be developed by one team that shares your entire vision.  

What does this vision look like? Check out our portfolio to see what professional design-build teams can achieve. 

To take your first steps with SARCO, book a free 45-minute call with our principal architect and see how building a luxury property in Costa Rica can make perfect sense for you. 

As award-winning architects who have also been named one of the World’s Top 100 luxury architects and designers, there really is no better team to trust your dream home or investment with.