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Car sales are down substantially in Panama, Central America. It looks like folks are being careful about discretionary spending. In the press this is presented as a looming disaster. If you have a home in Panama, are a resident here, or do business here how does the drop in discretionary spending affect your business, Panama real estate investment, or residency?

First we have a couple of thoughts about how folks spend their money during recessions. During an economic downturn people remodel their homes instead of buying or building a new one. Workers on larger construction projects tend to move into “fix up” work and small home improvement projects. When folks don’t buy new cars they fix the old ones and auto repair shops take on more work and more employees. People put off the big trip to the theme park in the United States and take a cruise on Enchantment of the Seas out of the Port of Colon.

A Drop in Discretionary Spending and Panama Real Estate

If you home is in Panama and you are not planning on buying or selling in the next year or two the drop in high end Panama real estate values will have not great effect on you. The drop in discretionary spending could end up reducing prices for cars and you might get a good deal on a new Toyota, which seems to have had a big drop in sales. Think about it the next time you are driving along the interoceanic highway.

If you want to purchase a new Panama home the drop in the high end of the real estate market is a great piece of luck. ABPanama is actively seeking both distressed sellers and buyers with cash to the benefit of each party. We believe that one will be able to get a home in Panama at a great price during the next few months to a year before the recession starts to improve.

A Drop in Discretionary Spending and Bank Accounts

The savings rate has gone up in the United States, at long last. That is probably true of Panama too. Considering that the local banks are very conservative and tighter with credit this year than last an influx of money into CD’s and savings accounts will help loosen the credit supply and hasten the next economic boom in Panama.

Despite the worldwide economic downturn Panama is still building. There is published concern about when the current construction projects end, when the Cinta Costera is finished, and when the Interoceanic Highway is finished. Will folks have jobs?

Panama is building more than one road and not all construction workers need to work on high rises. In a free market economy money moves to where it will make money and jobs move to where the money is.

In the meantime if you have a home in Panama you live in a tropical paradise with a stable democracy as well as a relatively low cost of living. You may even be able to talk the car dealer into an extra discount to take one of those Toyotas off of his hands.

Come talk to ABPanama about Panama real estate opportunities in this market.