Granada and LeÃ³n used to be the rival centres of power in Nicaragua. Granada was the conservative centre, having grown wealthy as a trade point between the Atlantic and the Pacific. Once the Panama Canal opened Granada stopped being important, and all its elegant colonial-era buildings started going to ruin.
All those pretty, rundown buildings are very attractive to foreigners with a little bit of cash. Granada is the expat centre of the country; they arrive, they buy property, they renovate it, then they open a café or B&B.
Granada is also the country’s biggest tourist trap. Bit by bit all those tourist dollars are being used to renovate the city; currently it is a mix of fresh paint and centuries-old neglect.
A lot of the visitors that visit Granada don’t actually spend much time there. The city is a jumping off point for trips to Volcan Mombacho and the Volcan Masaya complex, Laguna de Apoyo (extinct volcanic crater lake), the Pueblos Blancos, and Lago Cocibolca. Tour agencies in town will tell you that you need a ride and a guide for most of these; you can get to any of them (and back again) independently if you don’t mind a sweaty bus ride (and, really, if you do you might want to rethink Central America as a destination).