September 08, 2012

The Fallacy of Real Estate Purchasing Power and the Fickleness of Cheap Edens

Several months ago we wrote about the fearful expat that castigated us for blogging about living in Cuenca. When we explained that we weren’t spoiling our own pond because we write about how we actually live, that is, blending into the community, being part of the Ecuadorian neighborhood, living like locals, etc. and showing others how to do the same, his response was that it doesn’t matter because the expats won’t listen to all that.

He echoed his sentiment that the expats would just come here and overpay and eventually ruin the place. We shrugged it off as to his way of seeing things, and to date we have been consistent with the outflow of useful information, eventually publishing an electronic facilitator, the DIY Cuenca Landing Guide to save people money and help them see another way of doing things.

And that’s what brings me to this purchasing power nonsense. I got a newsletter last week from a well respected, well followed international consultant that said that the international bench mark for, ready for this?—“quality” construction worldwide is , in his opinion $100 dollars per foot of new construction. And so it goes that if Europe is way above that, it’s expensive, and since Ecuador is below that, it’s cheap.

I don’t have a problem with that comparison. It’s just that, when he said, “quality” construction, it sounded as if he was saying that if you’re not paying the $100 per foot, you’re not getting quality. Hopefully that’s not what was meant, but it seems to me that the way the foreigners are handling things, it appears they actually believe that, and that’s exactly what’s happening.

Sad to say, many people promote $100 dollars a foot or more in Ecuador, as if that’s the new standard. What is not known or understood is that you can get high “quality” construction here for way below that. And that’s the high end. If teak hardwoods and marble tiles are not “quality” then I must live under a rock.

Not only that, but from a traveler’s perspective, who says Europe is high and Ecuador is cheap? Some people simply believe that you get what you pay for. And I’m not referring to construction, but joy de vivre, ambience, etc. Ecuador, from a traveler’s perspective, is certainly not Europe. Not even close. It’s not necessarily worse, nor better, it’s just different. So that’s my beef with the purchasing power parity comparison.

You may have heard this before, that if a hamburger costs $7 dollars in Europe and that same hamburger costs $4 dollars in Costa Rica, you’ve got yourself a real live cheaper place to live. The next thing that happens is that this fact is heavily advertised, so that people move from far ends of the earth to come eat that cheaper hamburger, and within a span of just a few years that Costa Rican hamburger now sells for 7-8 or even 9 dollars.

After some time, people start seeing things about Costa Rica they didn’t see back when that hamburger was $4 dollars, and they start looking for that $4 dollar hamburger once again. This time they hear that purchasing power parity says, Mexico is cheaper. The same thing happens over and over and now it’s Ecuador’s turn.

What they don’t tell you is that you’ll be eating that $4 dollar hamburger in a noisier, smoggier environment.

We’ve had several expats, who live in other Latin American countries, write in asking us about Cuenca because they don’t like some things about the Latin American country they are in now. So, if you do not like it in the Latin American country you are in now, it’s likely you will eventually or sooner find negative and positives about the city you move to and you have to accept that. Cuenca is not going to be any different.

Will You Like Cuenca More than Where You Are Now?

Some of the people writing in are looking for a cheaper lifestyle, while others want cooler weather, and some folks just want to move to Cuenca because the novelty has worn off where they are at.

Do you remember back in the 80’s and 90’s how they were hyping up Costa Rica and Mexico, and then in the late 90’s to date, Panama? Well, now its Ecuador’s turn. That’s all that is. When you read these tales of how cheap so and so country is, just replace that country name with another one; all these articles are pretty much the same—publicity gimmicks. That’s all it is.

The biggest drawback to this is when a certain place gets packaged up with a big red bow, like Cuenca is now, it eventually becomes too expensive, and then it’s just another place to go…Cuenca is getting like that now. We’ll be reporting more about this on the Discover Cuenca blog, so stay tuned.

Is It Cheaper to Live in Cuenca?

Some people move from one Latin American country to another just because they hear it is cheaper to live. We know of one couple here who are barely making it here on $1,500 a month. Cuenca’s cost of living can be cheap if you know where to shop, rent, and eat. But if you bring your North American standard of living with you, it is not cheaper! It’s higher!

No place is going to be perfect and that includes Cuenca Ecuador. We also doubt that you will find Cuenca too much cheaper than any other Latin American country. Even in Panama you can still buy five acres and a house for $120k out in the country. Unfortunately Cuenca’s real-estate market is inching up there, at least within the city. To find the deals you need to go out about 30 minutes from Cuenca.

Should You Visit Cuenca? By All Means, Come and Visit!

Yes, come and see if you like Cuenca. But do not uproot yourself and whole family from Mexico or Costa Rica and move to Ecuador because of all the good things you hear about it on the blogs and travel magazines. It’s just Ecuador's turn right now. You just wait, in a few years, when all the hype dies down and cost of living has skyrocketed to where most people can't afford it, the big glossy magazines and big name news media will buy up some property somewhwere else and hype it up as the newest retirement haven. 

Update August 2015: Portugal has now been named best place to live and guess what, one hugely popular travel abroad magazine did in fact buy property in the city she is hustling in Portugal because she admitted it in one of her articles. So there ya go. 

The fact is, the novelty of a city will eventually wear off no matter where you decide to live, whether its Potugal, Spain, Ecuador, or Panama. We have to make our own happiness and contentment in life and we do that by learning to adjust to those things that we find negative or annoying.

No place is perfect like the magazines like to say. The best way to find out if a city is for you is to live there for a year and totally immerse yourselves into the local community. Yes, you’ll find negatives, but so what, work with them and be happy.

The DIY Cuenca landing Guide will help you get a feel for Cuenca first before coming; it will help you find a hostel or apartment rental, plus it will show you where to shop, eat, and find bargains, and how to blend in and feel secure during your visit. It will take you along the local trails of Cuenca Ecuador and you may decide it’s not for you after all...

or...decide you are not going to wait any longer to jump into your new life in Cuenca Ecuador and move here next week.

For those that are serious about their move and are disenchanted and surprised to see how much more it costs here than they’ve been told, we will be rolling out a new service to assist them in finding a long term rental along the lines of what we discuss on our blog.

Coming soon! See you then!!!

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