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I find these posts and stories about cost of living useful and interesting. They illustrate a wide range of difference between what foreigners spend and how they live their daily lives in Costa Rica. Statistics are not always useful, but I wonder what the average monthly income is for north americans living in Costa Rica.
I think I recall reading that the upper 10% of the Costa Rican population earned just over $2700 a month. The next 10% level down earned about $1100 per month and the remaining 80% earned far far less. The jist of the article was about the big gaps between these population segments in incomes and how that might cause social problems. I wonder if any social problems might arise if too many richer foreigners move to Costa Rica.
sprite, I think there’s the potential for all sorts of problems arising from the wealth disparities between many north Americans who move to Costa Rica and the native population. I worry, for instance, that we will drive up the price of real estate and construction to the point that no Costa Rican can afford to own a home. We could also corner other markets such as medical care, services like home and car maintenance, etc. Again, by bringing so much money into this economy, we run the risk of pricing the Costa Ricans out of it.
That, in turn, could certainly foster a xenophobic backlash that would work to our own detriment.
How to prevent this? Ya got me . . .
Have a look at real estate prices in London… Check out where the buyers are coming from… There are a lot of Brits who are very UNHAPPY with real estate prices there because so many foreigners are buying…
You can not prevent it …
This morning I was doing some research into apartment prices in N,S, E & W London at http://www.foxtons.co.uk/ It’s bloody terrifying!
A new 350 square foot (32.53M2) studio apartment at Canary Wharf costs the equivalent of US$690,938. The price per square meter ranges from about $15,000 per square meter up to about $78,000
Want to see “expensive”? Take a look [ http://property.timesonline.co.uk/tol/life_and_style/property/article3559490.ece ] “The average price paid has been around GBP£20m or almost GBP£6,000 per square foot.”
GBP£6,000 per square foot = US$64,560 per square meter.
God! I love this place …
Scott Oliver – Founder
WeLoveCostaRica.comI love it, too, Scott. I just hope we don’t snot it up. You are right, of course, that prices in London are dramatically (absurdly?) higher than here, but that has little effect on the local Costa Rican economy. My concern is what all Costa Rica’s newfound wealth (from outside sources) will do to the average hombre en la calle if the numbers sprite cites are anywhere near accurate. As a group, we’re prepared to outspend them in every sector of the economy.
The monthly dollar amounts are close to what I read. I believe the article was in Spanish and probably 6 months ago was when I saw it. The distribution percentages I am not sure about but the jist of the article is accurate. There is concern withing the CR government.
The other concern I have is the introduction of Chinese capital into this mix. That money might help or it might exacerbate even further. The only thing for sure is that there is nothing anybody or any government can do about this momentum.
My primary point – although admittedly I could have made it more clear – was that foreign buyers make up a huge percentage of the real estate buyers in London.
A report published by the Institute for Public Policy Research and funded by the Foreign and Commonwealth Office stated that “nearly one in ten British nationals lives part or all of the year abroad. It also means that there are more Britons living abroad than there are foreigners living in the UK.” And “…that 5.5 million British Nationals live overseas permanently; equivalent to 9.2 per cent of the UK’s population.”
British real estate buyers have changed the real estate market in Spain, and foreign buyers from US, Canada, Venezuela, Mexico, Spain, Colombia, Israel and China have certainly changing the real estate market in Costa Rica.
And Costa Rica is still very much a developing or emerging market. With the amount of new high rise developments we are seeing in San Jose, you won’t recognize the capital city San Jose in ten years.
Scott Oliver – Founder
WeLoveCostaRica.comNot being able to recognize San Jose in ten years can only be a GOOD thing. But there are plenty of countries around the planet which can show off a dazzling city or two. Does that always mean life conditions improve everywhere else in the country once a capital city reaches a level of high development?
Within the city of London, there are ethnic neighborhoods which were once British. Many of those British are somewhere else. The ones that stay in town have become polarized against immigrants. Normal human nature.
There are already barrios around San Jose populated by illegal Nicaraguan immigrants. They and Ticos will eventually be pushed out as development comes in. Where will they go and how content will they be with their new lot in life? It won’t help their attitudes too much when everywhere they look, they will see a Gringo driving around in an SUV costing more than 10 years of the average Tico wages.
And Chinese have a VERY curious accent when they speak Spanish…perhaps worse than the average Gringo accent.
The good news about the environs of San Jose is that they do not include the extensive slums such as exist on the peripheries of many large cities in second- and third-world countries worldwide. What that says to me is that, while there certainly is poverty in Costa Rica, it is not widespread. In general, the Costa Rican people are able to live in their economy.
What I fear is that the influx of foreign money will change that for the worse.
The poverty level in CR acrually went down as opposed to the poverty level in the US going up. I believe the poverty level income in the US is equal to the average income in CR. San Jose definitely has some slum like areas, which I have walked with my wife when we got lost on our 1st trip 6 years ago. We found a young teen who was extremely helpful and led us to a visual point where we could get our bearings. That would not happen in San Salvador, Guatemala City, Mexico City or LA, Chicago and NYC. It is all a matter of perspective and what the national sentiment is toward violence. In CR, it is significantly low compared to population densities in major urban centers worldwide. Housing in US is $130/SF construction cost at best in the cities, approx. $200 in Puget Sound suburbia, but twice that in Seattle or Bellevue, on average. An aguacate (avocado) is $1.25 EA here on sale and hard, pineapple $5/EA at best and green, mangos $1-$2 each, power bill on coldest months $350 in temperate Seattle w/ 100% hydro-power, phone/cell/sat. TV/ sat. Internet = $300/mo, property taxes on $500K = $350/month:New Jersey $1,000/month, health insurance for family of 4 w/ 50 yo parents = $1,350/month. Gasoline is the same cost currently and diesel is 30% less. Put that in perspective.
How do you guys see the availability of credit to Ticos playing out? Are they going to borrow themselves into huge credit card debt and vehicle debt or is there a cultural bent against doing so? I see lots of bilingual young people getting jobs in call centers with $800-$1500 per month take home. They live at home and have few expenses and at the same time they are getting credit offers.
As far as living expenses are concerned, we have lowered our expenses over what they were in the US and have added the quality of life that a maid and a gardner allow. I have also been pleased with the price and quality of medical care, haircuts, massages, facials, car mechanics, and service in general. I look at Sprites numbers and realize that my house rental and related expenses are more than the take home of the top 10% and we don’t think of ourselves as being on the top tier of the spending spectrum but I guess we are. Not to mention private schools, car insurance, food, diapers, medical care, cell phones, internet, etc… My hope is that the spending of people like us will trickle down through the economy and lift the Tico standard of living up instead of pricing them out of the market.
Trickle down foreigner resident spending doesn’t seem to have much of a winning track record elsewhere as far as helping the overall economies.
Costa Rica has one huge advantage for its economy over much of the developed world; its power supply is mainly hydro and wind and is less dependent upon oil. I don’t think any other factor will have a more beneficial effect on the relative wealth of the Costa Ricans for the immediate future. Increased Chinese investment could be another factor but there might be a heavy environmental price to be paid which the ticos may or may not be willing to accept.
Costa Ricans are living in interesting times which, by the way, is the main ingredient in an old Chinese curse.
Costa Rican’s can benefit from foreigners in many ways. It is up to each of us to be a part of our community in a positive way.
Culturally, Costa Ricans have split up the farm amongst the male children, the girls were forced to go find a husband. The farm has now been split up so many times that the pie can not again be split, handed down, and support those families. What is a parent to do? Many are looking for the foreign dollar to buy them out. The foreigner is not forcing them out, the Costa Rican parents were looking for light at the end of the tunnel when the foreigner arrived and they will receive far more money than had the foreigner not come.
Other benefits are the knowledge that foreigners bring with them and should the Tico want to learn English, job skills, a trade, or self-employment skills from you, he or she now has an opportunity to earn more money.
Remember that the best Foreign Aid we can bring to Costa Rica is our knowledge. We also bring more job opportunities; many jobs allow the employee to earn a living now, and learn skills he never had available to him in his life.
Support your local school with a donation of time and money. Outfit children for school or provide pencils, notebooks and shoes to those who have no money. Provide bus fare for children in need. The teacher knows who these children are, just ask her how you can help, who needs what? Teach reading and math, my rural schools have failed to teach these skills to the children. 6th and 7th graders can barely read, have no comprehension and can not add the most basic math problem. They can not look up words in the dictionary, because they do not know the alphabet. They can not use the phone book, because if you do not know how to use the dictionary, you can not use a phone book for the same reason. If you taught dictionary and phone book you would improve the lives of these children.
It is our responsibility to improve the lives of our neighbors in meaningful ways no matter where we live. What skills do you have to share? Volunteer, mentor, or donate your money to others who are working with few resources. There are many really good NGO’s here who do wonderful work. We help support our local school in Esperanza, we also donate food, money and time to the Voz Que Clama Mission in Tuis de Turrialba. They help the rural poor and Cabecar Indigenous (see past articles in We Love Costa Rica) as well as supporting the local schools to teach the rural and Indigenous children. 100% of your donation goes to helping these poor people into sustainability. The Mission directors take no salary.
Much of what happens in Costa Rica or anywhere else, is beyond our control. But you could be the blessing that helps change the course of some of these children’s lives in an extraordinary way. You, can give them a chance and opportunity.
Ginnee
After lifetimes of self absorption and the pursuit of wealth to the exclusion of of the truly important aspects of life, I am sure many retired Americans welcome the opportunity to offer something of themselves besides their money to their host country. The problem is that too much money injected over a short period of time has to upset the social order and all the volunteer English teachers in the world won’t be able to offset the strong negative effects that new sudden money will have.
Ginnee,
I have just tried to replied to your blog and ran out of time off just before I could send it (I think).
My wife and I are in the process of retiring and moving near Golfito, Costa Rica. We may be there fairly soon. Patsy is working the elementary school system and I am working in architecture. We live in California.
We have had discussions as to how to interact with the Ticos and not just be there, become and learn the culture since we want to live there. Your ideas and suggestions are a lot of what we have been discussing and you have helped to vilified our thinking, thank you.
The reason I am writing, this is my first blog response ever and I am not sure if there is a prodigal or procedure of connection and communicating. If I send this and you get it, I may not be able to find it again. I don’t know if it goes to you our gets posted. Anyway, my interest in connecting with you is because you mentioned the local school in Esperanza, is that near Golfito, there is an Esperanza near where are going to be living. I would like to communicate with you, I am sure my esposa would also.
If you open to communicating and I can’t find you through this blog, you can get our e-mail through, Katie Duncan, Land Sea Services (Terra del Mar) in Golfito. I will let her know you may contact her. I know this is lot to ask and probably much out of the way for you, or you may not be interested, this is fine. I can speak for Patsy and myself on this. The things you mentioned in your blog are what we would like to do. I have a few other ideas also.
Looking forward to e-mail from you.
Dennis and Patsy Mahaffey, of the Overlook, Katie will know us.
Why do we assume that more money in the hands of Costa Ricans is a problem?
Why do we believe that we can handle a sudden increase in wealth, but others cannot?
As a business owner in Costa Rica, I have many employees who have worked with me for several years. They are working in the tourism industry in jobs that wouldn’t exist without foreign money. (investment and tourists) Many have been able to purchase or build their own homes with this income. They have coverage through the Caja for medical. Regular paychecks and regular paid vacations.
I wonder sometimes if we look at Costa Rica with nostalgia and believe it would remain traditional and pure if only we hadn’t corrupted their life style. The truth is they want the same things we all do. Security of food, shelter and comfort. Picking coffee beans for four weeks of the year isn’t going to do that.
Some will have a difficult time adjusting to the changes, but change WILL happen and the young generation here understand that. Ten years ago few Costa Ricans spoke any English. Now they understand that learning a new language can double their earning potential and they WANT that opportunity.
I say, help out where you can and don’t worry that they can’t cope with all your money. They will learn!
Alberto
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