The Cheapest Places to Live – 2010

Quito, Ecuador - one of the cheapest places to live

Quito, Ecuador - one of the cheapest places to live

Each year I put up a post on the cheapest places to live and inevitably the comments gravitate to arguments over renting vs. buying, gold versus stocks, working overseas or slogging it out in your home country, and whether it’s a scary world out there beyond your own neighborhood or not. (See the cheapest places to live, 2009 to see what I mean.)

All that goes to show, I guess, that you can’t choose a place to live on cost alone. Otherwise nobody would be living in New York, London, Stockholm, Moscow, Shanghai, Dubai, Malibu, or Tokyo. I can’t say what’s right for your situation and maybe you have a really good reason for living in one of those places. If costs matter though, here are some places to think about.

Stressed-economy Europe

If you’ve always wanted to buy a home in Europe, this may be your year to move there for six months and go shopping. The euro is bouncing around it’s lowest point against the U.S. dollar in half a decade and I can’t ever remember a time when Canadians have had this much buying power there. The exchange rates are loonie! (Sorry, couldn’t resist.) Many experts say some markets are still way overvalued—especially England and Ireland—but it’s probably a great time to buy in places on the brink of disaster, countries where wage cuts and austerity measures are hitting hard. That would include Greece, Portugal, Spain, and most of Eastern Europe. In the countrysides especially, you can get a lot of ye olde Europe for your dollars.

On the rental side, locking in the rent when it’s 1.25 euros to the dollar is certainly a lot less painful than signing a lease when it’s 1.6 to the dollar, as it was not so long ago. The British pound has dropped from a level of 2-to-1 to 1.44 to the dollar. Again, for Canadians this is a historic point.

Post-bubble U.S.

If you want to buy or rent a cheap house, how do you feel about Detroit? OK, so it’s not quite as easy now to buy a house for less than the price of a car like you could last year, but it’s still a buyer’s market: the median asking price there is just over $100K and there are 37 thousand homes for sale—not counting the ones banks haven’t put on the market. Check out that house to the right. Gorgeous isn’t it? Built in 1919, 5 bedrooms, 3 baths, and the price is…drumroll please—$59,000. Really! Here’s the listing.

It’s a similar story throughout the rust belt. If you are a work-at-home freelancer, or you have a band that needs a big house with rehearsal space, or you’re an artist that needs a studio, look to places that were built on manufacturing jobs. Pull up the real estate ads in cities like Terre Haute, IN; Columbus, OH; and Saginaw, Michigan—where the median sale price has doubled, to all of $60,000.

But let’s just say you want a bargain in a place you’ve always wanted to live. Well this article from U.S. News & World Report says the deals right now on property are at historic low levels in Santa Fe, Fort Meyers, Las Vegas, and Bend, OR. In some cities you can rent a foreclosed home or condo for about 1/4 to 1/2 less than what it would have gone for two years ago.

Stable Latin America

Unthinkable a decade ago, Latin America is now looking like the most stable region in the world economically. (Apart from Chavez-cozying countries that is.) Brazil, Chile, Peru, Panama, and Uruguay have great balance sheets and strong growth ahead of them.

There are some property bargains in these places if you go beyond the obvious, but the best opportunities are elsewhere. Look for regions where new highways going in are making it easier to reach the beach. This is a trend currently opening up opportunities in southern Costa Rica and coastal Ecuador. Also, prices have leveled off or temporarily declined in Mexico and parts of Central America that were in some small part linked to the property bubble in the U.S. Things have definitely cooled down on the Pacific Coast as California money has dried up, including in Nicaragua.

If you rent, you can take advantage of a dollar that is generally strong or stable outside of Brazil, Chile, and Uruguay. In most other Latin American countries, the rate does not fluctuate a whole lot. My buddy Andy Graham of HoboTraveler is currently paying $150 a month for a furnished room with fridge, TV, and internet on Lake Atitlan, Guatemala. (Pictured to your left.) He says a furnished apartment would be $180 and “I’ve seen $200,000 houses renting for $300 a month because there’s just not much demand.”

Prices are pretty similar in Honduras and with the country being in the news much of last year, lots of places tourists would rent are sitting empty on Roatan and Utila. The story is the same in Mexico, where drug violence along the border has put a serious dent in the tourism numbers all over the country.

Where I’m moving to this summer in central Mexico, the 3BR/2 bath house I’m probably moving into with my family is $800 a month. That’s hefty by local standards, but it is furnished and has Wi-Fi, a fully stocked kitchen, and a roof deck with a panoramic view. If I were staying longer, I could easily find an unfurnished house of the same size for under $500.

The real key though, is most everything you spend money on after arrival is cheaper in Latin America, especially food and labor. You can easily cut your expenses by a third upon moving to Mexico, by half (at least) by moving to Guatemala, Honduras, Ecuador, or Nicaragua. Plus if you move there for good, there are all kinds of incentives and tax breaks that come with your visa, especially if you’re of retirement age or you exceed the required income levels—which are not very high.

For some ideas on retiring south of the border, if you’re in that age bracket, check out this Kiplinger’s article with a slideshow: besides Mexico and Panama, they highlight Cuenca (Ecuador), Punta del Este (Uruguay), and Buenos Aires.

Attractive Asia

The dollar is holding steady in Asia and once again, if you’re Canadian you’re in historically good shape here. The main problem in trying to live in Asia, however, is much shorter windows for tourist visas and much tighter restrictions on property ownership. In cheap Indonesia, you pretty much have to leave every  month or two and you can’t buy property unless you have a local corporate partner or an Indonesian spouse. As I noted in this post on living in Malaysia, the incentives are great in their My Second Home program, but the income/assets requirements are quite high.

Besides the visa and property issues, getting to this part of the world requires a longer and more expensive flight, which adds to the woes when you have to keep doing border runs and can’t just settle down for a year or two. So in my opinion, the cheapest parts of Asia are better suited to vagabonds than permanent residents. There are exceptions if you are willing to take all the right steps though. Thailand will allow you to stay longer if you go through the right application process and you can legally buy a condo (not a house) on your own there. Something tells me demand has probably dropped off lately, so there may be some great bargains around.

The Where and the How

All of this info is based on where you live, but remember that it’s also all about how you live. There are people spending less each month to live in New York City than others spend to live in San Miguel de Allende. Some people manage to spend less in Europe each month than others spend in Thailand. You can blow through five grand a month almost anywhere if you insist on living a first-world lifestyle with big cars, big energy bills, and a big house. To get the full benefit of local prices, you have to leave some of the consumerism trappings behind and adapt.

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