Property Costs Across Markets

Las Vegas Cheaper Than Santiago? Maybe…But That Misses The Point

A reader wrote this week suggesting that Kathie and I have been out of the United States too long. Don’t we realize, he wondered, that real estate in Las Vegas sells for less than US$90 a square foot? How could we think that properties on offer in Santiago, Chile, for US$90 to $US180 a square foot are a good deal?

Well…Santiago isn’t Las Vegas…and vice versa. I’ll spare you my opinion of Las Vegas (to spare myself letters from readers defending how great a place it is). But, even if you like Las Vegas, trust me. When you see Santiago, you’ll understand. There are few comparisons to be drawn.

Furthermore, the neighborhoods I was referencing when I quoted prices for buying in Santiago are the “Beverly Hills” of this city. I know the bottom has fallen out of the Las Vegas real estate market, but I can’t believe that it’d be possible to buy in the nicest neighborhoods (are there nice neighborhoods?) for less than US$90 a square foot.

Finally, you have to consider not only where you’re buying, but what you’re buying. The construction quality in Santiago is far better than that of the plastic and gypsum McMansions that seem to be all the rage in Vegas.

All this speaks to the real point…which is that, when comparing property prices from one market to another, you have to compare apples to apples. I’m stating the obvious, yet so often people forget this.

Telling me that property in Vegas is cheaper than property in Santiago is like telling me Las Vegas is cheaper than Society Hill, Philadelphia. Saying a one-bedroom house in South Phoenix is cheaper than a one-bedroom apartment in Scottsdale is likely a statement of truth, but, again, it doesn’t mean anything.

It’s like comparing an apple rotting on the ground to a sweet apple pie in a five-star restaurant.

Breaking down prices so you can consider them per square foot or per square meter is only the start of the comparisons process. You also have to remember neighborhood differences, quality of construction differences, quality of the city differences, views, ease of access, etc. Yes, you have to drill down to the cost per square meter to be able to get an idea of values in any market and among markets, but don’t let that be your only point of reference.

Unfortunately, when making these kinds of comparisons, most people can’t help but use the place where they’re currently living as their immediate frame of reference. They are looking for something cheaper than “home,” but cheaper isn’t always better. Moving overseas you could certainly find a place to live where the overall cost of living is lower than where you’re coming from. But you could probably do this moving from one place in the United States to another place in the United States, as well. But that’d probably mean moving someplace like Vegas. No thanks…

Getting more and better value for your money is the real point of all this and should be your real agenda in considering a move to another country. A house at the beach in Panama for US$300,000 can be a good value even though it’s not “cheap.” Because, while it’s not cheaper than a comparably sized house in Vegas or Detroit or Tucson, it’s not in Vegas or Detroit or Tucson. It’s on the Pacific coast of Panama. Meaning a more meaningful comparison would be to a comparably sized house on the Pacific coast of California. And, in that context, the US$300,000 house on the coast of Panama could be considered cheap.

As for Santiago, a city of 7 million people, you can certainly find a house for sale for much less than US$90 a square foot if that’s what you want. You won’t be living in the best neighborhood, but you won’t be living in a “bad” neighborhood, either.

And you won’t be living in Las Vegas.

Lief Simon

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