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A recent article (in Spanish) from La Nacion states that a 16.68% increase in construction costs has taken place since last year. The article expressed a hope that costs would come down in the future due to currency manipulations, etc…but that is just a hope.
My guess was close. Inflation, materials, labor and demand will all be putting additional pressures. I may have to adjust my expectations to a more “Thoreau” type of outlook on how to live a happy life in Costa Rica and build a simpler, smaller dwelling.
I can understand that construction costs are increasing in Costa Rica along with oil and steel prices and other commodities but what I can’t understand is if labor is so cheap here why do the homes cost so much?
If construction laborers are being paid $500 $1,000 per month and we don’t need the same kind of insulation as we do back home then why do homes cost so much?
Shouldn’t they cost much much less?
This is a great question and I will ask our construction expert Tom and see if he has the time to write up an article for us …
Scott Oliver – Founder
WeLoveCostaRica.comOne contributing reason may be additonal architect/engineering and administrative costs in Costa Rica. Most people in the States buy homes within large developments where these costs, along with others, are prorated throughout the development. Although, contrary to the above point, I also read that it is more cost effective to build your own home than to buy one already built.
First, I think you’ll find that equivalent homes in Costa Rica do cost significantly less than in North America or Europe. On a cost per square foot basis, costs here are relatively low.
A couple of factors that need to be taken into account are that the cost of building here is about 80% materials and only 20% labor, so any increase in material costs disproportionately affects total costs. Also, there are only two cement manufacturers in Costa Rica, so when they choose to raise prices, everyone is affected. And, of course, the government sets minimum wages which have recently been increased, so the labor portion of the cost has or will be going up, too.
And then there is the matter of competition. The rural areas are being drained of construction manpower to satisfy needs in Guanacaste which is booming. The competition for scarce labor means labor costs will rise, and the competition among buyers will raise contractors’ prices.
Sprite, I would argue strongly in favor of building your own house. You’ll get what you want and not be stuck with someone else’s idea of what you need (or what they choose to build). This is not to suggest that you should do the work, however. Labor here is still a bargain.
Oh yes, I definitely will be building on my property. I have been spending quite a bit of computer time using professional architectural design software and having a lot of fun creating my own home designs, adapting the size and position of the house to perfectly suit the build site. I do this with a certain amount of frustration since I cannot begin the project for a few more years. I know building costs will rise to the point where the project will cost significantly more by the time I am ready to start.
Square footage cost for my Miami home is $232. Right now, in the Central Valley, it should be between $70 and $90….about a third as much.
Good for you, Sprite. This is a wonderful opportunity to think through your needs and wants at your leisure and to get it right the first time. In a position similar to yours, we spent seven years designing the home we built on the Outer Banks of North Carolina in 2002. The design was everything from one story to three and back again about three times. Finally, we got it right and built a home we loved.
Our home in Costa Rica is closely patterned after the one in North Carolina and we’re very pleased with this design, too. Nothing takes the place of good and careful planning.
We build luxury homes in the Orosi Valley, 20 miles SE of San Jose. We recently finished 5 projects and begin 8 new homes in the next 3 months.
We find that the labor cost is about 30% to 40% of the total price. In San Jose they are charging 140,000 colones per sq. meter for labor only. We are currently charging 110,000 to 120,000 colones per sq. meter with a cost of 90,000 colones.
The increased demand for raw materials is coming from China, and it raises our prices.
Orosi RileySprite, David and Orosi have offered very logical facts about our building costs here in CR. As in any comparison, you need to be realistic and compare apples with apples. Costa Rica is not as cheap as it once was, however it is still a bargain compared to living in North America or Europe.
Chromebuilder,
I value the information I get here, believe me. How much house I can afford to build is dependent upon many factors, not the least of which is construction costs and how well the stock market performs over the next few years since that is the financing. These are two big unknown quantities for me to deal with when designing my home and deciding when to build. The other concerns about moving to and retiring in Costa Rica that americans might have are for me not a problem at all. I am fluent in Spanish, am very familiar with latin culture and I have the land on which to build. The biggest question mark left for me is what kind of dwelling I will be able to provide for myself. And I continue to read horror stories from others who have run into serious cost over runs. I want to be as informed as I can when I start this project.
Yes it is still much cheaper, how ever it is very expensive compared to other surrounding countries. I am finding out that Paraguay is really a diamond in the rough! Here it is far cheaper and the high ways systems are much better than in CR, plus you don’t have the crazy gringos here!
i used to work with a Paraguayan years ago. He owned some country property there and his plan was to retire early and return to build a home. I haven’t followed Paraguay since that time but there were serious issues for me regarding Paraguay’s political history and cultural attitudes.
Nobody escapes the past and I am so much more comfortable with Costa Rica’s past and present attitudes, politically and culturally. I wish you well in Paraguay, but I prefer the potholes here in Costa Rica because there are so many more important positives here.Sprite, as you mull all this over, you might consider formulating your house plan by working up from the absolute minimum you could live with. When we first came to Costa Rica, Marcia and I built a one-bedroom/one bathroom guest house of about 860 square feet. We lived there a year and were actually very comfortable. The two things we missed were a slightly more accommodating kitchen (not difficult to rectify with good planning) and a better place for the computer. Had we planned a little better, we might not have built the main house at all. Of course, hindsight is always 20/20.
But my point is that if you consider your real needs (as opposed to your “wants”) very critically, you might find that you could be comfortable with much less, and building costs would be less problematical. We’ve heard of folks, for instance, who want to build three or four bedrooms and three or four and a half baths. This is in anticipation of all the time the kids will be spending visiting. Well, I wonder . . . Put the kids up someplace nearby when/if they come, for instance, and your actual needs can become much less. And you don’t have so much to clean in the meantime. And you don’t have to pay for it.
Sarah Susanka is an architect who has written a couple of books (one: The Not So Big House) in which she advocates building smaller homes. Even if you don’t adopt her philosophy in toto, it still might be a worthwhile read.
Very insightful, David. I have been thinking along those lines myself for several months now. My designs are shrinking as they evolve. The idea of building a 1000 sq ft dwelling and designing it such that later additions could be added without architectural compromise is also an appealing challenge, although living in a house while it undergoes additions is very uncomfortable, I am told.
Scott posted a Thoreau writing recently which encapsulates a life view which I see as coming back into vogue again soon due to economic realities. The North American penchant for living in large houses of over 3000 sq ft is a ridiculous waste of energy and resources.
I am taking to heart this minimalist life style view in as many ways as I can. Live large in the important ways, and let the material stuff fall by the wayside is difficult, though, after a lifetime of living in a consumer driven culture here.
Thanks again for the wonderful advice.
Construction Sector Positively Affected By The Change in Exchange Rate
The change in the exchange rate of the colon to the dollar of the past several weeks by the Banco Central de Costa Rica (BCCR) – Central Bank – will have a positive impact in the construction industry, according to the president of the Cámara de la Construcción, Jaime Molina.
The positive effect of the reduction in the “bandas cambiarias” set by the Central Bank will mean lower costs in construction sector, with lower import prices for items like ceramic tiles, floor finishings and fittings, for example.
Molina said that those who are constructing or remodelling their homes will notice the difference in the coming weeks.
The exchange rate change meant a reduction of some ¢20 colones per each US dollar, mainly due to the weak dollar.
Molina assures that many builders are now reviewing their costs and an increase in construction projects may be experienced before any upward changes may occur.
Another change that is being notices, according to Molina, are that contracts are now being made in Colones instead of Dollars.
Molina added that there will be a definite drop in the price of imported goods for the construction sector in the coming months and that is good for the economy.
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