Cost of Living in Panama

What’s the real cost of living in Panama?

When you’re looking at moving abroad and particularly for retirement it’s obviously important to have a very good understanding of what your new cost of living will be. Many people don’t take the time to do their due diligence and thinking deeply about the impact this plays on lifestyle. There are many factors to consider. Here are a few to help you decide if living in Panama will improve your quality of life.

Property Taxes and Insurance

It always amazes me how people look only at the price of a product and neglect to consider the true cost of ownership. For example most purchase an automobile based solely on emotion and the sticker price. They never bother to check on insurance rates, cost of repairs and maintenance, etc. In Real Estate there can be an even greater impact. One which can determine whether you live like a  king or a pauper!

MARTHA BRANNIGAN reports in the Miami HeraldSouth Florida Homeowners Feel the Tax Imbalance.

Martha writes, “Claus and her husband, Brad Wagshul, a federal law clerk, bought their 1,473-square-foot house for $215,000 in 2000. Their tax bill was $3,482 last year. But right next door, Erin Kobetz and Joshua Diem, who bought a slightly smaller three-bedroom, two-bath home on an identical lot in 2004, were taxed $6,323 — 82 percent higher.

Among the largely comparable homes along Southwest 63rd Place, property taxes last year ranged from $2,278 to $9,432. Some neighbors — such as those with second homes and rental properties — aren’t eligible for the precious 3 percent cap on tax increases, and they are paying the most of all.

A block away live Ximena and Kurt Prelle, who bought their home at 8215 SW 63rd Pl. in 2003 for $280,000, before the hot run-up in prices that boosted some homes in the neighborhood above the half-million-dollar mark. But you can’t tell their good fortune from their property taxes. The Prelles, who are from Peru, are in the United States on work visas and haven’t yet obtained permanent U.S. residency. That means they aren’t eligible for the homestead exemption or Save Our Homes cap. So every year, their taxes have soared along with the rising property values. The Prelles forked over $8,550 for property taxes on their three-bedroom, two-bathroom house, which was assessed at $412,134.”

In Panama I have had people comment that home prices are ‘incredible bargain‘ but I’ve also talked with people who consider Panama Real Estate ‘too pricey’.  The way most base their initial impression of property value is on the market values where they are from. Some folks I have spoken with have even said, “I can buy a place in Florida for that!” Well, yes maybe you can but have you considered the true cost of ownership and how that affects your lifestyle? Just have a read through that article above again and add up what those property taxes will do to your cost of living over a year.

On his Panama investors blog, developer Sam Taliaferro writes, “This weekend I had a visitor from Florida who shared with me that his insurance on his home in Boca Raton is over $7000 a year. On top of that the taxes have been increasing each year to where it is over $8000 for an under 2000 square foot home. When you compare Panama (And Valle Escondido specifically) where the insurance on a 2500 square foot home is about $450 and the property taxes are zero for the next 20 years, you can see why Panama has become so popular. You can actually live very comfortably here in a master planned community with great amenities just on the $1200 a month you save on these two expenses.” (Sam Taliferro is an American expat many consider the pioneer who put Panama on the map with his first class development, Valle Escondido in the mountain town of Boquete.)

What would an extra $1,200 a month mean to your standard of lving? Low, low insurance, no property taxes on new construction plus fresh produce and groceries; entertainment and dining at about half the cost of comparable American fare and you can see why Panama has become the number one retirement spot for the baby boomers!



Daily Cost of Living in Panama

Here’s a reality check about the cost of living in Panama – It can be as little or as much as you want it to be!  And another reality is that statement is true for almost any country in the world particularly larger developed countries like Canada and the United States and even European countries like France and Spain. For a moment lets just use my home land of Canada as an example – Live in the city of Vancouver on Canada’s west coast and you will experience some of the most costly living on the planet but move to Manitoba or all the way to Nova Scotia on the east coast and you can live for a fraction of what you would pay in Vancouver. In the United States nice neighbourhoods in New York City or Los Angeles both offer up a pretty hefty price tag while Detroit offers some of the cheapest places to live in the world. Now, the largest cost of living for any household housing (either rent or mortgage payment), but it can also be the most variable part of your living budget. This is true in any city and it’s true in Panama City too, probably to an even greater extent than most.

It’s almost impossible to provide useful data on the cost of living in Panama City. Although it’s a relatively compact city compared to say L.A. it is still home to a number of diverse neighborhoods, from Costa del Este to Casco Viejo and from Marbella to San Miguelito. The cost of living in any one of these compared to another is dramatically different. This is primarily due to the cost of rent varying so much from one area to another. In the following table Kathleen Peddicord and Rebecca Tyre from Live & Invest Overseas focus not on Panama City as a whole, but on the neighbourhood of El Cangrejo. 

Here’s what Kathleen and Rebecca have to say about their data – “We’ve chosen El Cangrejo. Not only because this is an appealing place for ex-pats to call home, but also because it’s what might be considered a medium of cost of living. It’s not this city’s most expensive place to live (that would be Costa del Este and some parts of Marbella and it’s not the most cheapest place either.

You can certainly rent a place in Panama City for less, and we know many people who do. But you’d be living in a more ‘out of the way’ neighbourhood—Arraijan, for example, or La Chorrera. I’ve read reports from other sources suggesting that expats and foreign retirees looking for more affordable Panama City options consider neighbourhoods like these, but we don’t recommend it. The average retiree isn’t going to feel comfortable in these working class barrios. I don’t speak with prejudice but as want to give you a realistic perspective.

For the purposes of our reporting, we assume that you want to stretch your retirement dollars as far as possible, but that you also want to enjoy a comfortable lifestyle and an American-style standard of living . In Panama City, El Cangrejo is one of the top choices for enjoying a comfortable ex-pat lifestyle. And the realistic cost for that lifestyle is going to be just about US$2,000 per month.”

 

El Cangrejo – Panama City Monthly Cost of Living

renting an Apartment or House

Item US Remarks
Rent $800 Based on renting an older apartment – figure US$1,000 for new
HOA Fees $0
Property Taxes
Transportation $60 Occasional taxi fares
Electricity $80 Figure more if using a lot of A/C
Gas $5 Used for cooking
Telephone $20 Land line
Internet $35
Cable TV $35
Household Help, fulltime $300 For a part-time maid (two full days per week), reduce to US$160
Food $300 Groceries
Entertainment $400 Dining out, movies, bars, etc.
Homeowner’s Insurance $0
TOTAL $2,035

owning an Apartment or House

Item US Remarks
Rent $0
HOA Fees $150
Property Taxes
Transportation $60 Occasional taxi fares
Gas $5 Used for cooking
Electricity $80 Figure more if using A/C
Telephone $20 Land line
Internet $35
Cable TV $35
Household Help, fulltime $300 For a part-time maid (two full days per week), reduce to US$160
Food $300 Groceries
Entertainment $400 Eating out, movies, bars, etc.
TOTAL $1,385

Vehicle Ownership & Operating Expenses

Item US Remarks
Car registration US$50/year
Insurance US$150/year
Maintenance US$1,000/year
Fuel US$1,050/year
CAR TOTAL $2,250

Source: Kathleen Peddicord and Rebecca Tyre of Live & Invest Overseas

For beach living in Panama we’re going to look at Las Tablas, on the Azuero Peninsula. This is the first town of note along what is becoming this Panama’s Gold Coast.

Yes, there are other beaches which are closer and easier to access from Panama City but these “city beaches,” have become quite expensive. There are a couple of reasons for this – firstly is the local influence, Panamanians like to leave work on Friday afternoon and be at their weekend spot on the beach by dinnertime, and they’re willing to pay a premium for that privilege. Also, the closer you get to the city the more tourism development there is. So,  property at these Panama City beach areas have appreciated in value over the past several years. The problem is the beach properties that are still available aren’t that great, the oceanfront is typically muddy and flat, usually there is no town or community anywhere close by. These are old Panamanian weekend party houses where groceries and other supplies arre brought in the back of the car or SUV form the city.

But, go a little further – it’ll take you four hours to reach Las Tablas from downtown Panama City – and you’re far enough away from the city that well established communities have developed. The distance and time to drive maybe the bad news. But, the good news is that your travel will be on a very well maintained highway the entire trip. And the even better news is that once you arrive you will be greeted by a charming and lively town center, a welcoming local population, and a long established community of Panamanians and expats alike who savor their seaside lifestyle.

And the best news: You can join them on a budget of as little as $820 per month. You could spend more, of course, living in Las Tablas, especially if you travel often to Panama City to enjoy the big city. But if you’re happy with a quieter, modest life, sticking close to home, passing your days fishing and swimming, Las Tablas could very well be your Panama paradise!

Las Tablas – Panama Beach Cost of Living

renting an Apartment or House

Item US Remarks
Rent US$300
HOA Fees US$0
Property Taxes
Transportation US$50 Occasional taxi fares
Electricity US$100 Figure more if using A/C
Gas US$5 Used for cooking
Telephone US$30 Land line
Internet US$25
Cable TV US$30
Household Help, fulltime US$150
Food US$300 Groceries
Entertainment US$80 Eating out, movies, bars, etc.
Homeowner’s Insurance US$0
TOTAL $1,070

Owning an Apartment or House

Item US Remarks
Rent US$0
HOA Fees US$50
Property Taxes
Transportation US$50 Occasional taxi fares
Gas US$5 Used for cooking
Electricity US$100 Figure more if using A/C
Telephone US$30 Land line
Internet US$25
Cable TV US$30
Household Help, fulltime US$150
Food US$300 Groceries
Entertainment US$80 Eating out, movies, bars, etc.
TOTAL $820


Source: Kathleen Peddicord Live & Invest Overseas

Boquete in the Chiriqui Highlands of Panama is one of the few places in Panama where you can live without knowing any Spanish whatsoever. Many locals speak at least some English, while others, especially those who work in the service industry, are nearly bilingual. Note that although many people speak English here, it’s always beneficial to learn at least basic Spanish, if for no reason other than to show respect to the locals.




Living in Boquete costs much the same as it does elsewhere in Panama. If you own your own home, you can live in Boquete for around $1,300 a month. The cost of real estate is slowly decreasing in this region after years of seeing some of the most rapid appreciation in the country. Boquete real estate is still the second most expensive place to live in Panama, second in cost only to some areas of Panama City.

That said, it is still possible to find real estate bargains if you know where to look and who to ask. As in any unregulated market, you’ll find better real estate purchase and rental deals if you have your feet on the ground in Boquete and you have the right contacts to guide you. Scouting real estate from afar is much more difficult than if you’re physically present in the area.

Boquete – Panama Highlands Cost of Living

renting an Apartment or House

Item US Remarks
Rent US$500 to US$1,000
HOA Fees US$0
Property Taxes
Transportation US$50 Occasional taxi fares
Electricity US$100 No need for A/C in Boquete!
Gas US$5 Used for cooking
Telephone US$30 Land line
Internet US$25
Cable TV US$30
Household Help, fulltime US$300
Food US$300 Groceries
Entertainment US$400 Eating out, movies, bars, etc.
Homeowner’s Insurance US $0
TOTAL $1,740

owning an Apartment or House

Item US Remarks
Rent US$0
HOA Fees US$50
Property Taxes
Transportation US$50 Occasional taxi fares
Gas US$5 Used for cooking
Electricity US$100 No need for A/C in Boquete
Telephone US$30 Land line
Internet US$25
Cable TV US$30
Household Help, fulltime US$300
Food US$300 Groceries
Entertainment US$400 Eating out, movies, bars, etc.
TOTAL $1,290

Source: Kathleen Peddicord Live & Invest Overseas

 

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