This is an opinion editorial by Jeremy, an advisor to Escape to El Salvador which is a community of professionals who assist expats in gaining residency and citizenship in El Salvador.
Over the last few years, a lot of fuss has been made about so-called “crypto-colonizers” moving to the developing world and taking advantage of affordable housing and other amenities provided by disadvantaged locals. The Washington Post, Business Insider and even the New York Times reported from Puerto Rico, throwing around terms like “gentrification,” and associating this new class of wealthy, globe-trotting entrepreneurs with words like “utopian,” “idealist,” and the slimier “evangelist.”
Now, I’m not here to defend any particular individual or how they made their money, or even what they plan to do with it. Instead, I want to drill into one, very specific foundation for these types of accusations: that the rise in prices is due to demand. Superficially, that’s partly true. As anyone who has taken an intro to economics course can tell you, prices are set by the law of supply and demand. Each of these, in turn, can be influenced by a variety of factors. For the purposes of this article, I want to focus completely on real estate.
Real estate has a supply problem: They aren’t making any more land and all of it is already spoken for. Outside of a few eccentric efforts to raise islands from the sea, if you want a place to live, you have to buy it or rent it from someone. The seller is going to decide how much they are willing to accept for it based on a variety of factors: primarily its location, but also its use and the quality of its improvements. You can break this down even further and consider the view, the legal jurisdiction, the applicable tax regime, the soil quality of the land, its ease of access, perhaps whether it contains rare or useful minerals or other natural resources and finally, whether there may be a conservation or historical element to its…
