Where does money come and go ? You do the math

Formosano2000

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Mar 5, 2003
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I'm really intrigued by the recent debate thread on the existence of Dominican middle class and thought I'd branch out and add some relevant oberservations and pose relevant questions as well.

Now, as a foreigner living in DR for years, there are many phenomenon that continue to puzzle me. For example:


A. We all know the prices go up every year. Yet supermarkets are perpetually crowded. Especially on weekends. And if look around check-out lines, almost eveybody has their shopping cart and even carts filled to the top. Doesn't matter it's Nacional, Plaza Lama, Carrefour PriceMart...etc, all the same.

Now take a closer look. There people aren't necessarily rich. (sure, looks can be deceiving, but judging from their attire and demeanor, they appear very middle-class (some not even that). to me )

Talking pesos and centavos, those filles carts often amount to RD$2000 + plus per check-out. And I assume they make weekly trips. So just on supermarket purchases along, those folks spend upward of RD$8,000 a month. And we all know that most middle-class Dominicans don't make over RD$10,000 a month.

So, could it be that:

1. These people are actually housekeepers shopping on behalf of their rich due?o de la casa.

2. They are a bunch of perpetually over-indebted middle-class folks maxing buying thing on credit cards and paying through the nose on APR charges.

3. They are just regular but lucky folks who receive sizable "remesas" from Dominican York relatives.


Your take ?


B. The high real esate prices in Santo Domingo.


Rental prices are amazingly close to Manhattan level. There are "torre" condos renting for US$2,000 and upward a month. I know somebody paying US$4,000 for a high-floor (2-bedroom) apartment in Torre Del Sol. Of course he is not complaining as his multinational employer picks up the tab as part of his pay & compensation package. Sales prices aren't that cheap either. Most torre condos go for RD$5 million a piece.

Using the classic supply-and-demand logic, I fail to see how the high prices are sustainable. Yet, for the years I've lived here, I've never seen housing prices dive. If anything, it's going up every year, regarding of the DR state of economy.


In all major world cites, housing prices have boom-and-bust cycles. But in Santo Domingo, it seems not the case.


I've been told by locals that despite the mushrooming of torre constructions, there is still not enough housing to meet demand as people flock in to SD from "interior" and abroad.

But if you actually live in Santo Domingo and look around, you'll find noticeable vacancy rates in all sorts of apartments.

So what justifies and sustains the high housing prices ?

My guesses are:

1. Many foreigners come here for a predetermined period of time so opt for rentals rather than outright purchase. This is the case with missionaries, teachers (Carol Morgan and other English-speaking schools), company executives and managers and diplomats. The landlords can thus exact high rentals knowing they (or their employers) would rather pay up than buying outright.

2. Some wealthy foreigners and overseas Dominicans alike buy up condos but spend little time in here (for vacation only). Leery of deadbeat tenants, they much rather leave the condo vacant during their absence than renting out, thus creating an artificial housing shortage.

3. From what I heard, real estate purchase is a favorite way for ill-begotten fortunes (ie. drug and corruption) to be laundered. These people are indifferent to high pricing as they are chiefly concerned with funneling their fortune. Hence the inflated pricing.


But if you look around, non-luxury apartments aren't cheap either. Few decent two-bedroom apartment anywhere in SD go for less than RD$5,000 a month. Surely, these aren't the types of units of interest to the wealthy and the connected, but somehow the trick-down price effect still holds.


So what gives ?


Again, I'm not convinced that these apartment or estate owners are actually middle-class folks with monthly income around RD$10,000. So who are they ? If the rich still account for a small sliver of DR polulation, they sure are as ubiquitous as the torres.

So who are these home owners/renters ?
 

Criss Colon

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Jan 2, 2002
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How about this?????????????????

We live in Santo Domingo and therefore have a distorted view of life in the Dominican Republic ! Lets say that there are 100 US size and style supermarkets here.They are always full(really not true,you have to learn when to shop!) so to us it looks like things are great! Santiago has a few Super markets,and that is about it! There are 8.5 million people on the island.Most have never seen a Supermarket,let alone shopped there!

Go to the hills around Bani,they have nothing!
It is our,(Santo Domingans) who's persspective is messed up!

We need to "Feel Their Pain" to paraphrase "Bill Clinton ccccccccccccccccccccccccccccccc
 

Petaka

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Nov 8, 2002
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Still not clear to me

I think the questions is: who are all these people spending all this money?
Is this the 2% that is suppose to be rich or is it that the middle class is a lot more numerous than we think or that the city is full of wealthy foreigners?
 

kingofdice

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Jan 16, 2002
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Re: Still not clear to me

Petaka said:
I think the questions is: who are all these people spending all this money?
Is this the 2% that is suppose to be rich or is it that the middle class is a lot more numerous than we think or that the city is full of wealthy foreigners?

I have also noticed this conundrum in Santo Domingo. Wages seem pathetically low, yet when I stay at the Renaissance Jaragua or Hispaniola Hotels, I see the same locals gambling at the blackjack or crap tables night after night. They dress very modest and don't exhibit having alot of money. Yet they make bet after bet for hours on end. I have always found this a bit mystifying. Like where in the hell are they getting the money to gamble for hours on end, if the average Dominican wage earner salary is U.S. $50-60. a week. The math doesn't come out right.
 

Hillbilly

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Jan 1, 2002
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Plastic

If 5% of 8 million = 400,000 people.

In Santo Domingo there are perhaps 10 places to shop.
In Santiago there are four.
In Puerto Plata there is one, maybe two.
16 places for 400,000 people, is about 20 some thousand per store per week....that is nearly 3000 per day....

However, I am sure that there are more than 5% with capacity to go to a super market. Most "middle class" families have multiple incomes, so it is not quite accurate to think of a single income family....Even bank managers at $50-100 K per month have spouses that bring in another good bit of money...Supervisors at factories at 12,000 to 20,000 do the same thing...

CCCCC is quite right, most Dominicans never see the inside of a Nacional or a Pola or a Carrefour.

I am not sure if this explains anything or not...

HB
 

Pib

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Jan 1, 2002
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What HB said plus: I always say that in time of crisis you can do without most things BUT food. People still have to eat. Less maybe but they still have to, so this is not the best way to measure the crisis.

And because it is important I have to repeat another thing HB said: most middle class families (I suppose) are two-income families.