I love Cuenca, Ecuador for that matter, and it's a great place to live. I'm going to guess you are paying $300 for that rental?
I would not call it Third World, but I can understand why others might. Here a a few pics from my most recent trip in March for those who may want to look.
Good call on the rent. I have seen much higher asking prices lately in the Gringo Tree email list, but I hope they are atypical. I pay:
$63 condo charge (includes central hot water and propane for the stove, both luxuries here)
$39 cleaning ($9 a week for about 90 minutes)
$22 internet (pretty slow, down for hours at least once a week)
$15 purified drinking water (in 20-liter bottles, $2 including a tip when the guard brings it up)
$10 electricity (with a charge for street lighting!)
$4 water, sewer (and maintain public parks!)
$3 landline phone (plus a bit every 3 months to buy minutes for a cell phone)
$436 monthly total. That's in an apartment of about 700 square feet, nominally 2 bedroom 2 bath. One bedroom is really too small to use that way, and the master bath shower leaks, so I use the other one. No heat, which is normal here even though overnight lows are often 50 or a bit less. You wouldn't want AC; it rarely gets close to 80.
I might as well include some other prices in case anybody is curious:
Small supermarket close by, big one 20 minutes walk, poor discount store 40 minutes. Veggies 50 cents to $1 a pound, except stuff like asparagus at $3; fruits $1 to $2 a pound; meats $4 to $8 ($1.50 for the greasy hamburger!). Lots of the temperate zone produce like apples comes from Chile; many packaged goods come from North America or Europe, at a typical markup of 25 to 50% over home country prices. Most irritating ripoff: Kleenex, made locally under license at nearly 5 cents per tissue.
City buses 25 cents (crowded mostly when the school kids use them, very rough ride); taxis from $1.50 to $5, they cruise and there's lots except when it rains. Gas is $1.48 a gallon, $1.05 diesel, but the government is looking at the cost of maintaining that subsidy and hyperventilating. Starchy lunch specials in restaurants $2 to $3 (cheese and potato soup, rice with small servings of meat and salad, token dessert like Jello, glass of fruit juice with purified water.) Good coffee grown nearby just went up to $3.50 a pound. No bargains on wine, all imported; mediocre beer is reasonable.
Doctor visit $35 (that's high end, English-speaking specialist); dental checkup and cleaning $25.
Third World is an obsolete abbreviation, yes. This is a much nicer place to live than some other countries falling in that category.