As long as the locals barely make ends meet, housing is getting cheaper at a record pace – and can become very attractive for investors who are not afraid to take risks.
In the past five years, there has been a huge economic crisis in Puerto Rico. The island has a high level of unemployment, mass emigration, and almost catastrophic national debt, as a result of which the credit rating was lowered, reports the portal Global Property Guide.
The crisis has brought many changes and many new initiatives, although it is too early to say whether the innovations will bring positive results. The housing market of Puerto Rico is at the epicenter of the country’s economic problems. After huge annual increases in housing prices in the early 2000s, in 2008 there was a collapse. Since the second quarter of 2007, prices in real terms have fallen by 27%.
However, the decline continues despite demand stimulation programs: in accordance with the data of the Federal Agency for Housing Finance (FHFA), the cost of apartments and houses has decreased by 8.5% over the past twelve months. During the first quarter of this year, prices fell by 5% in real terms.
The Puerto Rico real estate market is becoming a paradise for foreign buyers. In the post-crisis period, many islanders were forced to sell housing at a loss. This was due to the high unemployment rate (almost 14%) and the country’s huge external debt.
The government burdened the country with a debt of more than € 6.141.800.000 ($ 70 billion), and Puerto Rico’s credit rating fell to negative values. The economic crisis “devoured” not only the savings of consumers, but also their confidence in the future, so many have postponed the purchase of housing until better times.
According to the consulting company Estudios Tecnicos, the financial losses of Puerto Ricans due to cheaper real estate are close to € 26.322.000.000 ($ 30 billion).