Report: Puerto Rican home buyers face discrimination in local housing market
The study involved an online experiment using fictitious home buyers.
A new study unveils significant challenges faced by Puerto Rican home buyers on the island, where they are often disadvantaged compared to U.S. mainland, or American, buyers.
According to research by Giovanni Castro-Irizarry, of the University of California, Los Angeles’ Department of Political Science, Puerto Rican home sellers show a consistent preference for American buyers, whom they perceive as more financially capable.
“I found strong causal evidence of bias in favor of American home buyers,” Castro-Irizarry wrote. “While Puerto Rican homebuyers were more likely to receive a response, they were less likely to receive replies with houses available or offering a showing.”
This key finding, the author says, reflects broader colonial and post-colonial societal biases and economic forces that may hinder Puerto Ricans’ access to the housing market.
“Adopting a behavior that treats and privileges settlers from the metropolis better than locals is consistent with theories of colonialism and the colonized mentality of colonial subjects,” Castro-Irizarry said, referring to literature on colonization, specifically “The Colonizer and the Colonized,” by Albert Memmi, which states that in colonized countries, a settler from the metropolis is “received as a privileged person by the institutions, customs and people.”
The study used a preregistered online audit experiment in which fictitious Puerto Rican and American home buyers inquired about 1,512 homes listed across Puerto Rico.
The results indicated that home sellers were more inclined to report homes as available to Americans, invite them to viewings and bypass additional requirements, such as proof of funds.
Meanwhile, Puerto Rican home buyers often received responses suggesting fewer homes were available, and they were more likely to face additional qualifications.
This disparity in treatment potentially creates a systemic barrier to homeownership for Puerto Rican residents, who may already be facing economic challenges in a housing market that has been reshaped by foreign investment.
For many Puerto Rican home sellers, the author says, the expectation of a faster, more lucrative transaction with Americans outweighs their inclination to sell to local buyers. This trend, he adds, raises concerns about the effects of Puerto Rico’s status as a U.S. territory and its transformation into a prime location for foreign capital investment.
With such policies as The Individual Investors Act of 2012 (Act 22, which is now part of Puerto Rico’s Incentives Code, Act 60 of 2019), he says the island has become a tax haven for foreign investors, encouraging a surge of stateside buyers willing to pay premium prices, often in cash.
Act 22 offers tax incentives to new residents from the U.S. mainland, which has attracted high-income individuals and investors to the island. This influx has increased demand for local real estate, driving up prices and making it more difficult for Puerto Rican buyers to compete.
Discriminatory practice
The study highlights how this preference for American buyers not only drives up property prices but also limits housing options for Puerto Ricans, contributing to a housing market that many locals find increasingly inaccessible.
Castro-Irizarry argues that by favoring non-local buyers, Puerto Rican home sellers may inadvertently contribute to a cycle of displacement and gentrification that disproportionately affects their fellow residents.
“The differential treatment identified is generally consistent with practices of statistical discrimination,” said Castro-Irizarry, who earned his bachelor’s degree in political science from the University of Puerto Rico, Río Piedras, and master’s degree at The Pennsylvania State University.
Castro-Irizarry’s findings highlight the need for less “ideologically and partisanly divided” public policy that addresses these economic disparities and provides greater support for Puerto Rican buyers.
The study also delves into the implications of Puerto Rico’s role as a tax-friendly destination.
As more investors from the mainland move to Puerto Rico, they bring with them a level of purchasing power that can distort the local housing market, often prioritizing profit over community stability, the author says.
The research finds that these housing market challenges are not isolated issues but are part of a larger pattern of economic inequality rooted in Puerto Rico’s political and economic relationship with the mainland.
By documenting these challenges, Castro-Irizarry contends that the issues he has documented provide a data-driven argument that Puerto Rican homebuyers face significant obstacles in their own housing market, suggesting the need for a more equitable approach to housing policies on the island.
“This dynamic, driven by structural economic biases and cultural perceptions, highlights the complex interplay between Puerto Rico’s colonial history and its modern-day economic policies,” Castro-Irizarry added.
Where can one get a copy and details of this report?
Hi. The link is in the story. Thanks!
Este artículo ofrece una perspectiva intrigante sobre los retos que enfrentan los compradores de vivienda puertorriqueños. Me pregunto si existen políticas o iniciativas que estén siendo propuestas para abordar este sesgo en el mercado inmobiliario local. Además, considerando el impacto de los compradores de fuera que actúan en un “paraíso fiscal”, es interesante explorar cómo estas dinámicas influyen en los precios de la vivienda y el acceso de los locales. Para más información sobre precios globales, podrías echar un vistazo a: https://world-prices.com/en/usa/prices. Aunque no siempre es claro si los datos están completamente al día. Como alguien interesado en la equidad en el acceso a vivienda, sería bueno saber si hay esperanza de real cambio en el futuro cercano. ¡Buen trabajo en poner luz sobre este tema crucial!