Study: Puerto Rico housing market was improving, then COVID-19 hit
Puerto Rico’s housing market was improving prior to the COVID-19 pandemic, as reflected by price trends and sales in 2019, which were upward-bound due to a lack of available inventory.
However, in general, prices have not recovered to pre-2007 levels and COVID-19 may slowdown the recovery process.
Those were some of the conclusions of the “Puerto Rico, COVID-19: Trends and perspectives for the economy and the housing industry” study presented by Graham Castillo, president of Estudios Técnicos to the Puerto Rico Association of Realtors.
The study shows that during the first nine months of 2020, a total of 6,795 new and previously-owned homes were sold, representing a 17.8% drop from the 8,265 units sold during the same period in 2019.
During the third quarter of this year, there were 248 new homes sold, of which 46% were single-family units. Average prices for 45.6% of those units ranged from $105,000 to $149,999, the study noted.
“Housing sales should recover in 2022. Expect higher demand from able buyers [who] will want to take advantage of low interest rates and housing incentives financed with Community Development Block Grant (CDBG) Program funds that will promote the demand for housing from low and moderate income households,” Castillo predicted.
Puerto Rico has been allocated $1.5 billion in CDBG program funds, of which $95.9 billion have been disbursed, representing a mere 6.4% usage.
However, the study also warned that “poor demographics and an expected inflation in the construction sector spells challenges to the extent and depth of this improvement,” he said.
The firm listed a smaller economy — which has contracted 20.8% since 2006 — significant job losses between February and September 2020, a declining population base, the impact of migration and a decline in births, as stumbling blocks for the real estate sector’s growth.
The findings also urged the industry to be “forward-looking to adapt to changing socioeconomic conditions and customer needs.”
Finally, the analysis confirmed that a niche market — including the need for construction and rehabilitation of elderly housing — is characterizing the local industry. Thus, identifying and timely responding to customer preferences and needs is critical to succeed in the current and expected socioeconomic and industry context.
Puerto Rico’s current 65 and older group represented 21.3% of the island’s population in 2019, up from the 11.2% on record for the year 2000, the study stated, citing the US Census Bureau’s population estimates.