The real estate market in Puerto Rico during the pandemic period has taken everyone by surprise.
THE WEEKLY JOURNAL interviewed several chapter and district presidents of the Puerto Rico Association of Realtors® (PRAR) —Bayamón Board of Realtors®, San Juan Board of Realtors®, Mid Island Association of Realtors and Caguas District (formerly Caguas Board of Realtors® , today Caguas District because it is an 'At Large' territory)— on the effect of the COVID-19 pandemic and trends in the real estate market in Puerto Rico, and this was what they shared with us.
Although at the beginning of the pandemic there was a decline in the real estate sector —during the first quarter of 2020—, “in recent months there has been an increase in property sales and rentals. According to the Office of the Commissioner of Financial Institutions of Puerto Rico (OCIF), the mortgages granted for the acquisition of homes in December 2020 were nearly 30 percent higher than those for the same period in 2019. During the month of November 2020, the mortgages granted for the purchase of homes were 11 percent higher than those of the same month of 2019," explained Marixa S. Álvarez, president of the Bayamón Board of Realtors®.
Will property prices go down or stabilize?, we asked the expert, who has been working in the real estate market since 2014.
"This will depend on several factors. There is enough inventory to meet the needs of prospective buyers and the status of properties that are under moratorium, that once the period ends, they will go through the processes of 'short sales' or foreclosures. You also have to see how the mortgage banking market will behave in terms of interest rates. This has been a boon period for both the purchase and refinancing of properties. This is due to the drop in interest rates and the granting of loan incentives guaranteed by the federal government of the United States and the state," she replied.
Sales on the Asking Price
Likewise, Álvarez indicated that in areas such as Guaynabo, San Juan and Río Piedras, land houses do not last a day in the market once they are listed. Even many purchases are made in cash.
"The areas of Dorado, Condado, Isla Verde, Ocean Park, Rincón, Isabela, Cabo Rojo, Humacao-Palmas del Mar and Río Grande continue to be favorites to buy. There is the phenomenon of properties in these areas sold on the asking price. It is worth mentioning that many of these sales correspond to the so-called luxury properties (over $500,000). This has been achieved in large part by the incentives of the 20/22 laws, which have attracted to the country many international and U.S. investors, interested in benefiting from said tax haven," she explained.
Álvarez, with an office at Strategic Realty Services LLC, in Guaynabo, also indicated that other properties that have experienced a great boon in sales are the multifamily kind, because they are very attractive for investors and for people who want to have an additional income for their retirement; commercial buildings, because there is more demand than supply; the ‘fixer-uppers’ and beach properties, with a view to becoming places to rent in the short term such as Airbnb, VRBO, etc.; the plots with farms, for the harvest, and the plots of land ready for the social housing development programs. "All the properties mentioned will have a lot of heyday once the funds allocated for this purpose decrease," concluded Álvarez.
Regarding the sale of properties in the Caguas area, Carlos Javier Ortiz, president of the Caguas District (who together with the president of PRAR, leads the transition of the territory), indicated that “in this area, 2021 has not been as busy as 2020, due to the low inventory of properties and the high volume of prospective buyers, many willing to buy on the value of the property and others in cash, which is the most attractive option for the seller, because the sale process is faster and does not require an appraisal."
More Primary Residence Purchases
According to Ortiz —who is certified in Short Sale & Foreclosure Resource and is an authorized agent of HUD properties, among others— the tendency is “to try to first acquire a property either for primary residence or as an investment, due to the demand for rentals, as a result of the increase of people who have had a reduction in hours in their jobs due to the pandemic, or who are not prepared to buy a property at this time."
"What type of properties are the most requested to buy, in what location and with what characteristics?," we asked Ortiz. "The trend is to acquire large properties, with access control, that have a large patio, two bathrooms, terrace and preferably with a pool," he said.
Buying or Renting?
Regarding sales trends in the towns of Fajardo, Río Grande, Caguas, Gurabo and Humacao, Melissa Montero —president of the San Juan Board of Realtors® and certified as 'Price Tragedy Advisor', among others— pointed out that “sales in these towns they are very stable. Many people have come to buy properties for cash, attracted by the incentive of Acts 20 and 22. The sale is done very quickly because they are tourist areas and there is a lot of purchasing power."
Montero, who currently serves the residential, investment and commercial sectors of the aforementioned towns, stressed that “not only do foreigners come to the island to invest, but Puerto Ricans are also very aggressive. They are careful not to get ripped off, but if they have the cash, they are not afraid to compete."
"What is more common, the purchase of properties or the search for spaces to rent?," we asked Montero.
“The purchase goes above the rent because it is more attractive to be able to do it at the moment. The reason is that what you would pay for rent is the same as what you could pay for a mortgage loan. And with the prices so high to rent, it is no longer as attractive to do it as before; and depending on what they want to do in Puerto Rico, many people understand that it is better for them to buy than to rent," she said.
The real estate expert argued that "single-level properties are the most requested, especially by older people who no longer have children with them, and understand that a country house (three rooms, two bathrooms) is more affordable and facilitates their mobility around the place."