Recession, tight credit choke Puerto Rico's housing market
Puerto Rico's housing market is not gaining traction and is not expected to improve this year as it continues to deal with the headwinds from a prolonged recession and tight credit.
Forecasting the housing market is difficult and sales are unlikely to exceed the 2014 level of roughly 2,000 units by much, Puerto Rico Home Builders Association, or ACH, president Roberto Trapaga told Efe.
Before the housing bubble burst, according to ACH figures, annual home sales on the island ranged between 8,000 units and 10,000 units.
"Developers face a difficult situation. Construction costs have soared and people do not have money," Trapaga said, referring to the complex housing outlook in Puerto Rico, where lack of housing is a severe problem.
Trapaga, a partner in Starlight Development Group, said the island's market was far from returning to the 13,419 units sold in 2006, the last year of robust growth in the market prior to the collapse.
Current estimates call for sales this year to be barely 15 percent of the level a decade ago.
"When the time comes to buy a house, people don't have the money," Trapaga said, adding that banks were not helping ease the situation since they have tightened the requirements to obtain a mortgage loan.
"Banks have also been hit hard by the crisis" and that has created a market slump affecting thousands of Puerto Ricans who cannot get a house, the ACH president said.
The Puerto Rico Planning Board estimates there are 1.4 million housing units on the island, of which 861,000 have occupants, with the average price of a unit nearly $121,000.
This means that thousands of new housing units are ready for sale and many people need one, but most potential buyers cannot meet the requirements to qualify for a loan.
A solution might be the construction of housing units priced at around $75,000, the best price point to match Puerto Ricans' economic means, Trapaga said.
Prices, however, are not coming down because construction companies face challenges in trying to cut costs, with 20 percent of a housing unit's final price going for taxes, the ACH president said.
As a result of the obstacles to acquiring housing through traditional means, many people are resorting to building informal dwellings, skipping municipal permits and certifications from architects and engineers.
"Almost 50 percent of the houses in Puerto Rico do not meet code," Trapaga said, adding that about 40 percent of dwellings lacked sewer hook-ups, leading to sanitation problems.
Another worrisome fact is that some 100,000 housing units in Puerto Rico are occupied by multiple families. EFE
Recession, tight credit choke Puerto Rico's housing market
Forecasting the housing market is difficult and sales are unlikely to exceed the 2014 level of roughly 2,000 units by much, Puerto Rico Home Builders Association, or ACH, president Roberto Trapaga told Efe.
Before the housing bubble burst, according to ACH figures, annual home sales on the island ranged between 8,000 units and 10,000 units.
"Developers face a difficult situation. Construction costs have soared and people do not have money," Trapaga said, referring to the complex housing outlook in Puerto Rico, where lack of housing is a severe problem.
Trapaga, a partner in Starlight Development Group, said the island's market was far from returning to the 13,419 units sold in 2006, the last year of robust growth in the market prior to the collapse.
Current estimates call for sales this year to be barely 15 percent of the level a decade ago.
"When the time comes to buy a house, people don't have the money," Trapaga said, adding that banks were not helping ease the situation since they have tightened the requirements to obtain a mortgage loan.
"Banks have also been hit hard by the crisis" and that has created a market slump affecting thousands of Puerto Ricans who cannot get a house, the ACH president said.
The Puerto Rico Planning Board estimates there are 1.4 million housing units on the island, of which 861,000 have occupants, with the average price of a unit nearly $121,000.
This means that thousands of new housing units are ready for sale and many people need one, but most potential buyers cannot meet the requirements to qualify for a loan.
A solution might be the construction of housing units priced at around $75,000, the best price point to match Puerto Ricans' economic means, Trapaga said.
Prices, however, are not coming down because construction companies face challenges in trying to cut costs, with 20 percent of a housing unit's final price going for taxes, the ACH president said.
As a result of the obstacles to acquiring housing through traditional means, many people are resorting to building informal dwellings, skipping municipal permits and certifications from architects and engineers.
"Almost 50 percent of the houses in Puerto Rico do not meet code," Trapaga said, adding that about 40 percent of dwellings lacked sewer hook-ups, leading to sanitation problems.
Another worrisome fact is that some 100,000 housing units in Puerto Rico are occupied by multiple families. EFE
Recession, tight credit choke Puerto Rico's housing market
posted by Zo Heri at 6:32 AM
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