The lack of inventory in the middle-class housing segment remains the biggest challenge for real estate in Puerto Rico this year. However, industry experts assure that the overall market on the island is "vibrant." The scarcity of middle-class residential properties poses a challenge for real estate brokers, especially at a time when there are federal aids and funds that have left many buyers ready to acquire new homes.
According to Vanessa Rivera, former president of the Puerto Rico Association of Realtors, the real estate market is currently vibrant, despite the shortage of inventory. She mentions that there is a high demand for middle-class residential properties, particularly due to the CDBG Housing program, which has attracted many buyers looking for properties priced up to $200,000. However, there is insufficient inventory to meet this demand.
Another challenge faced by the market in general is the high cost of materials and the lack of skilled labor. Prospective buyers who are interested in properties needing repairs, such as foreclosed houses, are uncertain about the costs of materials and the availability of workers to carry out the repairs.
Aileen Guzmán, Vice President of Production at Fembi Mortgage Puerto Rico, highlights that the lack of inventory, high material costs, and labor shortage are the major challenges for people looking to buy properties in Puerto Rico. This not only applies to new projects but also to the purchase of foreclosed homes that require renovations.
Rivera believes that investors who buy, renovate, and sell properties, as well as those entering the short-term rental market, should not be viewed negatively. She argues that these buyers provide solutions to existing problems in the industry, such as abandoned or poorly maintained houses. Investors who repair abandoned properties contribute to making them eligible for financing, thereby increasing accessibility to the public.
The short-term rental market has also provided a second chance for properties that were previously unattractive to the residential market. Rivera notes that the interest of buyers extends beyond tourist areas and is now spreading to the interior regions of Puerto Rico. Both Americans and Puerto Ricans from the diaspora are investing in these locations to experience the cultural aspects of living in Puerto Rico.
Guzmán shares that there is a new profile of buyers in Puerto Rico, with an increasing number of Americans relocating and establishing residency on the island. This represents a shift from the previous trend of Americans purchasing properties as second homes or for retirement purposes. Changes in legislation, such as Law 52, which allows employers to have remote employees in Puerto Rico without tax liabilities, have encouraged this type of relocation and home buying.
Although there has been a slight decrease, cash sales still play a significant role in the local market. Guzmán emphasizes the importance of documenting cash transactions and obtaining data to assist with financing transactions.
Regardless of the segment or financing method, real estate broker Ricardo Antonio Martínez Sarmiento advises buyers to enlist the services of a realtor. A good realtor can provide the necessary information for market analysis, ensuring that the property is fairly priced and not overvalued. They can also guide buyers through the process, connect them with reliable lenders, explain different financing options, and find properties that align with their objectives.