CompraoAlquila Real Estate

Have Real Estate properties in Puerto Rico lost value?

People talk of “The Housing Bubble” and “The Sub-prime woes” in the United States - but what about Puerto Rico?

Real Estate in Puerto Rico is a large market in a small pond… the listings in CompraoAlquila (http://compraoalquila.com) tells a story about what has happened in different sectors of the island.

1. We have “urbanizaciones” – blocks of residential houses clustered together, accesible ethrough a main entrance which usually has a guard or security gate. These are all over the metro-area, composed mainly of San Juan (The Capital), Guaynabo, Bayamon, Carolina and Caguas.

2. In a given “urbanizacion X” there are between 20-100+ houses, now, consider the following scenario
   1. Houses 1-20 in a “urbanizacion”

2. 2. House 3 is sold early in 2004, for $235,000, by a family who was a bit rushed in the transaction and had let the house deteriorate (lived in the US, old people living there, etc.)

2. 3. House 5 is sold a month later, for $250,000, the buyer fell in love with it, the market was doing well…

2. 4. House 7 decides to sell (mid 2004) and the appraiser used only 1 comparable data transaction – House 5 data - and values house 7 (with slightly more square footage) at $265,000. The market starts booming, interest rates fall and they sell in 30 days for $265,000.

2. 5. House 9 had a pool and extra maid room, the appraiser uses House 7 data and estimates value at $285,000…

3. Get the idea? Well, we have samples of similar houses selling anywhere between 20k-50k more in the same urbanization, in a span of 6 months… it is all over the place!

4. Two samples show something like this:

4. 1. Sample 1

i. House sells in May 2005 for $270k

ii. House sells in November 2005 for $313k

iii. House sells in February 2007 for $321k

4. 2. Sample 2

i. Walk-up sells in Dorado (suburban area) for $171k in 05

ii. Similar walk-up sells for $183k

iii. That same walk-up sells for $168k in 07

I’m not saying property value in Puerto Rico is decreasing; we’re asking questions as to where it is going in the next few years. My guess is that prices will hold steady or increase at a 2-5% rate per year, but if you are in a rush to sell, and have had it on the market for 3-6 months, you may have to lower the price tag or be in for a long ride…

This is not “breaking news”, more of a reassurance of what is happening - what people see and talk about is being recorded on our website…