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/ Wednesday, February 12, 2020
Increase in the Value and Sale of Residential Real Estate The tendency is helping banks reduce their inventory and sustain real estate market prices
B
Ileanexis Vera Rosado
ivera@elvocero.com
@iverarosado
anks are seeing their inventory of repossessed homes decrease due to a need of housing and a lack of new projects. In Dec. 2019, out of the 944 homes sold, 50 were new and 894 had been previously owned. When compared to Dec. 2018, this represents an increase of 5 percent, when 903 homes were sold, out of which 52 were new and 851 had been previously owned. According to Silvio López, president of the Mortgage Bank Association, this tendency is helping banks reduce their inventory and sustain real estate market prices. “We managed to close 2019 with an increase in
prices and amount of homes sold, which seems to indicate that the market is bouncing back. The numbers indicate that there is an increase in the sale of previously owned properties, due in part to the lack of new construction projects, which, in turn, is due in great measure to the recession. Banks and developers are being much more cautious with their investments. This lack of homes has allowed banks to unload part of their inventories, so there aren’t that many repossessed homes available anymore,” said López. López went on to say that nowadays it’s harder for families to find homes, which has made prices increase. The average price for a home today ranges between $120,000 and $200,000, although there are more expensive properties on the market. López believes that there may soon be another boom in construction of homes in the aforementioned price range because there’s a demand for it. “Although there are always luxury homes on the market, most people look for home with a tag of no higher than $200,000,” he stated. According to López, 70 percent to 80 percent of all properties on the island have been around
for around 30-40 years and are not up to code. López also said that about 50 percent of these properties were not built in accordance to government standards. “There is not only a need for new homes, but also new projects that are built according to current codes. Puerto Rico needs to start building safe homes with prices that are determined by the developers and the market. The market has finally started stabilizing after Maria, and we expect the current trend to continue,” added López. According to the Office of the Commissioner of Financial Institutions (OCIF, by its Spanish acronym), 4,826 homes were sold from July to November of fiscal year 2020, a 3.2 percent increase over last year’s number. During this time, the sale of previously owned homes rose 9.9 percent and the sale of new homes declined by 48.4 percent. On Nov. 2019, property sales rose by 13.7 percent, which amounts to 881 units. According to OCIF, from January to November of 2019 there was a 3.4 increase in sales when compared to the same period in 2018. During that period, the sale of older homes rose by 12.5 percent.