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In September 2017, Hurricane Maria swept through Puerto Rico, claiming about 4,600 lives and causing damage worth $91 billion.
When a hurricane strikes, the local real estate market takes a massive hit. While the consequences last a long time in some markets, others rebuild fairly quickly and regain a significant chunk of the lost value.
In this article, our focus is on the Puerto Rico real estate market. Keep reading to gain insight into the effect Hurricane Maria had on the island’s real estate market.
Puerto Rico Real Estate Before the Hurricane
To understand the hurricane’s effect on Puerto Rico, it’s necessary to have a clear picture of the island’s real estate before the storm.
Historically, Caribbean islands are a prime destination for real estate investors. Beachfront properties and island life are an attractive prospect for most wealthy people. However, some islands have better economic environments than others.
Puerto Rico is one of those islands with a struggling economy.
As early as 2006, PR’s economy was already on a recession. Then came the Great Recession of 2008, which further deepened the island economic and financial woes.
House prices took a tumble and by 2017 (before the storm), most properties had lost as much as 50 percent of the value they had before the recession. About 16,000 residents were already behind on the mortgage payments and were facing foreclosure.
The Storm Made Things Worse
Clearly, PR’s real estate market was already in a storm of its own making, but Hurricane Maria made things worse. It fueled the depreciation of properties.
For existing homeowners and investors, life after the storm means counting financial losses. About 20 percent of the 470,000 affected properties were completely wiped out and the rest sustained major structural damages.
As the territory is currently in a debt crisis and unemployment rates are high, a vast majority of property owners lack the funds to rebuild and spur growth in the real estate market. The net effect is property prices are on a downfall. Today, the median home price is $116,750, an 8-year low.
Falling Home Prices Are Attracting Investors
While Puerto Rico struggles with the aftermath of the storm, the falling home prices are gaining the attention of investors in Continental America and beyond.
A common rule for investors is to buy low and sell high. As such, it’s easy to see why the island is attracting outside investors. Prospective buyers are looking to snap up bargain properties, fix them and wait for the prices to go up before selling.
Are you among the people looking to buy property in Puerto Rico? Don’t DIY. You stand a solid chance of getting the best deals when you use a local real estate agency such as Strong|Edge Realty.
Investing In Puerto Rico Real Estate Market: Proceed with Caution
Even though now is the best time to dive into Puerto Rico real estate market and make a couple of investments, it’s important to make calculated moves.
Home prices are very low, sure, but given the island’s economic situation and vulnerability to natural disasters, you can never be too assured of getting a decent return on your investments.
Good luck and keep tabs on our site for the latest financial news and insights.