Housing Affordability in Puerto Rico Remains a Concern

Affordability of new housing, as measured by Estudios Técnicos Inc.’s Housing Affordability Index, remains a problem in Puerto Rico. The affordability gap is further confirmed after analyzing data from real estate website CompraoAlquila.com
By: Jose Carmona, Caribbean Business
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Sept. 13, 2008 - PRLog -- Published by Caribbean Business, the article uses CompraoAlquila.com data:

Nearly half (49%) of households throughout Puerto Rico are in the low-income bracket, thus reflecting prevailing socioeconomic conditions in Puerto Rico, including poverty.

Affordability of new housing units, as measured by Estudios Técnicos Inc.’s Housing Affordability Index, remains a major problem in Puerto Rico. Close to 9,200 units need to be developed annually at a price of less than $90,000 to supply the annual need of low-income households, according to ETI’s Housing Demand study.

“Most municipalities in Puerto Rico exhibit significant affordability problems for median income families. In fact, 40 municipalities exhibited an index below the average,” indicated the ETI study.

ETI’s consumer survey reflected a significant potential for rental housing. Of those interviewed, one in four (25%) indicated they would rent rather than purchase a housing unit.

The affordability gap was further confirmed after analyzing the data from leading local real estate website http://compraoalquila.com. The web portal has a listing of 9,000 residential units from individual homeowners as well as Realtors, brokers, real-estate companies and banks’ mortgage divisions.

Through an online qualifications calculator, the website collects information from users inquiring about its residential listings such as their income, expenses and the price of the property in which they are interested.

After analyzing the data from 1,400 website users over the past six months, the data showed only 45% of potential property buyers qualified according to the information provided, whereas 55% did not meet the minimum income-to-debt ratios required to qualify for financing with a participating local mortgage lender.

According to U.S. Census data from the 2006 Puerto Rico Community Survey released last week, the median value of owner-occupied housing units in Puerto Rico was $98,700, which was lower than 46 U.S. states. Among the island’s municipalities, some of the highest median values of owner-occupied housing units were found in Guaynabo ($181,300), San Juan ($150,300) and Trujillo Alto ($151,400).

In Puerto Rico, 47.2% of mortgage owners spent 30% or more of their household income on selected monthly owner costs (mortgage, tax, insurance, utilities, fees, etc.), an amount exceeded only by California at 51.8%.

According to the U.S. Census survey, median earnings of full-time, year-round workers in Puerto Rico came to $19,280, with men earning slightly more ($19,750) than women ($18,803).

At $20,425, the median family income in Puerto Rico was about a third that of the U.S. mainland ($58,526) and about half that of Mississippi ($42,805), the state with the lowest median family income.

Among municipalities, Bayamón, Carolina, Guaynabo, San Juan, Toa Alta and Trujillo Alto have median incomes that were higher than the median for the island.

The U.S. Census survey indicated Puerto Rico’s home ownership rate of 74.1% was one of the highest in the U.S., lower than that of only two states—Minnesota (76.3%) and Michigan (75.25).

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