Editor’s note: This article was originally published in the July 5 – 11 issue of Caribbean Business.

The real-estate market crisis in Puerto Rico, which for a decade has turned the island into the U.S. jurisdiction with the highest amount of vacant housing stock, was exacerbated after Hurricane Maria struck, according to a report by the Center for Puerto Rican Studies at Hunter College in New York and University of Puerto Rico’s Planning School.

According to Hunter College’s policy brief, the U.S. Census Bureau established in 2016 that there were some 1.5 million households in Puerto Rico. Of these, 257,798, or 18 percent, are uninhabited residences. Among the municipalities with the largest number of uninhabited homes were San Juan, Carolina, Caguas and Arecibo. However, the island’s inland mountainous region reflects a lower number.

The publication also concludes the high supply of residences, amid a decrease in demand, created a 10 percent drop in median home values since 2005. Municipalities such as San Juan and Lares, however, showed drops of up to 20.2 percent in the price of certain residential properties.

Experts argue the island market’s crisis began in early 2000, when the so-called real-estate bubble began to develop, which in large part was due to an excessive increase in the granting of mortgage loans of all kinds.

Speculation on sale prices of newly built homes and lax criteria contributed to the fact that most banking institutions granted mortgage loans to people who did not have sufficient income sources for repayment.

Furthermore, in the first half of 2017, before the emergency caused by hurricanes Irma and María, Puerto Rico already topped the list of nine countries with the greatest drop in property-sales prices, according to Global Property Guide, which analyzed the property-price performance of the largest economies.

According to the analysis, the price of homes in Puerto Rico fell 9.59 percent year-over-year in the second quarter of 2017, after registering a 3.26 percent increase the previous year, making the island “the weakest housing market in our global house price survey,” the report said.

However, Puerto Rico “made a surprise comeback with the seasonally adjusted purchase-only house-price index rising 12.55 percent in [first quarter] 2018 from a year earlier….”

Last year, the Financial Institutions Commissioner’s Office (OCIF by its Spanish acronym) said the number of foreclosures in 2017 reached 6,214, which was a considerable difference compared with 5,424 in 2016 and 4,459 in 2015.

In addition, OCIF indicated that more than 20,000 mortgage borrowers are in the process of being foreclosed.

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