Realtor Fernando L. Baez proposes to rethink the Puerto Rico Real Estate Industry with two measures: Puerto Rico should be marketed in the United States as an ideal place to have a second home and to purchase a home to retire. Along with this initiative, the government could increase incentives to attract US banks wishing to settle in Puerto Rico and thus inject capital for mortgage loans.

“With these two initiatives, Puerto Rico’s sluggish economy can quickly take off,” said Baez, president of real estate company Baez & Associates Real Estate.

“What Florida did in the 1980s and 1990s, marketed as a retirement home and second homes in the United States and Canada, is what Puerto Rico must do now. With the advantage that properties in Puerto Rico are at a better price right now than in other places in the United States and in other countries where Americans buy to retire, “Báez explained.

According to information compiled by the real estate expert, about 8 million US citizens live outside the United States. The country where they most tend to move is Mexico, where one million Americans live, followed by Canada and the Philippines. Báez says that they should be encouraged to move to Puerto Rico, because for Americans there are advantages here, which have not been explained to them.

“Puerto Rico has not been properly marketed and exposed to the world. We have and belong to the best and largest market of buyers that are currently: the citizens of the United States. Puerto Rico is a paradise for its climate, in an excellent location in the Caribbean, with easy financing and with the security of being a territory of the United States, the country of which they are citizens. Here they have the same currency, they do not need a visa, they have the ease of English and the mail. The biggest attraction Puerto Rico has is being used as a place of housing, either as a retirement site or as a second home for vacation, “explained Báez.

The real estate expert argued that, in terms of mortgage banking, these US citizens who are looking to invest in a second home or retirement location outside of the United States are people with solid incomes, buyers with money to buy immediately, and They do not need local source of employment for the transaction.

A boost to the economy

For Puerto Rico’s economy to attract these buyers has enormous advantages, because when they move to the Island, they will be creating direct and indirect jobs in services for their homes: buying furniture, appliances, painting, household goods, cars, going to supermarkets And restaurants, among other investments. As the population increases, particularly if they are older, they would also increase the medical class in Puerto Rico, because of the need to have health services. In addition, these new buyers will be promoting tourism in the island, as they are here, relatives and friends will come to visit them, said the realtor

Báez carried out an analytical study that he shared in a recent presentation to professionals in the real estate sector and mortgage banking. In the same, he compared the conditions of Puerto Rico, as United States territory, with those of Spanish-speaking countries to which Americans move: Mexico, Dominican Republic, Colombia, Panama and Costa Rica. These countries are marketed with commercials and videos in traditional media and digital media in the United States to search for buyers of their properties. That marketing is an advantage they have over Puerto Rico.

Even so, Puerto Rico has advantages over these. For example, in contrast to Puerto Rico (which has very low interest rates of around 3% and very low or no offers at the moment), for a mortgage in the Dominican Republic, it would soon have to be a 30% initial contribution, Amortization is 15 or 20 years, interest is between 8 and 10%. It is not financed to people over 65 years and the properties to be financed are only in exclusive tourist or residential places. In Mexico, the sooner they are required is 20% and, if they are looking for low interest, the sooner is 30% and 40%. Amortization is 15 or 20 years and interest fluctuates between 7.5 and 10%. Outside the tourist or residential areas, the purchase of properties would have to be in cash. Do not mortgage people over 65.

As for financing, contrary to what would happen in other countries, there are many mortgage products for which these buyers of the United States qualify: FHA, 203K, Veterans, conventional, reverse mortgage and Magic and Fannie Mae loans, “he said. Báez. He added among the advantages of Puerto Rico that the cost of the properties has declined, that the constructions in cement are more secure and that the properties can be resold without major complications reason why they are good investment.

Likewise, Baez’s study evaluated the promotion of properties of other Caribbean islands, including the Virgin Islands. In these it emphasizes that they are territories of the United States, when emphasizing that they are U.S. Virgin Islands, something that does not currently do Puerto Rico.

Attract the US bank. UU.

Báez also stressed the need for the government to attract more US banks to Puerto Rico. “In the past we had a strong commercial bank and a very solid mortgage bank,” said the realtor, indicating that there are now many less commercial banks and mortgage houses. The result of this, given the economic fragility of the island, is that banks are much more reluctant to approve loans and this damages both the mortgage market and the economy in general.

“The Development Bank would give me an assignment to bring all the banks in the United States and give them incentives to set up here. We want economic development in Puerto Rico, but we must start with financing. If no money for loans can not be developed. At the same time there is money to lend, the economy moves, “he said.

In the actual real estate market is very important to have the property in conditions than never before. The actual market is more competitive because the lack of active buyers and the excess of properties for sale, in additions to the banks repo properties. In the past there was so many active buyers that seller don’t have to pay attention on the details conditions of their properties. Now the market is completely different, seller will received only few visits to their property so they can’t afford to lose any opportunity to show their property in top conditions.

Recommendations have always your property as you expect a client every day so in that way you don’t lose any possible prospect. The front and back yard always in conditions touch of paint inside and outside the property constantly, clearing spaces inside and outside. At showing the property has to look great and be bright.

Remember be prepared so when you real estate broker or a client call set a showing of your property you don’t have to cancel the showing because you are not prepared, because probably they don’t going to call again, because the excess of properties in the market.

Owning a home embodies the promise of individual autonomy and is the aspiration of most American households. Home ownership allows households to accumulate wealth and social status, and is the basis for a number of positive social, economic, family and civic outcomes. Two-thirds of all U.S. households who own their home currently are enjoying these benefits. The positive social benefits from home ownership and stable housing are compelling. There is evidence from numerous studies that attest to the benefits accruing to many segments of society. Home ownership boosts the educational performance of children, induces higher participation in civic and volunteering activity, improves health care outcomes, lowers crime rates and lessens welfare dependency. Owning a home is different from renting. With the home purchase come the pride of ownership and the sense of belonging in a community where one has a financial stake in the neighborhood.

Perhaps, homeowners are “happier” just from having achieved the so-called “American Dream” a sense of accomplishment, a milestone. Also, ownership entails greater individual responsibility. Home ownership requires a large (if not the largest) financial outlay of a person’s life and often requires the responsibility of a mortgage spanning 30 years. Therefore, it is a long-term commitment, which may alter human behavior. Given such an opportunity, public policy makers would be wise to consider the immense social benefits of home ownership for families, local communities and the nation.

Puerto Rico Government approve a housing incentive program.

The legislature approve the law # 34 , a housing incentive program effective on July 2013, the purpose of these was to provided a more accessible program to families of lower income to acquired an existing or new housing, also tried to maintain active the actual slow real estate market in Puerto Rico . The project also make a new disposition on the communities service hour to be more accessible and flexible when the buyer take the incentive.

The program applies to new homes and existing homes. The top selling price is 200,000. The incentive for closing cost would be 3% of the selling price.

To qualified under this program, the buyer maximum income cant exceed  60,000, be a permanent legal resident of Puerto Rico for at list one year. Two unit property qualified for these program.

Puerto Rico’s house prices fell by 1.3% (2.66% in real terms) y-o-y in the second quarter of 2012, according to the Federal Housing Finance Agency (FHFA), a decline noticeably lower than during each of the previous three quarters, which saw average price falls of 5.9% y-o-y (8.7% in real terms).

Zillow recorded a median house prices fall of 0.8% during the year to September 2012 (median house prices fell to US$ 198,500, from US$ 200,000 the previous year).

Property sales in 2011 were 50% down on 2008.  2012 has been worse.  The first quarter of 2012 saw a 47% y-o-y residential sales decline, to only 603 units, and Q2 saw a 30.4% y-o-y drop to 937 units, according to the research firm Estudios Tecnicos, Inc (ETI).

Bottoming out of recession

Puerto Rico is much poorer than Mississippi, the poorest US state, and its economy is heavily reliant on the US Federal Aid.  The shift from agriculture to manufacturing through Operation Bootstrap in the 1940s failed to increase employment, and for every three agricultural jobs that were lost, only one manufacturing job was created.

The government is now the biggest employer with one-third of the total jobs.  The payroll for the around 300,000 government employees rose by 47.5% from 2001 to 2009, or from US$ 3.75 billion to US$ 5.53 billion, an average annual state employment growth of 6%.  By 2011, Puerto Rico’s public debt amounted to US$ 58.9 billion.

During 2000 and 2001, house prices appreciated by an average of 16.4% (9% in real terms) per year. But after the 9/11 terrorist attack house price increases slowed sharply, to 6.5% (0.4% in real terms) in 2002 and 7.2% (-0.6% in real terms) in 2003.

The Puerto Rican housing market has been sluggish since then.

The gloom was aggravated by the bankrupt Puerto Rican government’s two-week shutdown in May 2006.  Then in 2007 and 2008 the US housing market crash left Puerto Rico with a 3-year overhang of luxury houses, and a 5-year  inventory of houses worth US$ 260,000 to US$ 420,000.

Efforts to downsize the government started in 2007, and intensified after Governor Luis Fortuño took office in 2009. Fortuño reduced the budget deficit from 44% of revenues at the time he took office, to 7% in 2011, slashing the deficit from US$ 3.3 billion to US$ 610 million.

In 2009 the cuts were expected to require massive layoffs of around 30,000 public employees. Due to labour union protests the layoffs were reduced to only 12,000 people, but nevertheless propelled unemployment rate up to 16.6% by May 2010. Puerto Rico’s economy has been in recession since the second half of 2006 and the downturn continued in 2011, with a contraction of 1.5%.

But things are not as bad as they seem.  Compared with economic declines of 3.8% and 3.4% in 2009 and 2010 respectively, the moderate downturn last year suggests that Puerto Rico’s economy is bottoming. And although still high, unemployment in Puerto Rico has been declining since April 2011.

“We have stopped the loss of jobs and begun to create new jobs,” says Economic Development & Commerce Secretary José R. Pérez-Riera. By September 2012 unemployment was down to 13.6%.