Housing remains unaffordable for a great many in Puerto Rico
- The San Juan Daily Star
- Sep 17
- 3 min read
By THE STAR STAFF
The Housing Affordability Index, prepared by Estudios Técnicos Inc. (ETI), continues to highlight the challenges consumers face when trying to acquire housing, even though there was a moderate decrease in average prices during the first quarter of 2025.
Leslie Adames, director of economic analysis and policy at ETI, noted that the index rose from 53% in the fourth quarter of 2024 to 56% in the first quarter of 2025. However, he noted that the slight improvement does not signify a real enhancement in the affordability issues plaguing the island’s housing market. The index remains significantly below the pre-pandemic historical average of 84%, indicating that much work still needs to be done. Despite lower prices, housing remains out of reach for a large portion of the population.
The Housing Affordability Index measures a typical family’s ability to qualify for a mortgage loan with a 20% down payment. A value of 100% indicates that a family has enough income to secure financing at the average home price. Values below this threshold indicate challenges in accessing financing.
According to figures from the Office of the Commissioner of Financial Institutions, the average price of new homes fell by 19%, from $353,681 in the first quarter of 2024 to $286,234 in the same period of 2025. For existing homes, the decrease was a mere 3%, dropping from $215,973 to $209,284.
Conversely, financing pressures persist as 30-year mortgage rates have not significantly declined. In the first quarter of 2025, the average rate was 6.82%, which is very close to the 6.73% recorded at the end of 2024 and the 6.75% noted in the first quarter of 2024.
“To illustrate the impact on consumers, someone with an average annual income of $32,091 (roughly $2,674 per month) would face monthly payments of about $1,490 for a new home (56% of their income) or $1,090 for a used home (41% of their income),” Adames said. “Both scenarios exceed the recommended threshold of 30-35% of income for a mortgage. These calculations, which only include principal and interest, underscore the magnitude of the problem: housing costs remain out of reach for most potential buyers.”
It is important to note, however, that home sales saw an increase during the first quarter of 2025, showing a positive trend compared to the same period in the previous four years. According to the Office of the Commissioner of Financial Institutions (OCIF by its acronym in Spanish), 2,467 units were sold during this timeframe, representing 236 more sales than in the first quarter of 2024. The growth was concentrated in the new unit segment, where sales surged by 431 units, from 148 in 2024 to 579 in 2025. In contrast, sales of existing units decreased by 195, from 2,083 to 1,888 during the same period.
“The reduction in housing prices and public policies aimed at incentivizing home purchases are necessary conditions, but they are not yet sufficient to address the ongoing issues of housing affordability,” Adames stated.
He pointed out that multiple challenges continue to affect real estate market dynamics, including:
* High construction costs, exacerbated by rising material prices and federal tariffs on aluminum and steel.
* Labor shortages, worsened by immigration policy restrictions, with no immediate solutions in sight.
* High financing costs, as mortgage rates are influenced by long-term interest rates, which in turn are affected by the bond market and factors beyond our control, including the complicated fiscal situation of the U.S. government, declining savings levels due to demographic changes, and inflationary expectations.
“None of these factors indicate a return to normal in the short term,” Adames said. “The situation is further complicated by internal consumer issues, as household budgets are strained and personal debt continues to rise, limiting the ability to qualify for housing.”
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