The State of Housing in Puerto Rico

Housing is an essential part of people’s lives. It is where people feel secure, have access to their most basic needs and possessions, and often share lives with the people they love. Housing not only provides physical shelter but also satisfies deep-rooted psychological needs. It is fundamental for people to thrive. The physical and psychological influence of housing shapes societies and builds communities. It affects overall economic development and social dynamics, and its impact can be felt for generations.

Last year, Foundation for Puerto Rico, published a study that sought to understand the underlying causes of the growing housing affordability challenge in Puerto Rico and identify solutions with the highest impact. We identified three underlying problems – first, a sudden reduction in the supply of habitable housing stock after the devastation of multiple natural disasters - second, a long economic decline following the elimination of a federal manufacturing incentive that caused massive loss of well-paying jobs in the areas of the island that had been dependent on that industry and - third a decades-long suburban and car-centric planning that constraints land use in high opportunity areas.

These problems are linked because most of the remaining well-paying jobs and new economic growth are occurring in the San Juan metropolitan area, with the most significant housing scarcity. In contrast, in the other, generally more rural areas, there may be more housing stock but little economic activity or jobs. 

Tourism is a critical source of sustainable economic growth; local tourism is a robust community economic multiplier; short-term rentals accommodate a significant proportion of Puerto Rico’s visitors and are the only source of visitor lodging in many regions. In certain areas, vacation homes and short-term rentals for tourism visitors have added upward pressure on housing costs. Any measures to curtail short-term rentals should be localized and limited and focused on ensuring that short-term rentals continue to be a source of income for individual local owners participating in the sharing economy and of jobs for residents rather than becoming a vehicle for the financialization of housing.

Housing is a highly complex topic because we are all stakeholders regarding housing. It should never be examined from one perspective, problem, or solution. Many jurisdictions worldwide have successfully implemented solutions to affordable housing challenges from which we can learn. Some local community-level models need to be expanded or emulated. The time to devise solutions that apply to our society’s context is now.

There is much evidence that the supply effect has the most significant impact on reducing housing prices, so strategies to increase housing stock are critical. In Puerto Rico, a high priority must be given to growing the supply of affordable housing, focusing on areas where it is most needed. Archaic, exclusionary zoning must be modified, and sprawling suburbs of single-family houses must give way to higher-density, lower-cost housing close to collective transportation and where jobs are happening.

Foundation for Puerto Rico is committed to solving critical challenges for Puerto Rican communities by acquiring knowledge and devising strategies and recommendations to improve their quality of life from a sustainable standpoint. We invite you to learn more about the causes we identified and possible solutions to increase the affordable housing stock in Puerto Rico. You can read the complete study here.