Sunday, June 15, 2008

The Case of Puerto Rican Housing

If you build it, they will come... or so goes the saying. But while on vacation in Puerto Rico, I noticed a strange phenomenon- completely abandoned buildings. Many were severely decrepit. I even saw a tree growing through one building.

A typical site in Puerto Rico

I mean there was an abundance of them, and this was in the heart of the capital, San Juan. I even saw a beach-front hotel which was completely rundown. As I saw all this I couldn't help but wonder how so many good buildings could deteriorate into such a state.

It turns out, there was a very large property boom in the 50's and 60's which was followed by a very sharp drop in the 70's and 80's. I was hoping to research more details on the matter when I got home, but so far I've found limited information about it online. Still, the sight was a stark reminder that even real estate markets are held by reality- you need people to fill those buildings in order to add any real value. It seems Puerto Rico built way more than it needed, and they are reminded of their past excesses daily.

Is the U.S. in a similar situation? Unlikely, because I feel there is an abundance of people who would come and live here if the price is right (and immigration allows it). Also for those interested, you can find a 12 or so year history of housing units and vacancies here.

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