Puerto Rican Housing Stimulus Program Helps Increase 2010 Sales

Housing Market Shows Strong Growth during Stimulus Period, Year-to-Year

SAN JUAN, Puerto Rico, Jan. 27, 2011 /PRNewswire-USNewswire/ -- As a result of the housing stimulus program Gov. Luis Fortuño signed into law on September 2, 2010, housing sales in Puerto Rico increased 18% year-to-year and almost 35% in dollar value during the last four months of 2010.  This is significantly better than most other markets.

According to statistics released by the Puerto Rico Housing Finance Authority, housing sales in Puerto Rico increased by 18.04% year-over-year during the four month period (September – December 2010) in which the incentives were offered.  For the full year (2009 vs. 2010), they were 10.42% higher.  The dollar value of these sales increased 34.76% during the last four months of 2010 and 19.86% year-over-year.

"The Puerto Rican government believes that reviving the local housing market is key to rebuilding the Island's economy," said Jose R. Perez-Riera, secretary of the Department of Economic Development and Commerce (DEDC).  "To assist this strategic industry, Gov. Fortuño asked the legislature to enact the most far-reaching housing incentive program in the United States.  Based on the results from the program's first four months, it looks like the program is succeeding in helping Puerto Ricans achieve the Caribbean American Dream."

During these two periods, sales of new construction jumped significantly.  During the last four months of 2010, sales of new houses jumped 34.63% and 18.94% in dollar sales compared to the same period in 2009.  Year-over-year, the increases were 31.86% and 43.86% respectively.

Sales of existing homes also increased.  The increase was 13.34% during the last four months of 2010 and the dollar value increase was 42.41% compared to 2009.  For the full year, the increase in unit sales was 4.22%, while sales increased 9.23% in dollar value.

The increased growth during the last four months of 2010 was helped by three new programs designed to stimulate the housing market.  The programs run from September 1, 2010 to June 30, 2011.  They are:

Housing Boost 2011 – Designed to make it cheaper and easier for consumers to purchase a new home, Housing Boost 2011 eliminates the property tax on homes for five years.  

The program also exempts purchasers from paying the Island's current special property tax that expires in 2011. Purchasers will also pay zero ($0) tax on capital gains when the home is sold in the future.  Those who purchase an existing home will pay only half the tax on capital gains. Sellers of a new or existing home or commercial property valued up to $3 million and making a capital gain from the sale will pay zero ($0) tax on the capital gains.

The program also eliminates fees for all internal revenue stamps and vouchers required for the execution and filing of deeds with any public registry on new homes purchased during this period. In addition, consumers who buy an existing residential or commercial property valued up to $3 million will see fees for stamps and vouchers reduced by 50%. Those selling an existing residence during this period will pay zero ($0) in stamps and vouchers fees for the cancellation of mortgages being transferred.

Finally, the program also increases the credit against ordinary income that a homeowner can claim from $1,000 to $5,000 if there is a capital loss on the sale of a residence during the target period.  The credit can be taken annually for up to 15 years.  

My Mortgage Insurance – This program is aimed at purchasers of new and existing homes with a value of up to $300,000. Under this program, the mortgage bank can finance up to 105% of the purchase price. Insurance will cover 17% of the risk of the sale and the bank will take up to 88% of the risk. The commission that is charged will be paid by the bank, developer or seller, and the buyer will have to pay zero ($0) out-of-pocket cash.

My New Home – The third initiative gives homeowners of subsidized public housing a voucher worth 5% of the purchase price within the parameters of the Federal Housing Administration (FHA).

"These incentive programs are unprecedented in the housing industry of Puerto Rico," continued Perez-Riera.  "In addition to helping turn around the local housing market, they are also designed to revive the local construction industry, an industry that generates thousands of jobs."

These incentives are available not only to residents of Puerto Rico, but all Americans and other investors who wish to buy property on the Island.

SOURCE Government of Puerto Rico, Department of Economic Development and Commerce