Economía y Agricultura en Puerto Rico – Eduardo Bonilla

Is it better to buy a house or rent in Puerto Rico? (English Version)

On the island, for many of us Puerto Ricans, the question “Is it better to buy or rent?” is no longer simple. Housing prices have risen significantly, rents are sky-high, and the average salary is not enough to cover those expenses. In this article, we compare the costs, risks, and benefits of both options to understand which one may be more viable on the island today.

Current panorama of the real estate market in Puerto Rico

1.1. Increase in housing prices

• In the first quarter of 2025, housing prices or values in Puerto Rico increased by approximately 11.6% year over year.
• The House Price Index (HPI) for Puerto Rico in Q2 2025 is 246.52, representing a year-over-year increase of approximately 10.8%.
• In 2024, the average housing price rose by 15%, reaching around $221,824 for typical homes; new or modern homes increased by up to 20%, averaging $351,407.
• These data show that buying a house today involves higher entry costs and that property values will likely continue to rise.

1.2. Rental market

• In the capital city, San Juan, a one-bedroom apartment can cost around $2,600 per month (Q1 2025). For two bedrooms, the average rent during that period was $3,800 per month.
• In general, average rents in Puerto Rico are around $2,400 per month in high-demand urban areas.
• The rental market in Puerto Rico is classified as “very soft” because the vacancy rate has increased to approximately 12.3%, according to recent studies.
• Since 2010, while homeownership has declined, the number of households that rent has grown proportionally.

1.3. Profitability for investors

• In the island’s capital, San Juan, the gross rental yield for apartments is around 7.89%. However, this calculation does not yet account for costs such as maintenance, taxes, and fees.
• En mercados turísticos (apartamentos vacacionales), esos precios pueden subir, pero también implica mayor rotación, costos operativos y demandas de gestión.

Average salary vs. housing cost

Here is the real challenge:

• The average annual salary in Puerto Rico is about $28,000 (approximately $2,333 per month before taxes).
• With that income, paying an average rent of $2,400 or a mortgage payment on a $250,000 home is extremely difficult for an average worker.
• This means that many families allocate more than 50% of their income to housing payments, well above the 30% recommended by financial experts.

Comparison: Buying vs. Renting

Here are some key factors you should consider:

Factor	Buy	Rent
Initial investment	High cost: down payment, closing costs, legal fees, and others	Low initial cost (deposit, first month, others)
Fixed monthly costs	Mortgage + insurance + maintenance + others	Rent + possibly renter’s insurance + utilities
Appreciation / revaluation	Possible profit if prices continue to rise	You don’t gain profit, only expenses
Flexibility	Less flexibility to move if your circumstances change	Easier to move if your needs change
Market risk	Risk of price drops or interest rate increases if it’s a variable mortgage	Risk of rent increases or the landlord deciding not to renew
Hidden costs / maintenance	All maintenance is your responsibility	In many leases, major maintenance is covered by the landlord
Tax benefits and incentives	You may benefit from tax deductions (if applicable)	Fewer tax advantages for tenants
Affordability with average salary	Very difficult: mortgage payments exceed the capacity of middle-income earners	Very difficult: average rents exceed middle-income earnings

Numerical scenario

Let’s suppose:

• A home that costs $250,000
• Down payment of 3.5% under an FHA loan → $8,750
• Mortgage of $241,250 with an annual interest rate of 5% over 30 years
• Approximate monthly payment: $1,290 (principal and interest only, excluding insurance, maintenance, and other mandatory expenses).

The real problem:

• Many families don’t even have that $8,750 down payment.
• On top of that, closing costs (legal fees, appraisal, insurance) can add an extra $6,000–$10,000.
• In addition, good credit and the ability to demonstrate stable income are required.

Additional factors

• Tourism and vacation rentals: Airbnb and similar platforms have reduced the supply of long-term rental housing, pushing rents to higher costs.
• Insurance and maintenance: Puerto Rico is vulnerable to hurricanes, which drives up insurance costs and increases the expense of homeownership.

Conclusion

In Puerto Rico, both renting and buying are difficult for the average worker.

• Buying can be a better long-term investment, but it requires a very high initial capital.
• Renting offers flexibility, but it consumes an unsustainable portion of monthly income.

Result: The real problem is not just the decision to buy or rent, but that average salaries are not aligned with housing costs, creating an affordability crisis in Puerto Rico’s real estate market.

The Official Sponsor of this article is:

De Mi Tierra a Mi Pueblo Corp. 🌱 Committed to Agriculture and Food Security in Puerto Rico.

References

• Global Property Guide – Puerto Rico Residential Real Estate Market
• HUD – Comprehensive Housing Market Analysis: Puerto Rico
• Realtor.com – Puerto Rico Home Prices Surge as Wealthy Buyers Flock
• YCharts – Puerto Rico House Price Index
• Reason.org – Puerto Rico’s Housing Crisis
• Christie’s Real Estate PR – Rentals in Puerto Rico & Cost Insights
• U.S. Bureau of Labor Statistics / Census PR – datos de salario promedio en Puerto Rico.

September 25, 2025