Puerto Rico's affordable housing crisis: young professionals priced out as policy favors luxury tourism

Valeria Hernández and her husband Gabriel Sánchez have been hunting for a home for more than a year. Both in their late twenties, they qualify for a mortgage up to $160,000 with no government assistance. Yet every property they find slips away to cash buyers with deeper pockets. They still rent. They grow more discouraged by the week.

"It's been really frustrating," Valeria said. "What you could get for $140,000 not long ago now costs $200,000. How has everything changed so fast? You look at salaries and think, how do you ever get there?" She works alongside colleagues in their twenties and thirties who console each other in the break room. They have begun to believe there are no opportunities left.

Their struggle is not personal misfortune. It is the shape of a policy choice. A decade ago, 84 percent of Puerto Rican families could qualify for a mortgage with a 20 percent down payment. Today that figure has collapsed to 56 percent. New home prices have doubled—up 124 percent over ten years—while existing homes have risen 56 percent. Last year, a new home in Puerto Rico averaged $439,006, nearly double the $223,725 average for an existing property. The math is unforgiving. Young professionals are leaving the island.

The government has made a deliberate bet. To build a luxury condo-hotel or a high-end resort residence, developers receive tax credits of up to 60 percent, exemptions from construction fees, reduced tax rates, and expedited permitting. To build a home for the middle class, developers receive nothing. They shoulder rising material costs, labor expenses, insurance premiums, and interest rates alone. They must also build the infrastructure that private telecom companies and the electric utility LUMA Energy will later connect to—at no cost to those corporations. Thirty to 35 percent of the final price of an affordable home now goes to government-imposed costs, according to Pinsy Rivera, president of the Puerto Rico Builders Association.

The numbers tell the story. In 2023, the government forgave approximately $211.5 million in taxes through five categories of credits and exemptions for tourism development. That figure is projected to rise 11.3 percent over five years, reaching $235.5 million. Meanwhile, Law 212 from 2002—designed to incentivize residential development in urban centers—costs the government only $1.7 million annually and has been frozen by the Fiscal Oversight Board for a decade.

Developer Alejandro Brito put it plainly: "There's a national emergency. We're losing our young people, our young professionals. But for tourist residential projects, the government chases after them, pushing them forward." He and others in the construction industry say the policy is working exactly as designed—capital flows where returns are highest and risk is lowest. That is tourism, not housing for workers. Eleven residential projects are currently under construction across Puerto Rico, with prices ranging from $400,000 to $7.75 million. Meanwhile, at least 30 tourist residential projects are in permitting or active construction, scattered not just through wealthy enclaves like Condado and Dorado but also through Guayama, Vega Alta, Aguadilla, Isabela, Loíza, and Fajardo.

Law 100-2025, passed to ease restrictions on affordable housing projects, has sat unimplemented for a year. Agustín Rojo, a developer whose firm has built both modest neighborhoods and resort-style communities, testified that the government has simply not acted. "It's discouraging," he said. "We haven't been able to produce a coherent housing policy." He and Brito argue the solution is not subsidy but relief—reducing construction fees that have climbed from 3 to 5 percent to as high as 10 percent, deferring municipal costs, reconsidering impositions set in an era of stable prices and better affordability. "It's not about subsidizing the industry," Rojo said. "It's about not imposing so many costs, especially for affordable housing."

The construction industry stands ready to build for the middle class, Brito insists. That was the norm in Puerto Rico before the pandemic—homes for workers, not just the wealthy. But policy has shifted. Money seeks its highest return and lowest risk. Until that changes, young couples like Valeria and Gabriel will keep renting, keep hoping, and eventually, like so many others, will leave.