Real estate in Ecuador is ranked as some of the best in the world; at least for retired individuals who are looking for property investments abroad. The country is friendly to expats, the prices are affordable, the process is simple and fast and best of all, Ecuador is one of the best countries to retire in. This is one of the reasons why retirees are flocking to this country and starting to buy available properties in Cuenca.
The Cuenca, Ecuador Real Estate Scenario
Before you invest in anything, you have to look at the current situation of the real estate market in Cuenca, Ecuador. We have come across an article that discusses the Ecuador real estate scenario; specifically in the city of Cuenca.
The article revealed the following facts about the real estate market:
- There are so many unsold properties in Cuenca that new construction could be stalled or delayed; at least, those outside the dozens of construction projects that are already underway.
- The slowdown in real estate sales is attributed to the unforeseen increase in prices in recent years, especially since 2007.
- Ecuadorians who are returning from other countries have fueled the increase in home sales, specifically in the condominium market. This trend is slowing down and this means there will be fewer property investors available. In the last decade these overseas workers have come home or relocated to Cuenca but this trend seems to be slowing down.
- The large inventory in the condominium market is due to the wrong assumption of the builders that the homecoming of Ecuadorians will continue.
- Other causes of the rising cost of homes are the increase in land prices, expensive building materials and labor cost. The land prices in Cuenca have gone up from $50 per meter to $160 per meter. The cost of concrete and steel has risen by more than 150% since 2007. Labor costs have increased due to new government regulations and because of a 40% increase in the minimum wage since 2008.
- New rules that have been imposed regarding funding and permitting could compromise the construction of new homes, especially for small builders.
All of these factors make it difficult for builders to maintain the price of $30,000 to $40,000, which is the usual amount that Cuencanos can afford.
What does this mean for expats wanting to buy real estate in Ecuador?
As much as things are looking depressed in the real estate market in Ecuador, experts are saying that it does not seem like it is leading to the same housing collapse that happened in the US. The article mentioned that although foreigners have reduced their real estate investment by 50%; developers have come up with a new strategy. They will allow buyers to defer 70% of their respective payments to closing; at least this is true for those that are still under construction.
The experts also believe that home prices will not be declining soon and might still continue to rise, but only in the 3% to 4% range. And they are also saying that the government regulations, although affecting the price of homes, are imposed for the protection of the market.
So if you are retired and you wish to invest in Ecuador real estate property, you may want to proceed with caution for now. When inventory is high and the market does not seem like it is interested in buying a home; buyers will be in a better position to negotiate with sellers and property representatives. And if you can afford to buy a property now, it is encouraged that you invest in a rental property. The article mentioned that the rental market is growing; since most people cannot afford to buy new homes.
Although news about real estate in Cuenca is negative, you have to realize that this city is still one of the most prominent real estate markets in the country. The market will improve; maybe not right away, but in the future.