Many countries enjoyed a real estate boom between 2003 and 2007. And as such, after the storm comes peace: in 2008, one of the biggest recessions of the century was kick-started. Property prices dropped in many cities, especially those located in tourist areas. In the case of the Puerto Plata province, many of these apartments and houses are secondary houses for foreigners, making them the first to be put up for sale when their owners lose their jobs or are in need of cash flow.
As a consequence of a recession, the sale volume decreases, sometimes down to 80% of what is was before the recession, and the inventory of properties on the market for sale increases. In part, prices are determined by supply and demand, and since there is a surplus of properties on the market which is not selling, the owners in bigger need are forced to lower their prices. This lowering of prices drags those who did not want to sell with such urgency too, for if they would wish to sell they would have to hope for less, because there are more attractive prices available.
Tourist properties in the Puerto Plata, Sosua, and Cabarete areas were affected by the recession that started to show in 2009. Poor real estate activity during the 2008-2011, and as a consequence, also big opportunities for buyers seeking the same properties as before, but now being able to pay prices lowered by an average of 20%. In many cases, these owners were willing to sell at a price 30% to 40% under the original price, accepting a great loss.
The majority of tourist property sales made in 2012, which were relatively few, were done under big discounts. This is still happening in 2013, but less frequently because such underpriced inventory is being sold. Therefore, we are seeing a return to prior market values.
It should be noted that some of the new projects developed over the last few years did not suffer such a harsh drop in sales prices for they were new products and the developer often had no urgent need to sell. Plus, some of these products already had competitive prices.
Now is a good time to buy properties that have been up for re-sale for some years. A big part of these properties sold between late 2012 and the first month of this year, but some good offers still remain. In addition, many of the owners who are motivated to sell offer financing options for several years under low interest rates.
This scaled effect is not applicable to properties outside tourist areas, due to the fact those properties are usually occupied by their owners or renters, and do not remain vacant most of the year, as is the case with tourist properties, which are used by their owners only on vacations.
This effect only took place in the south of the United States, for because of its warm weather, many North Americans have a second property.