The Real Estate market in Cuenca is strong and has been showing steady and consistent growth over the last few years with prices increasing at a rate of about 12-14% per year. We believe that the market will continue to go up for at least the next couple of years and that any sudden swings in the market will be relatively small. In Cuenca having a mortgage is the exception not the norm and even those who have mortgages pay a down payment of at least 30% down. Growth in the local market is primarily driven by thousands of Ecuadorians who live abroad and are returning to Ecuador to retire and due to the worldwide financial crisis. Other factors contributing to the increase in prices include the trend for more Ecuadorians to be migrating to the cities verses the countryside, increased building costs, increasing import taxes, and the increase in demand due to an increasing world wide population. Even though prices in Cuenca are even lower than most other Latin American countries we often find people taking a wait and see attitude, sitting back, monitoring the market and hoping prices will go down. The main driver for the increase in prices, truth be told, does not have as much to do with supply and demand as it does with a stable housing market whose prices are denominated in U.S. dollars. Because Ecuador’s housing market is driven by real wealth rather than speculative loans and also because prices are in US. dollars it is practically impossible for prices to ever go down. Most of the confusion ex-pats have about the housing market in Cuenca has to do with their tendency to overestimate their numbers and influence while simultaneously underestimating the effects of dollar devaluation.
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