El Salvador's soaring property costs are hurting locals

Originally published on Global Voices

In recent years, Salvadoran real estate prices have increased to levels never seen before, primarily due to improved security – safer streets have made the country's real estate more attractive. However, the rise in property value has left many locals behind. Home ownership has become increasingly more out of reach for most Salvadorans.

The average price for a moderate-sized apartment or house in a mid-income area outside of the downtown area of the capital, San Salvador, ranges from USD 175,000 to 250,000, while a regular home in Sensuntepeque, a city in Cabañas – one of the poorest departments in El Salvador – costs between USD 60,000 and 150,000. Homes in Sensuntepeque were approximately 40 percent less expensive five years ago; most Salvadorans can't afford them now.

According to real estate agent Vilma Guerrero, property prices have risen meaningfully across El Salvador as growing confidence in economic stability and long-term security attracts both local and foreign investment. Tourist hotspots like El Zonte and El Tunco have seen 200-500 percent increases.

Why the increase?

The simple answer to the country's rising real estate prices is improved security; the country has gone from being one of the most violent in Latin America to one of the safest in terms of street crime. This has boosted confidence among investors and homebuyers.

The Salvadoran diaspora has been investing heavily in the country's real estate market. About 2.5 million Salvadorans live in the United States alone, representing 40 percent of El Salvador's current population. Salvadorans living abroad now see the potential for profitable real estate investments in the country to which many of them once feared returning.

Bitcoin enthusiasts have also been getting involved in Salvadoran real estate. Since 2021, many of them have started buying properties along the coast and in popular tourist spots, which has caused price hikes in those areas. They're drawn to El Salvador because it supports the Bitcoin economy and has a generally favorable attitude toward crypto currency.

Boosting infrastructure

The Salvadoran authorities have invested millions of dollars in improving infrastructure in key areas, including downtown San Salvador, coastal regions, and the eastern part of the country.

While such improvements have boosted property values, they have also made life harder for locals. For one thing, real estate prices have increased, making housing less affordable. San Salvador's historic district, for example, was the first to be revitalized – something that Salvadorans wanted for a long time. Not long ago, this area, with its iconic buildings, was one of the most dangerous in the capital.

The enhancements made to this historic area have increased property values and attracted tourism and investment. However, as a result, real estate prices around the capital have risen, including in Soyapango, a poorer area with a reputation for gang violence.

As part of the Surf City El Salvador project, coastal areas were also revitalized, which increased property values and attracted investors and tourists. Real estate agents report that property values in key coastal hotspots have surged by over 200 percent.

El Salvador's eastern region infrastructure projects include the new Pacific Airport and the Gerardo Barrios Highway. Although still under construction, the airport is expected to begin operations around the middle of 2027. Yet, property prices in the area have already begun to climb.

Why can't Salvadorans afford to buy?

Low wages and limited access to affordable financing make it nearly impossible for average Salvadorans to buy homes at current market prices. To begin with, 70 percent of the population works in the informal sector and lacks access to traditional financing, while only three out of ten Salvadorans – who must also contend with low wages – qualify to apply for conventional mortgages.

To afford a property in El Salvador, individuals must earn at least twice the country's minimum wage, which is currently USD 408 per month. They must also qualify for a mortgage loan, which is often difficult to obtain. Most banks require applicants to have at least two years of formal employment, good credit, and a debt-to-income ratio that meets the standard set by global financial institutions. Most Salvadorans don't earn enough to meet this criteria, however, which disqualifies them from accessing home loans.

To make matters worse, most new construction targets wealthy buyers, thereby reducing availability for those at the middle or lower-income level. As such, most Salvadorans continue to rent because they lack both affordable housing and reasonable financing options.

Reactions to rising prices

Casual conversations with the average Salvadoran reveal mixed feelings about the country's real estate market. Some people see the increased property values as a good sign, as they believe it means the country is growing and getting better. For them, higher property values signal progress and increased investment opportunities.

Others, however, are concerned that rising prices primarily serve the interests of the wealthy. They believe that government policies are prioritizing access for real estate investors and wealthy foreigners over typical Salvadoran households, and attest that locals are finding it more and more difficult to purchase homes in desirable locations.

While some celebrate the changes, therefore, others feel left behind – a difference in perspective that only highlights the complexity of the situation. People want development, but also want it to be fair for everyone.