Real estate appreciation in Ecuador is quite a bit different than the United States. In the U.S., the real estate market is very liquid with properties changing hands often. The volume of transactions and easy access to credit apply upward pressure to housing prices.

However, real estate in Ecuador is treated more like a savings account or long term investment, and used as a hedge against inflation.

Most real estate in Ecuador is for sale, for the right price. But that price is usually far above the assessed value because if they sell one property, they must immediately buy another because the banks only insure deposits up to $32,000. That means housing prices aren’t very negotiable and real estate doesn’t change hands very often.

Due to hyperinflation in the late 90’s and the crash of the Sucre, Ecuador’s currency at the time, most Ecuadorian’s remain distrustful of the banking institutions. People who owned real estate during the transition from the Sucre to the Dollar in 2000 fared much better than those who only had cash in the banks.

Credit is also not as easy to get in Ecuador, and the interest rates are far higher than the U.S. This means most real estate is purchased with cash or mostly cash, limiting the potential market and reducing liquidity.

Additionally, the economy in Ecuador has been very flat for the past several years and inflation (before the pandemic) was sitting around zero percent. Wages have also remained mostly stagnate.

This means the price of most things has remained very stable, and since wages haven’t increased much, you don’t see a lot of home upsizing. People tend to stay put for a long time and many live in their family homes with multiple generations under one roof.

If you buy real estate throughout most of Ecuador, you can expect very little to no price appreciation over the first 3 to 5 years.

The one exception is the coastal region due to the movement of Ecuadorians from the cooler mountain region and congested cities to coast. With more people moving to the beach, housing is in short supply, which has driven up the prices of both for sale and for rent properties.

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