admin's picture

Median price 53 percent higher than national average

SAIPAN, CNMI (Marianas Variety, April 13, 2011) – In Guam, mixed signals dominate the housing sector as the median price of a Guam single family home soared 18 percent from a year earlier to US$260,000, pushing the affordability index into increasingly unaffordable levels, the Captain Real Estate Group reported yesterday.

Captain Real Estate Group President Nick Captain, in his latest market update report, said the Guam median home price is now 53 percent higher than the national average of US$170,000.

The median price has doubled during the past decade, "partially due to market recovery and partially due to a change in product mix," according to Captain.

The median price increase occurred as transaction activity has slowed significantly with only 118 units closing during the first quarter of 2011, reflecting the slowest pace in 8 years (except for 113 units sold during peak of financial crisis in Q1 2009).

Stricter lending guidelines are one factor contributing to what could be Guam’s first major housing crisis in 20 years, as federal regulators have proposed rules that will likely boost interest rates and fees on many low-down payment loans.

Families looking to enter Guam’s homeownership market have also been recently hit by massive utility connection fees and increasing utility costs, further eroding the ability to pay mortgage costs.

As housing costs soar, the inventory of vacant housing becomes an increasingly critical component of projecting future demand. However, while Guahan Housing and Urban Renewal Authority’s recently completed US$350,000 Comprehensive Housing Study estimates vacant housing units at 9,125 (2009), the federal government’s recent free estimate reflects 2,800 units, a difference of over 300 percent.

As the number of housing units sold declines, the inventory of unsold units is increasing to unhealthy levels. Based on Q1 2011 sales volume and a Multiple Listing Service capture rate of approximately 40 percent, the inventory of unsold homes on Guam reflects nearly 15 months, compared to just 6 months on Oahu.

Condominium sales volume during the first quarter of 2011 surged to nearly US$13 million. This past quarter included 9 units sold at prices above US$500,000, as the high-end market continues its recovery from the recent lows in 2009. The condominium sector has been reflecting less volatility due to increasing investor confidence in Guam’s economic future.

During the first quarter of 2011, overall quarterly real estate sales volume on Guam exceeded US$100 million for only the second time since mid-2008, and Quarterly Island wide sales volume reflected 60 percent growth from a year earlier. The sales volume was boosted by the closing of the former Hotel Okura property in Tumon, which sold at a price over US$20 million. Future aggregate sales volume figures are likely to be impacted by foreign investment trends, which have been rebounding primarily due to progress on the military buildup. However, the impact of the three disasters in Japan on Guam’s real estate market remains unclear.

Rate this article: 
No votes yet

Add new comment