During the first half of 2008, Guam’s overall real estate sales activity dropped by over 40 percent compared with 2007 figures. Through June 2008, Captain Real Estate Group reported that island-wide, annualized 2008 sales volume reflected $409.3 million, down by over 40 percent from the $686.8 million in sales reflected during 2007. According to Nick Captain, Guam’s real estate market remains strong and the massive decline must be considered on a relative basis. “The pace of real estate sales during 2008 is tracking just under that reflected during 2006, and that's more than double the annual sales volume in 2004 and 2005”, reported Captain. The 2008 market slowdown was exacerbated by a series of local government actions that have resulted in a reduction in the potential profits associated with real estate investment and development. These actions include mortgage recordation fee hikes, utility connection and rate increases, and most recently, a development moratorium. “The development moratorium was a fatal blow to numerous potential developers considering investing on Guam”, according to Captain. “We look forward to a resolution of the moratorium issue as quickly as possible”, he added.
Captain noted that the government related issues were not the only factors behind the real estate market slowdown in 2008. “Probably the most significant issue impacting transaction activity is the wide gap between buyer and seller expectations”, said Captain. Additional factors include notably higher prices (following significant price growth between 2004 and 2007), competition for foreign investment (destination such as Florida, Las Vegas and Southern California have suffered massive price declines since 2006) and fewer high-priced “trophy” asset sales, such as hotels and golf courses (partially due to global credit and liquidity issues).
Commercial properties led the decline with annualized sales down by over 70 percent during the first half of 2008. Last year’s sales activity was highlighted by the sale of the 228,000 square foot Guam Premier Outlets Shopping Center. “Guam’s commercial real estate sales volume periodically fluctuates and the global credit and liquidity squeeze means that last year’s record commercial sales volume of $76.8 million is unlikely to be surpassed in the near term,” said Captain. Apartment building sales activity during the first half of 2008 declined by over 60 percent “primarily due to limited supply of quality product” noted Captain. Land and condominium sectors both declined by over 30 percent compared to 2007.
The 2008 single family residential real estate market on Guam reflected a decline in sales volume of less than 10 percent compared with 2007. However, sales volume in 2008 is 10 percent higher than 2006, a strong indicator of local consumer confidence. After three years of double digit percentage growth, the median price of a Guam single family dwelling stabilized during the first half of 2008. The median price of a single family dwelling during the second quarter of 2008 reflected $199,100. The 203 houses sold during the second quarter of 2008 reflected the second strongest quarter in over a decade. Captain reported that high priced residential property sales are especially weak due to the wide gap between seller and buyer expectations. For example, only two houses on Guam sold at prices above $500,000 during the second quarter of 2008 while more than 50 are currently listed for sale in the Multiple Listing Service. The median price of a condominium unit on Guam reflected $130,000 during the second quarter, the lowest median price since early 2007. Also during the second quarter, condominium unit sales volume at 68 units sold was the slowest in over two years. However, 2008 condominium sales include the $1,600,000 sale of a Tumon beachfront unit, a record post-bubble price. The most significant real estate transactions on Guam during the first half of 2008 included the $3.0 million sale of 10 acres of former federal excess land along Route 3, the $2.75 million sale of 5 acres of land along Pago Bay and a $2.45 million sale of 70,000 square meters of residential land in Yigo.