Although the single family housing category reflected a relatively healthy 146 unit sales, the median price dropped by 25 percent, the sharpest drop since the 26 percent decline reflected during the global financial crisis impacted first quarter of 2009.
The median home price on Guam remains strongly correlated to the product mix ratio, or the relationship between the number of new versus older homes sold. When the ratio of new houses is high, the median price tends to increase, because new houses typically sell for higher prices than older homes.
If the new home sales product mix ratio continues to decline, the median price level is likely to decline further. Guam median housing prices first exceeded $200,000 in mid 2007, and peaked at $268,000 during the second quarter of 2011 due to the atypical ratio of new home sales. Total single family home sales in 2011 are projected to reflect 575 units, down sharply from over 700 units sold annually between 2006 and 2008, but far higher than the record low 380 units sold in 2000.
Guam median house prices increased dramatically from less than $110,000 in early 2003 to $170,000 by late 2006 as product sold transitioned from low priced foreclosure sales to new construction. The annual median home price ranged from approximately $195,000 to $220,000 between 2007 and 2010, but increased sharply during the first half of 2011 due to the significantly higher ratio of new home sales, many located with Guam’s largest subdivision, Paradise Estates.
Guam’s condominium sector also reflected a sharp decline in median price during the third quarter of 2011, as sellers remain reluctant to reduce asking prices, and sales volume has shifted to lower priced units. The 36 condominium units sold and $119,500 median price reflected during this past quarter were nearly identical to the second quarter of 2000, nearly 10 years ago, indicating future increases are imminent in this notoriously volatile sector of Guam’s real estate market.
During the third quarter, only three condominium sales closed at prices above $400,000 with the vast majority of sales closing at prices below $200,000.
Mixed signals dominate Guam’s real estate market as foreign investment has rebounded, but economic realities and uncertainty over the military buildup negatively impacted market activity during the third quarter of 2011. The rebound in foreign investment was highlighted by two major transactions that boosted overall quarterly sales volume to $91.6 million, an increase of 42 percent from the prior quarter, according to the report.
The closing of the Sherwood Hotel and the sale of an 11-acre beachfront site along Tumon Bay highlighted transaction activity and impacted third quarter sales volume by over $30 million. Year to date 2011 real estate sales activity reflects $257.9 million, up by almost 10 percent compared with the same period in 2010. The third quarter reflected a rebound in high priced sales with nine transactions closing at prices above $1.0 million.
The high end single family market also rebounded with 17 properties selling at prices above $400,000, according to the report.
Third quarter 2011 sales volume included two industrial property sales at prices over $1 million, including the $2.1 million sale of the 21,600 square foot Proline warehouse complex in Harmon Industrial Park. Multifamily apartment sales during the quarter included the $2.5 million sale of the 66 unit Granada Apartments Complex at Oka, Tamuning.
The report said commercial property sales during the third quarter included two grocery store related properties at prices from $800,000 to $2.5 million. In addition to the $17.6 million Tumon beachfront sale, the nearly 250 land sales closed during the quarter included three deals priced above $1.0 million and two sales reflecting unit rate prices over $200 per square meter.
Land sales at Guam’s premier gated residential communities have stalled with no lot sales recorded at Talo Verde or The Laguna at Pago Bay Resort during 2011. Guam’s premier residential subdivision, Talo Verde, continued through its foreclosure related sales activity with Department of Land Management records reflecting seven Talo Verde Acquisition LLC house sales during the third quarter at indicated prices of $540,000 to $600,000 with buyers including Guam Pinnacle Corporation, Manu Melwani, Tamio Clark, Felix P. Camacho and Louie Yanza, according to the report.
