Is it a Good Time to Buy a Home on Guam?
I was just reading over the latest issue of "Casa Guam" magazine. I'm it comes out monthly and is free to anyone that sees a pile of them laying around. For the most part, it's a advertisement vehicle for real estate agents, with agent pictures splattered over most of the pages. I never really figured out the purpose of that, but that's another topic for my "private" blog. But, there is usually a good article citing statistics for sales for the quarter.
It looks like sales are on their way up on the island, but prices have dropped a bit. Median single family home prices are in the area of $210k now, with median condo prices just short of 120k. Maybe Guam has found it's ceiling.
I've noticed lately that there are some nice home being built in the "under $400k" range in Dededo and Yigo. A couple years ago it seems like everything was going high end. But The simple fact is, investors looking to cash in on Guam's military rental market need to face is that a high percentage of the military tenants top out at $2450 per month. What we're seeing lately is that for the nicer homes, $2500 – $2600 is the price owners are sticking with and they're getting it. So still to me, if you're looking for cash flow on your investment, buying a $400K house with a $2200 mortgage (I don't know if these number work, I'm just throwing a grenade here) doesn't make too much sense if you can only hope to clear $300 per month after you go through all the headaches of having a tenant.
In my humble opinion, I feel like the market has found it's limits. Beginning in 2006 when prices soared, landlords felt out the market by asking for higher rents and seeing what they could get. It wasn't that uncommon to find a home with an asking price of $3k per month and getting it for $2k. To put it quite plainly, they were trying to find out what they could get away with. Prices began to come back down to be more in line with the military OHA rate.
So what about those of us who pay our own rent?
Falling into this category myself, I know my way around the topic a little.
A lot of people write asking about more affordable properties. There are plenty to choose from, but they just don't get the press the way the new & shiny places do. There are plenty of places for rent in the vicinity of $1000 per month, but they're getting harder to find because of the demand. You just have to realize, especially if you're coming from the mainland U.S. that standards and living conditions here are different. That's not to say that they're bad, just different. I've been here for 7 years now and I don't think I'll ever leave. If you've lived in Asia before, you'll understand what I'm saying. Things are smaller, most places don't have kholer faucets and fancy landscaping.
My solution to the high cost of rent is to buy. Even if it's an inexpensive place. I don't recommend anyone that's only going to be here for a year or two get into the high end market unless you need a tax deduction, I just don't see how you'll get a return on your investment in a short time. Gains here will be nominal from now on, as the market as found its limits and is adjusting. In my building, I could rent a place for $1400, or pay my $1000 mortgage and $250 HOA dues every month. It's easy to rent, easy to sell, and should the bottom fall out of the market, which is very unlikely, how much will I really loose?
