With contracts hanging in the balance, Many employers on Guam are watching closely as the lawsuit over H-2B temporary worker visa denials plays out in the court systems — but they aren’t the only ones.
Guam realtors already know it's a challenging market. Add to that the impending military buildup and the effective stoppage of skilled labor, and those challenges can become full-scale obstacles.
Realtor Patrick Supple is concerned about what the H-2B limits mean for housing costs.
Supple, who works at The Real Estate Professionals with realtor Kishin Advani and principal broker Christopher Murphy, said that Guam’s housing inventory is mostly sufficient for current demand, but just barely.
Of about 260 homes listed on Guam’s real estate multi-listing service, 104 are pending sales, indicating that the buying process has begun. The largest percentage of available homes are in what Advani calls the mid-level zone, priced between $201,000 and $350,000. Of 125 mid-level homes on the market, 52 are pending sales.
Mid-level homes are generally in highest demand, as most buyers on Guam are interested in single family dwellings. In the last few years, Murphy said, there has been a limited increase in high-level homes, priced between $351,000 and $550,000, but it’s slower growth.
Since the H-2B visa cutoff, home construction costs have risen and construction times have lengthened. With the military buildup on the horizon, realtors are bracing for an influx of people looking to buy or rent in a market that has added very little new inventory.
If that happens, prices could escalate dramatically, with locals affected most.
“We always try to keep first time, local buyers in mind, but occasionally there are down payment issues and financing issues. So if interest rates go up – which, they’re trending upwards – and if construction costs go up, then what limited opportunities there are for locals are further reduced as the cost of inventory coming online increases,” Murphy said.
According to Murphy, many people don’t realize how heavily Guam’s real estate market is driven by military. Military members are almost primarily in the rental market, but now “every bank is offering some kind of VA program, and it’s the military guys buying under the VA program. If that stops, it’s like dominoes – values will drop, inventory will drop, new sales will drop, rentals will drop.”
In Yigo, realtor Shalyn Allen caters almost exclusively to military members and families at Welcome Home Realty. Most military buyers, Allen said, want what they had on the mainland — a type of home in short supply on Guam.
“Four bed, three bath, fenced yard, modern amenities. That’s what everyone wants – they want a dishwasher, they want a garage,” Allen said. “If you have that we are looking for it, always.”
Gated communities and fenced properties with American-style amenities are the hottest properties on the Guam market. Since that market is driven by military, the prices are often driven by military housing allowances.
“The most popular rental amount is $2,450, which is the allowance for the average military member with family dependents. For purchase our most common price range is between $380,000 and $475,000, although that is becoming a little bit tougher as we’re seeing prices come up on the cost to build,” Allen said.
So what happens if costs go up?
“We’ve seen over the last 10 years that the military does their housing allowance depending on the market. But they’re not going to have inventory to move off base, and most military guys are not going to move into a house from 1975. They want a new house with new features, modeled after mainland standards,” Murphy said. “You won’t be able to build those homes if the costs of construction keep going up. It’s going to be less desirable and affordable, then there won’t be inventory out there for these 5,000 guys and gals who are supposed to be coming here."
And for civilians?
“I think our market is geared towards that military map. For anyone who has a house, why wouldn’t you try for the most you can get? And for military, it’s use or lose — they’re not going to get to keep the difference,” Allen said. “But for everyone else, what you can get for $1,500 a month is a little bit depressing.”
Military influence on prices does largely depend on proximity to bases and central location. Additionally, Community First Credit Union loan officer Frank Chaurfauros believes that there are still enough developments being built and enough financing options available to keep providing locals with opportunities to buy.
Given the amount of investment the military is doing in building up base housing, Chaurfauros said, the buildup might even mean more rental properties freed up for locals. And while he acknowledges that building a new home will be “a little more expensive with a longer wait period,” there are still “quite a few different ways to get a loan financed nowadays, and people are still buying houses.”
Chaurfauros does believe that if the H-2B issue is not resolved, the military buildup will not move forward due to lack of workers.
If that’s the case, Murphy suspects he and a few other realtors will be out of a job. “I think from our standpoint, if the military stopped becoming involved in the housing market because of inventory issues and rental issues, it would all dry up. That shows the importance of that one sector in the real estate industry.”
Supple agrees, and hopes that the current administration, Del. Madeleine Bordallo, even the Guam Association of Realtors will “take this issue seriously and try to mitigate the problem as quickly as possible. It’s the federal government that’s pushing to get more boots on Guam, but it has to be a win-win for the local community and the military.”