Guam’s property market remains depressed

Guam house pricesGuam's housing market remains depressed. In 2013, the residential median price plunged by 10.5% (-10.1% inflation-adjusted) from a year earlier, to US$187,989, according to figures released by Cornerstone Valuation Guam, Inc. On a quarterly basis, residential prices fell by 6.3% (-6.6% inflation-adjusted) in Q4 2013.

  • The median price of single-family dwellings fell 9.1% (-8.7% inflation-adjusted) in 2013, to US$200,000. In Q4 2013, prices of single-family dwellings fell by 4.3% (-4.6% inflation-adjusted) from the previous quarter.
  • In contrast, the median price of condominium units surged 10.9% (11.4% inflation-adjusted) in 2013, to US$130,000. However on a quarterly basis, condominium prices plummeted 18.8% (-19% inflation-adjusted) in Q4 2013.

Property demand remains depressed. Total real estate transactions in Guam in 2013 were just US$261.7 million, less than half the US$472.9 million real estate sales in 2012, based on figures from Cornerstone Valuation Guam, Inc. There were a total of 761 real estate transactions in 2013.

Some high-priced transactions last year: Tumon ocean front in Tamuning at a price of US$10.5 million; Former Lada Estate site at Dededo at more than US$9 million; Agana Bay ocean front in Tamuning at US$5 million; Route 3 in Dededo at more than US$3.5 million; Dandan in Inarajan at about US$3.2 million; an apartment at Alupang Street in Tamuning at US$3.2 million; and a single-family dwelling at Sheraton Laguna vicinity in Tamuning at about US$2.6 million.

Guam had a total housing stock of 50,567 units in 2010, based on the 2010 Census conducted by the Bureau of Statistics and Plans.

The average interest rate for one-year adjustable-rate mortgage loans was 2.63% in April 2014. The average interest rates for 15-year fixed-rate mortgage loans and 30-year fixed-rate mortgage loans were 3.13% and 4.25%, respectively, according to Capital Real Estate.
Interest rates are rising, according to Capital Real Estate.

"A combination of excess supply and higher interest rates will negatively impact local housing market conditions," said Capital Real Estate. Guam's real estate market is expected to remain depressed this year, according to First Hawaiian Bank.

On the other hand, Guam's rental market is thriving. The rental market is driven by three segments, namely the subsidized military, subsidized Section 8, and local market. In 2013, the average monthly rent for condo/apartments rose by 33.7% y-o-y to US$1,843. The average monthly rent for single-family dwellings increased 29.3% to US$2,746 over the same period.

The number of condo/apartments rented in 2013 was up by 5.2% y-o-y to 1,083 units, according to Cornerstone Valuation Guam, Inc. Likewise, single-family dwellings rented increased by 2.3% to 676 units.

The military expansion in the island is the result of an agreement between the US and Japan to relocate around 8,000 US Marines and their dependants from Okinawa to Guam.

There are some restrictions on foreign property ownership. Guam is a territory of the US and its people have U.S.citizenship. Non-U.S. citizens who have not declared their intent to become permanent residents (green card applicants) can only buy one house or condominium in their personal names, which must be owner-occupied.

For investment purposes, however, a foreigner can form a Guam corporation with at least one local shareholder/director. The corporation can then buy as much property as it wants.

Volatile housing market

Guam condominiums annual price change graph

Guam's housing market is sensitive to external shocks. This is not surprising given the dependence of Guam's economy on tourism and US military spending.

In the late 1990s to early 2000s house prices stagnated. Then from 2004 to 2007 there was a four-year housing boom, spurred by speculative investments from foreigners and U.S. military spending, according to the Guam Comprehensive Housing Study (2009). In addition, declining mortgage interest rates fuelled demand.

House prices rose faster than local household incomes, which actually fell - the average household income dropped in 2008 by 2.7% to US$45,786, from US$47,062 in 2005, according to Guam's Bureau of Labor Statistics.
On the other hand, the median price of single family dwellings rose 54% from 2004 to 2007, while the median price of condominium units rose 58%.

Demand down for several years

Guam annual sales volume graph

Property sales fell by 32% to US$251 million in 2009, the lowest level since 2004, according to the Captain Real Estate Group, having already fallen 46% in 2008, following a peak sales figure of US$480 million in 2007.

Sales for single family dwellings in 2009 fell 21% to about US$130 million. Condominium sales plunged by about 50% to US$25 million, while land sales dropped 55% to US$50 million.

Despite falling sales, the 2009 Guam Comprehensive Housing Study estimated pent-up demand at about 3,665 households, mainly low and middle-income households. About 2,068 of these are would-be buyers, while the remaining 1,597 households are would-be renters.

After four years, property demand remains down. Total real estate transactions in Guam in 2013 were just US$261.7 million, less than half the US$472.9 million real estate sales in 2012, based on figures from Cornerstone Valuation Guam, Inc. There were a total of 761 real estate transactions in 2013.

Around 25,000 households are currently renting their home, 45% of them occupying single-family dwellings, 15% duplexes, 26% apartments, and 7% condominium units.

The number of condo/apartments rented in 2013 was up by 5.2% y-o-y to 1,083 units, according to Cornerstone Valuation Guam, Inc. Likewise, single-family dwellings rented increased by 2.3% to 676 units.

Guam's population at end-2008 was 176,401, and its median income was US$49,900, according to the US Department of Housing and Urban Development (HUD).

Housing supply

The construction of residential dwellings in Guam peaked in 2003, when about 1,031 permits were issued. Since then, residential construction permits have been steady, with an average of 470 units from 2004 to 2008. In 2008, 524 residential construction permits were issued, up 10.3%, according to Guam Department of Public Works. Figures for residential construction permits for 2009 are not yet available, but it is believed that there was a decline, due to lower foreign investments.

Despite the increase in the number of permits issued, the value of residential construction permits in 2008 dropped 24% to US$69.7 million, reflecting a move toward building low-cost houses.

The homeownership rate in the island in 2009 was 50%, one of the lowest in the US, based on the 2009 Housing Demand Survey.


Total housing units 53,673 100.0
Occupied Housing Units 44,548 83.0
Vacant Housing Units 9,125 17.0
For seasonal, rec. use 183 2.0
Owner-occupied 22,319 50.1
Renter-occupied 22,229 49.9
Unit Type
Single Family Dwelling 35,216 79.1
Multi-Family Dwelling 9,332 20.9
Number of Bedrooms
Studio 178 0.4
One bedroom 2,940 6.6
Two bedrooms 12,251 27.5
Three bedrooms 19,022 42.7
Four bedrooms 7,039 15.8
Five or more bedrooms 3,074 6.9
Source: Global Property Guide

Military housing market

Guam residential construction permit graph

The military build-up, scheduled to start in mid-2010, is a result of an agreement between the US and Japan to relocate around 8,000 US Marines and their dependents from Okinawa to Guam. The relocation is projected to be completed in 2014, and to cost over US$10 billion.

The move should create significant construction and infrastructure opportunities. Guam's population is projected to increase by 20%, or by approximately 30,000 people, creating demand for additional housing. Two years ago, foreign real estate investment rose sharply in anticipation of the military buildup.

Military households make up about 13% of total households in Guam, but the military housing market is independent of the local housing market.

Nevertheless, the military presence does impact the local housing market, in the following ways:

  • Some military personnel choose to live off-base
  • Military dependents may have to live off-base, or choose to do so
  • Housing for construction workers
  • Housing for civilian workers
  • The military buildup results in improved economic prospects for the island

Though Japan's newly-elected government has signaled that it is no longer so sure it wants to comply with the US-Japan bilateral agreement, the U.S. has affirmed that the program will proceed as planned. In May 2010, Japan will announce its decision.

Large rental market

Guam rental unit location graph

Guam has a large rental market. About half the total housing stock is renter-occupied. Unlike other tourist destinations, Guam's rental market does not exhibit seasonal characteristics, and the number of advertised rental dwellings is evenly distributed across all months.

Most residential leases are for one to three years.

Most rental units are in north Guam. In 2009, about 57% of all advertised rental units were in the northern region, primarily in Dededo and Tamuning; 42% in the central region; and the remaining 2% of advertised rental units were in the southern region.

From 2003 to 2006, advertised rentals rose by about 20%, peaking in July 2006. Since then, rents have fallen.

According to the Guam Comprehensive Housing Study, monthly rents in 2009 were as follows:

  • The median rent for studio apartments was US$486
  • One-bedroom apartments had a median rent of US$540 per month
  • Two-bedroom apartments had a median rent of US$689 per month
  • The median rent for three-bedroom homes was US$1,566
  • The median advertised rent for two-bedroom townhomes was US$1,307 per month
  • Three-bedroom townhouses had an average monthly rent of US$1,574

Tourism-based economy

Guam visitor arrival graph

Tourism contributes about 60% of Guam's total revenues. The island's second largest source of income is US military spending, which generates about 30% of revenues.

In the past two decades, tourism has expanded rapidly, causing a boom in the construction of hotels and golf courses. About 1 million visitors come from Japan annually and 150,000 from Korea. Guam's tourist hub, Tumon, features the Pleasure Island, large hotels, an indoor aquarium, and other entertainment facilities.

In 2008, there were 1,140,499 tourist arrivals in Guam, down 7% from a year earlier, according to the Guam Visitors Bureau.

Most food and industrial goods are imported into Guam, with 75% of the imported goods coming from the US.

Guam is an unincorporated territory of the US. The Governor is the head of government, and there is a multi-party system. Guam elects one non-voting delegate to the US House of Representatives. Guam has no votes in the Electoral College.

Despite Guam being a territory of the US, it has no real influence on the American political system. Guam residents are not allowed to vote for the President of the United States.