Whether Guam households are looking to buy a home or move to a rental apartment of standalone house, soaring prices have become an obstacle to many looking to move to a bigger rental or trying to achieve their homeownership dream.
The recently released report from a $500,000 study commissioned by the Guam Housing and Urban Renewal Authority states rental prices have increased dramatically.
• In 2019, the average rent paid by Guam households for a two-bedroom, single-family home was $1,831. This represents a 47.6% increase over the average rent of $1,240 in 2010.
• The rent paid in 2019 for a two-bedroom multifamily unit was $1,333. While the jump in price for two-bedroom multifamily rentals between 2010 and 2019 was not as significant as for single-family homes, it did increase by more than 30% during that period.
• Single-bedroom multifamily units saw the largest increase in rent, climbing 45.7% between 2010 and 2019.
Military households who get a housing allowance have influenced pricing in the home rental market on Guam.
The study shows military household rent was, on average $1,916 in 2019. For nonmilitary households, the average was $1,069.
With low interest rates for home loans, at 3.5% or lower, households that can qualify for home loans are paying a lower average housing cost than their Guam counterparts who are limited to renting.
The current monthly shelter payment – including mortgage and utility payments for homeowners – averaged $1,294 in 2019, the study states.
Those who currently own their own home and want to buy their next housing unit said they could afford a median monthly payment of $1,382. That is roughly $100 higher than the current median monthly mortgage payment of $1,294, the study states.
The main challenge for households looking to buy a home for the first time is the cost of houses on Guam, which has also increased substantially.
The cost to build a new home is reaching nearly $300,000, according to the study, which looked at building permit applications for new house construction.
The median sales price for a standalone house on Guam was $271,000 in 2019. A decade ago, in 2009, it was $200,000, the report states.
The median household income on Guam did increase to $63,000 in late 2019, up from about $50,000 in 2010.
The Guam Housing Study and Needs Assessment Report was completed this month by Hawaii-based SMS Research and Marketing Services Inc. and Guam-based PCR Environmental Inc.
The study includes a description of Guam’s current housing conditions, the prospects for growth in Guam’s housing stock through 2040 and an exposition of the expected impact of a proposed military buildup on Guam between 2024 and 2026.
“The study reaffirms our belief that we have a huge shortage of affordable homes on Guam," said GHURA Executive Director Ray Topasna.
"My management team and I have been talking to the GHURA board and the administration about our plans to aggressively address this issue. We will be talking to the U.S. Department of Housing and Urban Development very shortly, and are optimistic that HUD will support some of our proposals."
New home prices are driven up by foreign buyers and investors so that young families have been unable to afford to buy or rent in Guam’s recent market, Topasna said. "Instead, they have been staying with their families. Hard data are not available to support this contention, but this kind of interference with household formation is a common reaction to high housing prices. Other data presented in this report corroborate high and increasing pent-up demand that forces households to double up."
The study also found:
• In 2019, most potential buyers – 83% – preferred single-family detached homes, with another 10% desiring a townhouse and only 7% looking for a condo. When asked if they would accept a multifamily dwelling if they could not find a single-family home in their price range, 7 out of 10 said they would consider it.
About 42% of buyers are looking for homes with three bedrooms and two bathrooms. "In Guam’s current slow-growth economy with its high cost of housing, prospective buyers recognize that they may have to settle for less than their ideal home," the study states.
Asked about the minimum number of bedrooms required in their next home, 4 out of 10 buyers indicated they could make do with two bedrooms.