The sale of single-family homes has overtaken other areas of real estate activity and picked up to a breathless pace.

Meanwhile several executive plots are being snapped up due to a shortage in the market.

In the first six months of 2004 314 home transactions amounted to $41.5 million an increase of 17% from 2003 figures.

Captain said in terms of total sales volume for 2004 Guam is likely to reach $200 million the highest figure by far in more than five years. That volume would be achieved if the Hilton Guam Resort & Spa sale closes as expected in August and the recent pace of activity continued he said. Sales averages for the past three years barely made the $120 million mark he said.

The second quarter of 2004 saw 181 home transactions and total sales of over $23.7 million both record highs during the past five years. The lender share of this market (foreclosure sales) declined from over 30% during 2002 and 2003 to less than 16% during the first half of 2004.

A sharp decline in lender activity contributed to recovery in the residential market.

Welcome news for the real estate industry is that total sales volume in all areas — single family dwelling fourplex’s condominiums and other commercial properties – has increased from $123.8 million in 2002 to $145.9 million in 2003.

W. Nicholas Captain president of The Captain Co. a real estate consultancy firm and Captain Realty Advisors told the Journal “Transaction activity is up. We are pleased to see that the market is rebounding from the bottom in early 2003 when the price of a single-family dwelling dropped to a low of $106 500. Since then the median price has increased over 15% through the last quarter.”

In the first quarter of 1999 the median sales price of a three-bedroom home netted approximately $150 000. In the ensuing five years that price plummeted as did number of sales a result of the declining economy. Activity in just the first two quarters of 2004 show 314 transactions have taken place and the median sale price is also rising.

“After a very long period of decline the market appears to have turned the corner. Market activity is extremely high and the median price is continuing to rebound as well ” Captain said.

The turnaround is evidenced in condominium sales as well. “In the condominium sector — which historically has exhibited more volatility — we see a similar trend. This market bottomed out in the fourth quarter of 2002 as evidenced by sales of only 29 units with a median sales price of $57 444 ” he said. “In the first half of this year 104 units have sold and the median price rebound trend has continued.”

While interest rates have reached all time lows Captain said an interesting phenomenon occurred on Guam.

“One problem that we have with the local market is a significant degree of interest rate risk. What happened in Hawaii and the mainland is that during this period of declining interest rates prices increased. But here because our economy was so bad and so many people were leaving the island even though interest rates were declining we had a drop in median price. We really had a divergence of what you would normally expect when interest rates decline.

Low interest rates have assisted buyers and contributed to the rebound he said. “However what happened in the mainland and Hawaii did not happen here on Guam.”

Captain attributed the real estate rebound to a general recovery in economic conditions. He said the easiest correlation was the increase in tourist arrival numbers.

“If you look at tourism arrival figures the recovery began in the second half of last year. That directly coincides with the rebound in median price for single family homes.”

With the rebound in the market sub-division activity and new construction should be expected but at the higher end of the market. “Supply at the upper executive home end of the market is tight and demand is increasing.”

Private subdivisions that were built in the early 1990s included Goring Villa in Yigo Ypaopao estates in Dededo and Nikken subdivision in Chalan Pago. These failed because of falling economic conditions and unfortunate timing he said.

In addition he said the lower end of the market would not be a good subdivision investment proposition to attract first-time homebuyers because prices in that sector are still relatively depressed and development and construction costs — though lower — are still relatively high.

“The market that is ready to open up in the next 12 to 18 months is going to be more executive-type subdivisions ” Captain said. “There have been a number of major residential land transactions in central locations that are ideally suited for executive subdivisions and there is a pent-up demand for these types of homes.”

The Captain Co. received on average three to four calls a month for homes in the $300 000 to $400 000 range which Captain said is a high number of inquiries for a market that did not have quality properties to offer. “People don’t want to spend $350 000 on a home that is 25 to 30 years old that needs to be renovated.”

The last major executive subdivisions to be built on Guam were Nimitz Estates Barrigada Heights the Hyundai division in the late 1960s and Liguan Terrace in Dededo in the mid and late 1970s.

A 19 020-square-meter parcel adjacent to First Hawaiian bank on the Maite cliff line has been subdivided into 16 lots by Timothy A. Hoffman. They are being listed for sale by Tower Realty Inc. for $300 000 or $16 per square meter. The appraised value is listed at $3.32 million. MBJ