Realtors optimistic about 2011
Bahamian real estate may have seen a significant drop off in value in 2010, but leading real estate practitioners think markets have stabilized and are expressing cautious optimism about next year.
Several realtors said that the results this year were better than they had anticipated and attribute a lot of this year’s volume to sellers who were willing to come down on price from previous expectations. Some realtors believe this year saw a correction in market prices which more fairly reflects their value, but all those interviewed concur that this year was a lesson in classic supply and demand forces.
“There’s a whole lot of(properties)on the market, and people who are making deals are getting their properties sold,”Garnett Ellis, president of Landmark Realty Investments& Appraisals Services toldGuardian Businessyesterday.”Ironically, this is the best time to sell and the best time to buy.”
Garnett said that based on his experience, on average real estate prices have come down about 20 percent this year. Garnett is a Bahamas Real Estate Association(BREA)-licensed broker/appraiser who services a broad cross section of the Bahamian market.
“I firmly believe that this downturn is going to create a stabilizer in the market which will really bring these prices down significantly,”Ellis said. He said prices may have been exaggerated in recent years, but because there were enough people with the capacity to pay those prices the market was sustained at the higher levels.
Garnett said that based on his experience properties around the$250,000 range have been the best moving this year. A particularly strong period of sales between June and September this year have left his company in a comfortable position until mid-2011, he said.
Larry Roberts, CEO of Bahamas Realty said that he believes the real estate market has bottomed out.
“We were not anticipating making a profit at all, we thought that if we broke even this year we’d be happy,”Roberts said.”And we made a small profit this year, which we are pleased with.”
Roberts said this year was not’robust’but showed encouraging signs of a recovery. He said that it may take several years for the market to get back to where it was.
“The properties that are selling, for the most part, are on average about 20 percent off their highs,”Roberts said.
“One of the issues that has come up, and is weighing heavily, is that our financial services industry is in contraction, so we have fewer foreign executives here, and also the banks have cut way back on the subsidy that they give to their expatriate employees.”
Roberts added that the rental market was hit much harder than the sales market, with some rents down 50 percent. On average he estimated that rentals were down 30 to 40 percent, particularly in the$4,500 to$7,000 monthly rental market which he believes was hit the hardest.
Speaking on whether or not the real estate market was correcting in terms of exaggerated prices, Garnett said it all was a matter of supply and demand and that markets ultimately find their own level. He added that buyers today are more informed than ever before, doing comparative shopping online.
“Some of the renters and buyers are more educated than the agents themselves,”Roberts said.”Most of them have researched the market, looked on different websites and seen what’s available.”He said this comparative shopping was also a factor in pushing real estate prices down.
George Damianos, president of Damianos Sotheby’s International and Lyford Cay Sotheby’s International Realty, toldGuardian Businessyesterday hat he really had no way of knowing whether the market had hit its bottom yet. He said that external factors such as the U.S. economy would continue to impact the local market.
Damianos’companies focus on the middle-upper to upper segment of the market, properties with an average sale price around$1.3 million, according to him. His company enjoyed a sales increase this year of about 40 percent over last year.
“”I think it was based on the fact that sellers did become a little more realistic with their expectations on what their properties were worth,”Damianos said.”I think it is a correction, no question about it. We were going pretty wild there for a while, whether in the states or in The Bahamas.”
According to Damianos there was a lot of speculation in the market, with people buying-in thinking they could add profit and resell without a problem.”That really isn’t the case in the real world,”he added.
On the upper end of the market, Damianos said that properties were selling 30 to 40 percent off their highs. He said that in most cases this did not represent a loss on investment for clients, but it did mean that clients did not make as much as they may have expected to, or broke even.
Despite his companies’success this year, he said that they did have a challenging time and stuck with it, adapting to the new market conditions.
“There’s no more easy money,”Damianos said.”All the easy money has been taken off the table in this recession we’re going through… You have to work for every dollar you are going to make.”
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