We’re seeing increasing signs of a significant turn in Bermuda’s housing market. It began with the many for sale signs scattered around the island that seemed to linger endlessly. Today’s surprise was a couple posts on my company’s kitchen notice board advertising 2 bedroom apartments for under $2500 a month near Heron Bay Marketplace. This leads us to note that the ‘executive’ moniker so popular during the boom period is rare to be seen and despite it being the last day of the month, numerous rental listings still exist as available Sept 1st. New monikers dotting the ads include ‘spacious’ and ‘REDUCED RENTAL’, things you were less likely to see in the past. Also shockingly listed is a 3 bedroom condo in Hamilton parish for $695k, a price for which only a few years ago you would have been lucky to get a 2 bedroom condo.
Bermuda’s real estate market increasingly seems to have taken a turn away from the boom period and is something we’ve been expecting for some time. While certainly a boon for those renting and hoping for market prices to drop it is not a good sign for those who overleveraged themselves during the boom period to take on huge mortgages with little down payments only to watch the value of their homes decline while the mortgage stays the same. Worse are those who struggled to afford the payments in the first place and may now be facing layoffs or already have been in the wave we’ve seen.
As they say, leverage is a knife that cuts both ways and this may yet only be the beginning. Especially as we get a better picture of the state of jobs in our economy when the June July August September? employment brief is released.
We bought a condo in March this year and already know that we possibly could have waited about 6 months, the only problem is that rents at that time were still pretty bad, relatively speaking.
Like you said, there are several properties that have been up for sale for many months. One place that we looked at in early March, is still up for sale. However, the offered price hasn’t fluctuated as the owners I suppose aren’t willing to budge and potentially a loss.
There are probably several homeowners who are now stuck in a bad situation with a property that’s dropping in value every week (but the mortgage of course remains constant).
And yet, people are still constructing condo developments. Are they oversaturating the market and putting too much of a squeeze on current owners?
Tryangle,
I wouldn’t worry about the drop in the value of your condo if you bought it as a home rather than an investment. If it is something you can afford even if you hit rough times and is something you’re happy with then I wouldn’t bother worrying about market fluctuations. We’ll probably see further bubbles and downturns in the future and assuming you budgeted your purchase you should be safe through all of it.
Those who over extend themselves by buying what they can’t afford unfortunately are less likely to be lucky.
Regarding condo developments it is a sign of many projects that were started near the peak. Developments take months to complete and it becomes a question of whether you walk away from it as a write-off or try to recoup some of your investment.
The larger concern I have is the number of people working in construction that will be facing layoffs as the remnants of our boom peter off and construction work disappears as we end up with over capacity.
With the end of construction booms we will see a lot of people going into the drug trade.
With the government’s poor financial control in the boom time – and continuing now – the government will not be in a financial position to fund capital projects to keep people employed.
It is indeed going to get ugly – but on a delay from the US.
how long do you think it will take the swing voters to figure out they have been screwed by the carpetbagger’s friends & family scam?
by the time the do, this will be another west indian ghetto,as happened to Bahamas & Jamaica: devalued currency ,real estate and business that cant be sold, out of control crime and drug violence.
You know I’m tired of the “West Indian ghetto” commentary. Lord, not every Caribbean nation is jam packed with slums OR has had to float or devalue their currency. Can’t people focus on the issue at hand?
Sal,
Can you not manage to keep it civil? As I’ve suggested, post whatever you like on your own blog and send a trackback but don’t use my blog for personal attacks, name calling or derogatory remarks, it just isn’t necessary and accomplishes nothing positive.
Sal, seriously.
Bermuda will continue to be a wonderful place to be no matter what. The decline of our country is only relative to what is possible.
For a long time we have needed a decline in house prices and it should have come through increased supply and better immigration control, such as using Morgan’s Point and Club Med for some high quality single family house neighbourhoods instead of hotels that – as we’ll see in the employment briefs – will do nothing more than enrich contractors and require the importation of hundreds more guest workers, in turn further squeezing the low end of the rental market.