Real estate is still the best investment in the world but in today’s economy, more Bermudians are becoming disenchanted with the rising price of property.

“For the first time homebuyer starting from scratch, you have to save everything,” says C Phillip Smith, a long time realtor with W J Seymour Real Estate Ltd.

“But if you’ve got a good income and you’re not paying an exorbitant rent you should be alright.”

He admits that people who find themselves in the lower income bracket are going to struggle.

“For anybody working for minimum wage, trying to find a property to rent is a nightmare. Trying to find something to buy is almost impossible.”

Even though the price of real estate continues its climb ever higher, the young Bermudian today is still looking and hoping that they will find that little cottage with a piece of land.

“It’s not as easy as it was,” Mr. Smith admits. “Some properties have actually doubled their value.”

Four years ago, Mr. Smith sold a property in the Knapton Hill area for $295,000. Two years later the same property sold for $415,000, and two months after that it sold for $625,000.

“Two, two and a half years ago a quarter of an acre would cost you about a quarter of a million dollars. Today it runs you anywhere from $500,000 up,” he adds.

“That’s how bad it is now for a younger person who is looking to purchase.”

What is happening to the market to cause the prices to rise so dramatically? Several factors can be considered in the rising prices of real estate today.

“Contractors have driven the price of land up more so than anybody else.

“If they can find a lot around a quarter of an acre or just under and it’s large enough to put four condominiums on, they’ll purchase it for whatever price you’re asking,” Mr. Smith explains.

“They’ll factor that price into the price of the condos when they sell them later. As a result of that, land in some areas doubles in value.

“The price of condos is not going up. In some cases that market is becoming saturated,” he adds. “The price of the cottage with the piece of land around it is still going up because there isn’t that much real estate to choose from.”

This, he feels, causes more people to compromise their first choice in order to buy what they can afford.

“It’s not easy to find anybody a house anymore,” he says dismally. “I’ll be very honest with you. The stock is down and it has been that way for a while.

“Ten years ago I could take a client out and I had a choice of properties to show. But nowadays you have that one good property and you focus on the property as opposed to the different clients.”

Often a buyer will present their realtor with a precise image of what they want.

Although the realtor will try to find what they are looking for or something similar, 99 percent of the time they are not going to find a property that is exactly what the client had in mind.

Mr. Smith continues: “The only way to get exactly what you are looking for is to build it and to buy the land and build a house in some cases is no cheaper than buying a house that’s already constructed.

“The lack of available housing frustrates buyers because they can’t find what they’re looking for. When they do eventually see something, the house might be right but the price is higher than what they expected to pay. It’s the supply and demand theory. The demand is higher than the available supply.”

If a house goes on the market and the price is fair, within a week it will sell, he explains. But if a house goes on the market and it is overpriced, six months later it may still be up for sale because the buyers in Bermuda are a lot smarter than they used to be.

Mr. Smith encourages first time homebuyers to look around for themselves.

This will give them a greater awareness of what is available and will offer them the opportunity to compare prices: “I did it too when I was looking for my own home.”

Another contributing factor is that there is plenty of money available for financing.

“If you are a pre-qualified purchaser, there’s no problem getting money- financing is easier than it used to be. All of a sudden 300 buyers become 3,000.

“Those people who didn’t have very much of a deposit have the ability to repay and overnight you have several people making bids on one house.”

Where it seems that some young people are discouraged by the high costs of real estate and are more inclined to go for smaller investments, such as a car, there are also a lot of responsible, young people out there that would still prefer to own a home.

And those students that have gone to college and return are at a greater advantage than those who do not.

“The student that goes abroad to school is likely to return to earn an income that is higher than those students that don’t go abroad. This puts them in an area where they can eventually save up and purchase a mortgage,” Mr. Smith says.

Younger people can also use their youth to their advantage:

“I find that there are a lot of parents that are prepared to put their deeds up to help their children purchase a home,” says Mr. Smith. “They’re really risking their deeds to cover the down payment, the actual mortgage ends up on the property that you purchase.”

In Bermuda the average mortgage for a younger person, anybody that is 35 and under, is a 30-year mortgage. The banks insist that your mortgage be paid off by 65- if you are 45 you will only take a 20-year mortgage.

“Anyone who owns their own house today, I’d say it’s worth it,” muses Mr. Smith.

“If you’ve got your whole life here and you make the choice at a young age pay rent for the next 40 years, you’re paying for someone else’s house.”

“If you choose to buy a house while your young, when you’re older it’s paid for, it’s yours.

“The other way you’ve paid all your life but you don’t own anything.”