Residential property sales slump
Bermuda's residential property market slumped during the second half of 2019, a real estate newsletter reveals.
Total sales transactions for the year are expected to be less than half what a normal market should produce, while many properties are taking more than a year to sell, said Brian Madeiros, president and chief executive officer of Coldwell Banker Bermuda Realty, who was writing in the firm's January 2020 newsletter.
In December, he wrote, there were 153 condominiums and 74 homes for sale, with average days on the market more than 470 in both categories.
On the flip side, Mr Madeiros noted that his firm's agents have compiled lists of qualified buyers who are seeking specific property across all market segments. Those buyers are challenged in many instances due to “a lack of inventory which is priced correctly and located in sought-after neighbourhoods”.
Mr Madeiros wrote: “Our agents need sales inventory to satisfy buyer demand.”
Yesterday, he added: “If a property is not priced correctly for the current market, especially in the stand-alone market, it will languish on the market for quite some time. Pricing properties for today's market is key.
“Although we clearly don't have the number of buyers in previous markets, we have got some robust, bona fide buyers who believe that properties offer great value for the list prices, and wish to establish their home in Bermuda.”
Prior to 2008 and the worldwide financial crash, there were some 650 property transactions annually in Bermuda in what was considered an overheated market.
Mr Madeiros said that level of transactional volume was “not healthy” for the community as people were being priced out of the market.
“We need to find a balance, an equilibrium, that works for everyone in our community,” he said.
Mr Madeiros said in the newsletter that the slump followed encouraging signs during the first half of 2019.
He wrote: “Although the early part of 2019 suggested that market performance was gradually improving and in June our agents were working with 25 per cent more buyers than the previous six months, market sentiment and pending sales contracts adjusted downwards notably during Q3 and Q4 2019 consistent with feedback received from realtors island-wide.
“We anticipate that the number of sales transactions, when all government records are calculated, may be around 200 for 2019, which mirrors the results for 2012. We are of the opinion that a normalised market in terms of demand and supply should produce around 450 transactions per annum.
“As there is a direct correlation between a robust property market and the island's construction-related industry, monitoring this data and working towards a goal which works for our entire community is absolutely imperative.”
The newsletter revealed some trends that emerged during the second half of 2019.
More than 60 per cent of buyers introduced by Bermuda Realty sales agents did not require traditional bank financing, Mr Madeiros noted. That was true across all market segments and price points ranging from $160,000 to $6.5 million.
During the latter part of the year, he wrote, a significant number of Bermuda Realty's sellers received multiple offers on their properties close to or over list price.
In addition, some vendors received offers within days of introduction to the market and were closing within 30 to 60 days. That was dependent on market segment, marketing strategy and correct pricing.
In the residential rental property market during the second half of 2019, Bermuda Realty said that 45 per cent of the firm's listings were rented to people new to the island, 30 per cent to expatriates already on island but changing address, and 25 per cent to Bermudians.
Bermuda Realty said it “desperately” needs inventory matching the following descriptions: two-bedroom cottages renting from $3,000 to $4,000 per month, three-bedroom houses/cottages renting from $5,000 to $7,000 monthly, and centrally located properties ranging from studios to three-bedroom cottages.
The agency said it had a waiting list of people seeking rentals in the Six Dundonald condominium.
Demand for the firm's land surveying services was “robust” during the fourth quarter of 2019, Mr Madeiros said, adding: “We anticipate this will continue into 2020.”