MLS Market Update – First Quarter 2011 By Dwayne Wallas.

As we can all bear witness, the world’s real estate markets have been seeing a very diverse range of performance indicators.

Some market areas show strong stabilization, recovery and price rises; while other areas are seeing the exact opposite. Take for instance reports from San Diego and New York are very positive, but reports from other areas of the US are not so rosy. There seems to be a similar pattern around the world and through the Caribbean. One major improvement is a significant absorption of the “condo glut” which hit areas like Miami and Las Vegas. So what is happening in the Bahamas?

The real estate market in the Bahamas is feeling a similar mixed pattern as the rest of the world. Some areas, such as those around the ‘Bahamar Resort’ in New Providence, are currently very hot – especially in the rental market. This can be attributed to a direct result of the ground breaking and ongoing development of the hotels on the Cable Beach strip. On the other end of the spectrum less developed islands, such as Long Island or Cat Island, are experiencing diminished activity from buyers. Notably, Nassau has managed to maintain a level of consistency in activity through the past tumultuous years.

In meetings and discussions with my professional colleagues at HG Christie, we have all spoken to a prevailing shift of attitude, or lack of confidence in smaller or emerging settlements, from the typical buyer as they gravitate towards more established communities.
New developments lacking a solid plan and sound financial position to complete proposed works are not attracting buyer or investor interest.

While signs of improvement emerge in small glimmers, it is still a challenging market for sellers and a exceptional time for buyers and savvy investors. Opportunities to choose and negotiate the best deal possible remain.

The following figures and facts obtained from the Bahamas MLS tell a supporting story to the previous observations:

Total number of listings on the Bahamas MLS during January 1, 2011 to March 31, 2011: 1,422
Total number of sales occurring in that period from January to March: 13

That means that should present conditions prevail it could take 27 years to sell all the listings on the MLS at the current Rate of Absorption.

However, it I would be remiss if I did not speculate the possibility that a hard hitting reality has made at least 50% of the listings on the MLS grossly overpriced and unable to turn in these, and possibly any, market conditions. So, if I take that out of the equation, we could still be looking at a 13 year supply of listings for the entire Bahamas market.

Hmmmm….. Lets break this down a bit. Let’s go by island and see which islands in the Bahamas are ‘hot’ and which are not.

For all of the following statistics the period of March 31, 2010 to March 31, 2011 was used. This time frame provided the opportunity to take into account an entire year that could emcompass seasonal ups and downs in the markets.

Nassau & Paradise Island
Listings: 343 Sales: 63
Absorption rate: 5¼ units per month or a 5+ year’s supply of listings.

Grand Bahama
Listings: 100 Sales: 3
Absorption rate: ¼ unit per month or a 400 year’s supply of listings.

Abaco
Listings: 335 Sales: 12
Absorption rate: 1 unit per month or a 27 year’s supply of listings.

Eleuthera
Listings: 73 Sales: 4
Absorption rate: 1 unit per month or a 219 year’s supply of listings.

Exuma
Listings: 103 Sales: 6
Absorption rate: ½ unit per month or a 206 year’s supply of listings.

Other Bahama Islands
Listings: 41 Sales: 2
Absorption rate: 1/6 unit per month or a 246 year’s supply of listings.

This is certainly an interesting exercise. Certainly one that makes you go “hmmm…”, and does not necessarily paint a very rosy picture, plus presenting the data in this method and does not allow for improvements to or adjustments in market conditions. Additionally, it is necessary to keep in mind that the Bahamian real estate market is maturing market. However, it does demonstrate that even amidst global challenge Nassau’s real estate market continues to chug along steadily. This bodes exceptionally well for future growth and activity as world’s economy settles.

Another market worth taking a look at is Grand Bahama. The numbers polled for the period above show that the activity in this market has been hit hard. This is possibly due to a ‘triple punch’ of imposing factors encompassing the world’s economic condition, pressures from the government and the embattlement with the heirs of the St. George estate. However, while the rate of activity in this exercise does not reflect Freeport’s historically vibrant market and notably high sales volume, there appears to be some very strong light beaming at the end of Freeport’s tunnel. The parties involved in the Port’s ownership appear to be resolving issues and a potential buyout in the works could bring renewed development and energy. Additionally, as the world economy slowly improves, it appears that the government will be providing better support in the near future. Freeport’s exceptional infrastructure make it poised for exponential growth and recovery.

After these markets, the Abaco market presents the healthiest investor confidence. In our current exercise, a 27 year supply of listings is not a good position to be in, but if you remove the percentage of the non-serious sellers, those who are ‘just fishing’, from the equation, a 13 year supply is about right for such a small island community. Indeed, a closer look reveals that a 13 year supply is very similar to the ‘pre-bust’ market levels.

Also showing exceptional potential is Eleuthera. This naturally beautiful island is in a relatively healthy position for growth. While Exuma is still in recovery mode from the boom/bust of the Emerald Bay Four Seasons marriage. Yet, Sandals is beginning to breathe life into this other phenomenally gorgeous locale.

In closing, I urge readers to remember that the numbers presented here do not include sales that occur outside of the realm of the MLS. The Multiple Listing Service of the Bahamas remains in its infancy stage and the transparency that it is bringing to the marketplace is still being absorbed by its participants.

What to take home? If you are selling, make sure you price very aggressively or not at all. If you are buying, now is your time. If you are investing, you should be picking up the phone to call me now.

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