(psst…..f you like the view above, it is for sale, Cherokee’s oldest home here!)
In 2018 real estate in the Bahamas was definitely not business as usual… or was it? Local newspaper interviews with brokers recently noted that the market showed strong improvements in 2018 compared to 2017. It appears that almost all real estate company’s sales were strong, despite some missing their projections for the year.
2018 started out with much optimism despite the curve ball thrown by the Real Property Tax bills increase. In January 2018, the profession said that 2017 was better than the year before and that each year has posted gains over the previous since the bottom of 2009. The question on everyone’s mind right now is “How long with the upswing last?” and “Will it sustain for another decade?”
The most notable recent change to the business is that your friendly neighborhood real estate agent is now required to take copies of your passport or government ID as well as a utility bill. So if you want to list a property in the Bahamas, be prepared to endure the horrendous burden of sending in some extra paperwork. Apparently, the financial world thinks a MARKETING COMPANY that is not a bank and holds no money is a FINANCIAL INSTITUTION. I guess next year we will be scanning our retina to verify we are eligible to purchase an apple.
Peripherally related to real estate – the financial services industry in the Bahamas has been on a decline for at least a decade or longer, which little real prospect of reversal (in my extremely unqualified opinion). Though one recent change is that the European Union has demanded there must be “economic substance” with off shore account holders. This could be a boost for the real estate market in the upper tiers but it remains to be seen how the new requirements will manifest into our economy.
As many are aware there was a large hike in property tax rates for the 2018 billing cycle and again for the 2019 billing cycle. Throughout 2018, ‘non-Bahamian’ real estate owners have been going through the process of appealing their property tax valuations and bills. Most have seen adjustments to their liability without much fuss, but keep in mind if you don’t put in the legwork, the tax value will remain the same next year. You can do it yourself or hire a professional to handle it for you. See previous blog posts on it here and here.
So how did the real estate market in the Bahamas actually perform in 2018 despite the anecdotal reports of the major brokerages? Using data from the Bahamas Multiple Listing Service (BMLS) there is apparently a contrary indication from the numbers. It appears that 2018 was not better than 2017…..*drum roll*….. The chart below shows that sales volume and the average sale price both fell in 2018 when compared to 2017. Keep in mind the MLS only records sales activity which occurs while the property was actively listed, many homes and lots are sold without an MLS listing agreement and therefore not included in the data sets below. That said, you can clearly see the decline from 606 transaction of 2017 and 534 transactions of 2018. The average sale price reported is not a great indicator as it includes everything from $5,000 bush lot sales up to multi-million estates and private islands. Interestingly though the average sale price dropped from $450k in 2017 to $344k in 2018. There could be many factors for this, one of which is likely more market acceptance of the general population in the use of the BMLS service.
Another interesting thing to look at with the Bahamas MLS data is how long a property is on the market before it is get sold. The average length of time to get it sold in the Bahamas over the past 9 years has ranged from a low of 239 days to a high of 308 days. The take away here is that if you have been advertising your home for more than 300 days and it hasn’t sold there is something wrong (in most cased the price is too high). Once you get past the 300 day mark, the chances are that your property will not be sold for a few years. So check your realtor, price it well and plan to see a sale by 10 months. If 12 months have gone by, my advice is to pull the listing, wait 6 months and list with another company (or the same one if you like your agent a lot, call me ). At the least take it off market for 3 months, then relist with new photos or change the house colour or add in a car to the price, just do something. Hanging a sign out front for a decade is not going to get you anywhere. The other take away is that selling a real estate asset in the Bahamas takes time. A lot more time than almost all of the rest of the world. I have colleagues and clients who talk about the real estate business in other parts of the world, where the property was sold and rekeyed in less time than it takes me just to get it displayed on the MLS database, about 7 working days. Working in this business takes oodles of patience. Good luck to all the new comers joining the ranks this year, tighten the belt (literally, you may starve) and get cracking.
Keep in mind this table below is DOM for properties which were sold. All the unsold or still active properties have an average DOM of 338.
Ever wondered how the market is segmented? Well it turns out that not surprisingly, more than half of the market is comprised of listings less than $350,000. The largest segment is the $100,000 to $200,000 price range at 17%. Though it may surprise you to find out that the $750,000 to $2 million range constitutes 18% of the market in the Bahamas.
Now this final chart I will present and let it sink in a bit. Take a look and then read on:
This interesting little picture shows something very interesting. Did you notice it?
I’ll let you digest a bit more. Still haven’t seen it?
Over the past 9 years the growth in the BMLS has been fairly steady. More and more agents, brokers, buyers and sellers are utilizing the service. It is clearly evident in the rise of the new listings added to the database every year. Also notice the Gross Total Dollar Volume has trended upwards fairly steadily. Now turn your attention number of properties sold and compare the volume of properties listed? Do you see the gap between the 2 widening? In essence the odds of getting your property sold is slowly going down every year as a percentage of total properties listed compared the number which are actually sold.
As of writing this piece, there are 3,827 listings active and available to purchase on the BMLS, while 2018 realized 534 sold properties. To put it another way you have a 14% chance of selling your lot or home through the BMLS.
After reading the statement above, do you think you should choose your real estate agent wisely? Do you think you should price and stage your home very carefully? Do you think you should listen to the advice of a real estate professional?
Want to know something else? There are 3 properties still actively being marketed and available to purchase which have been on the market since 2007. That’s right over 4,000 Days On Market and still for sale. You would think someone might suggest they try something new right? After 10 years, I’m fairly confident it ain’t gonna get sold (do you hear me agent on that eastern island in the Bahamas? lol).
In closing, please don’t use any of this information as a financial planning tool. It is intended to provide a very wide loose insight in the real estate market of the Bahamas and also to give you something interesting to read. The opinions and statements are not intended to be relied upon for making financial decision, merely to provide a curiosity.