A single-family home in Guam now costs about $420,000 — double the price from 10 years ago, when the average cost was $213,600 in 2014.
“It’s very unaffordable for locals to buy a house,” said Siska S. Hutapea, founder and president of Cornerstone Valuation Guam Inc., at the Society of American Military Engineers Guam Post forum on Nov. 15.
Hutapea was one of three panelists who discussed Guam’s housing challenges, a topic of increasing concern as the cost of renting, purchasing, and building homes has surged in the past decade. The other panelists were Fernando Esteves, deputy director of the Guam Housing and Urban Renewal Authority; and Tae Oh, vice president, Vantage Advertising and PSI Holdings LLC.
Esteves announced GHURA will host a summit in January to address updates to laws and programs aimed at making housing more attainable, particularly for middle-class families being squeezed out of the market.
Hutapea said the median price of a typical house lot 10 years ago was about $68,000 but now exceeds $100,000. Additionally, building a simple concrete home has increased from approximately $100 a square foot to anywhere from $200 to $250 a square foot.
Several factors contribute to rising construction costs. Guam relies on imported materials, leaving local prices vulnerable to global supply chain disruptions. For instance, costs spiked during the COVID-19 pandemic due to factory shutdowns and transportation delays. Guam also enforces stringent building codes due to the risk of typhoons and earthquakes, which necessitate higher-quality materials and construction methods.
Hutupea said as the military buildup started, there’s been a shortage of labor‚ a third factor in high construction costs in and out of the military installations.
There’s an additional factor, according to Esteves who said the military buildup has added between 6,000 and 10,000 people to the population, including skilled workers, the Department of Defense civilians and contractors that are working on military or military-related projects.
“In 2022, 88% of all assigned DoD, were living off base,” he said. “What we saw was increased demand in a short amount of time, decreased supply, and that led to market compression. Those in middle class were being priced out of middle-class rentals. It’s a type of gentrification … People are being priced outside of the market even though they were meaningfully employed.”
Military officials have acknowledged the housing strain, which has impacted on-base housing as well. In early 2023, Naval Base Guam implemented a policy requiring incoming military personnel to live in military family housing when occupancy rates fall below 90%, according to Journal files. See https://www.mbjguam.com/guam-housing-rfi-looks-meet-buildup-housing-needs
GHURA is working to update laws and programs to better address Guam’s housing needs, with a focus on middle-income families that don’t qualify for assistance but struggle to afford current housing costs.
“Our total community housing demand is projected at 9,908 units (that) we need by next year,” Estevez said. That’s not likely to happen, he said, since the cost is significant.
The Housing Summit, scheduled for Jan. 29, 2025, will explore potential solutions, including zoning changes and a shift toward attainable housing. Esteves emphasized the need to move beyond traditional affordable housing, which he said is “mathematically impossible” at current market prices, and instead focus on creating middle-income housing options.
Tae Oh agreed, citing an Oxford Economics report showing that home affordability has declined nationwide. In 2019, a family earning $56,800 annually could afford a home in the U.S. By 2024, that figure had risen to $107,700.
According to the report, “Only one-third of U.S. households earned enough to afford a home as of last quarter, far fewer than the nearly two-thirds of US households able to do so five years prior.”
Housing has become less affordable across the U.S. Courtesy Oxford Economics report
Oh supported a move toward mid-rise housing complexes to maximize land use and reduce infrastructure costs. He also suggested public-private partnerships as a more sustainable approach to housing development. For instance, the government could provide land for private developers to build affordable housing in exchange for tax credits and a requirement that a certain number of units remain affordable.
“Learning from both successes and challenges of past policies, traditional approaches like government housing construction have proven less sustainable in the long term. While government involvement is crucial, a balance approach that incorporates public private partnership (is needed),” he said.
Despite the challenges, Oh said Guam has unique opportunities to address housing needs by partnering with the military and private sector.
“Not only do we have a government agency that’s trying to bring affordable housing to the community, but we also have a (growing) military population … and that is actually creates a unique situation,” Oh said. He said building partnerships between government, the private sector, and the military, Guam can turn the housing challenges into great opportunities.
To address at least the cost of construction, there was discussion at the conference about alternate construction methods. Hutapea, Esteves and Oh said any help to reduce costs is always welcome.
Hutapea said construction has to be reliable and stand up to typhoon conditions. “If it’s not insurable, it’s not mortgageable,” she said.
Esteves pointed out that prefabricated housing is not new to Guam, citing public housing projects like Kaiser and GHURA 500, built around the 1970s and 1980s, that have withstood multiple typhoons and a major earthquake.
“Those are prefab and modular homes built in the 1970s or ’80s … and they’re still standing,” he said. “It’s not a new concept for Guam and it might be worth going back into.” mbj
