Realtors concerned about housing market
THE Realtors Association of Jamaica (RAJ) has, for the time being, been holding up to the COVID-19 invasion, but there are fears among the leadership that things could get really bad soon.
“We are sending off a letter to the Government with some points that we would like to have dealt with for our members,” the president, Andrew James, told the Jamaica Observer on Wednesday.
James said that some realtors are not earning at this time, because they do not get a salary but a commission from their sales, which has left them in a bad situation.
He said that the RAJ is most concerned about its members earning under $1.5 million per annum, to see how they can benefit from the Government’s stimulus package, and would be putting forward some ideas in their letter.
According to James, basically, what has been happening with the emergence of COVID-19 is that some customers have been watching the market, and their assumption is that as the situation is now, maybe in another three to six months they will not be able to meet their loan payments.
He said that if that happens, a number of properties would be going up for auction, and will be going on the private treaties list.
“So there are those persons who say they will wait and see. Persons who may even have put down a deposit are now saying, ‘Hold on, hold on, I don’t want to go any further until I know what is happening, because chances are I might not have a chance to pay down the loan,’ and so on,” he stated.
“So, as far as the realtors are concerned, they are in an awkward situation right now: Realtors are only paid by commissions,” he added.
However, a more optimistic immediate past president, Howard Johnson Jr, told the Observer-related The Edge 105 radio station Wednesday morning that the good thing about the current situation is that construction is still active, realtors are advertising their development and getting good responses to date.
However, he admitted that there were a few cases where individuals have been holding back to wait and see what will happen.
“If you followed the trend from last year, you would note that developers are pretty much just completing units that have already been sold. So we are really just looking forward to the delivery of these units, as opposed to marketing for sale,” Johnson explained.
He pointed to new developments that have been prepared and have been approved, and the contractors are still building them out because the demand is still there, at this point.
“We don’t know if we will see a reduction in demand, but we do not anticipate that in the near future,” he said.
Asked by the Observer if he thinks the Jamaican market will be able to withstand the ravages of COVID-19, James admitted that the local market has a history of being resilient, in terms of disasters, and gave as an example the bounce in the market which followed the 2008/9 meltdown.
James did not see much of a bounce in the market from the improved interest rates for National Housing Trust (NHT) contributors, which were announced by the minister of finance and the public service recently, because prices have not gone down commensurately.
He noted that one-bedroom units are selling for $20 million and more, and two bedrooms up to $40 million, and these are apartments and not town houses which sell for much more.
According to him, the high-scale apartments are mostly investments, like apartments and town houses which are bought by people investing in a second home, or one which their children will eventually own after they leave college.
“Then you have the young professionals who continue to rent their homes, while they buy these apartments for the short term (like Airbnb) for prices that cover the market prices,” he pointed out.
“What is happening now is that the short-term market is, I regret to say, drying up. A lot of people have invested in Airbnb, but with nobody travelling and flights not coming in, these properties might now be turned into long-term rentals,” he informed the Observer.
“Because, if you have a mortgage to pay, you might not have a choice but to keep it locked up with nobody to rent it, so you have to go long-term,” he added.
According to data from the Statistical Institute of Jamaica, employment in the real estate renting sector grew by 7,800 jobs between April 2018 and January 2019, or about nine per cent, while construction, to which real estate is linked genetically, added 1,000 jobs during the same period. Together, the sectors are responsible for about 16 per cent of employment, second only to tourism.
RAJ, an affiliate of the National Association of Realtors in America, is also one of the largest professional associations in Jamaica, serving more than 1,000 realtors and affiliate members. It facilitates the acquisition and advancement of the profession of real estate brokers and salesmen, and protects and promotes the general interests of the profession.
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