(Editor’s note: This is part of a series that looks into Guam’s high housing costs and shortage.)
There appears to be no immediate relief in sight for renters in Guam’s current housing crisis and for now, the only real answer to the lack of affordable units is to expand housing subsidy programs, longtime local realtor Chris Felix said.
Another suggestion is to ease the local government’s “over-regulation” by revisiting changes to the law related to the construction of workers’ housing.
“For the low-income people, the only solution is to subsidize housing to be very honest,” he said. “I wish there was a way out of it, but I don’t see any.”
Felix is referring to Section 8 of the Housing Act of 1937, which provides rental housing assistance to low-income households by paying private landlords on behalf of qualifying low-income tenants.
The average rental on Guam is now about $1,500 to $1,700 a month for a two-bedroom unit without utilities, which is even stretching the budgets of many middle-income local families.
Lacking 6,000 housing units
According to a recent report by the Guam Housing and Urban Renewal Authority, GHURA, Guam is about 6,000 housing units short of demand, and Felix said the double whammy of higher construction costs and rising interest rates means “affordable” housing is not feasible anymore.
“For a landlord to build and rent out, they’ve gotta get $2,000 a month, but the market is only at $1,500. That’s the problem. We’ve had this huge skyrocketing of construction costs,” Felix said.
The military buildup, he said, has “just basically scooped up the construction market and put it on base”.
“I don’t see it going down for at least another five to seven years until the military construction curve is over. They’re still going to be building for the next 10 years, but after about seven years, they’ll be building less and less.”
He said in the meantime, the government of Guam should lobby the federal government to expand the Section 8 program for Guam, or seek other federal or local funding.
“That’s something the government’s gonna have to look at, but you would think that there’s some form of grants for affordable housing,” the longtime realtor said.
Not DoD, landlords’ fault
What GovGuam officials shouldn’t do is blame the anticipated influx of Department of Defense personnel and contractors due to the military buildup on Guam for squeezing the local market, Felix said.
“They’re trying to say we’re 6,000 short and the military’s taking all the housing. That’s not the case. That’s not what’s happening. We’re 6,000 short because those 6,000 people, they can pay $800 to $1,500 a month rent, but there’s nothing there in that market unless you subsidize it,” he said.
Felix also disagrees that the landlords are to blame. The landlords he works for, he said, have always been very understanding towards the tenant and their needs.
He said landlords either keep the rent the same out of courtesy to that tenant or raise it gradually.
“They’re not gonna jump rent from $1,000 to $1,500 because they can get it. They will gradually, say you know, let’s go to $1,100 for six months, or a year let’s go to $1,200,” he said. “If I throw this tenant out I can get that $1,500, but that’s not right, that’s not fair, it’s not reasonable.”
GovGuam ‘over-regulating’
Felix believes another way to help ease the crisis is for the local government to revisit the changes to the law regarding construction of barracks housing.
About three years ago, he said, GovGuam started “over-regulating barracks housing for the contractors.”
A lot of the contractors wanted to buy 10-, 20-unit apartment buildings for their personnel and then once their people move out, then they can use them as rentals for the public. That was a huge demand, he said.
“The government stepped in and said for barracks housing, it has to be in an M1 (light industrial) zone, and it just stopped that demand,” he said.
Felix said he understands that GovGuam is trying to protect the public by not having barracks within traditional residential neighborhood settings.
“But they over-regulated it by saying barracks housing must be in M1 light industrial zones,” he said. “I just wish the government would get rid of this M1 zoning thing and allow these guys to pick up these one-bedroom and studio apartments that are not in really heavy demand on Guam. The studios and one bedrooms are perfect for these guys and when you don’t need them anymore, you start knocking holes and converting them.”
He said contractors should also be encouraged to build new barracks in R2 residential zones that can eventually be converted into traditional two- to three-bedroom rental units.
“At the end of seven or 10 years when they don’t need it anymore, they sell it off to a developer who can convert it into a rental unit building, or they do it themselves and hold it as an investment,” Felix said. “A smart contractor, the ones I talk to, that’s exactly what they’re doing…just rehab them, upgrade them a little bit and put in a nice new floor, fix the bathrooms up.”
GovGuam should also allow contractors to go into R2 zones and buy small hotels and motels “that are basically empty, which will free up the apartments that are in M1 zones,” he said.
Typhoon-proof
Felix is skeptical of alternate construction methods as a quick way to meet the affordable housing demand such as 3D printing of homes, which is a construction method that uses a 3D printer to create a home by gradually adding layers of material.
“I’ve been around 50 years and people on Guam don’t want to live in anything but concrete, I’m sorry,” Felix said. “It’s gotta be typhoon-proof and earthquake-proof. That’s the demand.”