The Tribune

• Trends drive 'transition' from sellers' market

• Days on market rising, list-to-sales price falls

• Demand strong but outstripped by inventory

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A 200-300 percent increase in new listings is driving Bahamian real estate's "transition" away from a sellers' market by outstripping buyer demand, a prominent realtor is asserting.

David Morley, Morley Realty's principal, told Tribune Business that while the industry is "not fully in a buyers' market right now" there are signs that equilibrium is being restored based on the increased number of days properties remain available after being listed for sale as well as the reduction in the listing-to-sales price ratio.

Drawing on data from the Bahamas Real Estate Association's (BREA) Multiple Listing System (MLS), he added that the latter trend signals that sellers are "being more flexible in their negotiations and taking lower prices" even though the number of new contracted sales - a key indicator of demand - remains strong.

Morley Realty, in its just-published analysis of market trends for the 2023 full-year and fourth quarter, concluded that the numbers "show continued signs of a changing market" following the post-COVID boom when pent-up demand drove activity and prices to new heights.

Referring to data captured by the MLS system from New Providence, Grand Bahama, Abaco, Eleuthera and Exuma, the firm said: "While the data in all five island markets generally points to an increase in buyer demand by way of an increase in contracted sales across all island markets, the volume of new listings also continues to far exceed the sales demand thereby increasing the inventory of available properties."

As a result, the data was "now showing fluctuations in the days on market, listing-to-sales price ratio and also the median price. Even though the overall volume of year-over-year closed sales may be down from 2022, the overall volume of closed sales and contracted sales in 2023 appear to have returned to pre-pandemic levels," Morley Realty added.

For New Providence, as an example, the number of new home and vacant land listings in the 2023 fourth quarter increased year-over-year by 174 percent and 221 percent, respectively, meaning they more than doubled and tripled in comparison to the same period in 2022.

And, while the volume of contracted home sales on New Providence rose by almost 85 percent year-over-year in the fourth quarter, hitting 61, this was outstripped by the 174 percent jump in new home listings to 181 - a difference of 120. And, while the volume of contracted land sales increased by 533 percent in the final three months of 2023 to 38, the latter figure was dwarfed by 125 new vacant land listings.

"If you look at the data," Mr Morley told Tribune Business, "what the data shows, for example, is the listing-to-sales price ratio is coming down. Sellers are having more flexibility in their negotiations and taking lower prices. The demand seems to still be strong if you look at the number of new contracted sales and, if you look at days on the market, days are creeping back up."

The latter factor, he added, together with the decline in listing-to-sales price, which measures the difference between a seller's asking price and what they ultimately accept, is likely "as a result of the volume of inventory coming on the market".

"The demand seems to be consistent and pretty good, but consumers have multiple choices, which means product takes longer to sell and sellers have to be more flexible on the price than before," Mr Morley explained.

"If you look at the amount of inventory, look at the new listings curve for 2023 versus 2022, it's up by anywhere from 200 percent to 300 percent compared to what was going on in 2022 with the volume of new listings."

On Exuma, for example, the volume of new home listings during the final three months of 2023 increased by 360 percent year-over-year and 229 percent when compared to the third quarter. This overshadowed the 50 percent jump in contracted home sales for the same period, while new vacant land listings also rose by 115 percent year-over-year in the 2023 fourth quarter.

As for Eleuthera, new home sales rose by 300 percent year-over-year in 2023's final quarter while contracted sales remained flat. New vacant land listings on the island rose by 116 percent compared to the 2022 fourth quarter to 41, exceeding the 200 percent rise in contracted sales to 12.

Mr Morley said there was "no doubt" that the MLS data contains a large enough sample to show trends in the local Bahamian property market, given that it mainly captures real estate for sale at around $1m or less, as opposed to the high-end properties favoured by international buyers. This nation effectively has two different markets - one for local buyers, and the other largely for wealthy expatriate clients.

"If you follow contracted sales, that shows the demand more than anything else. Follow that curve, and demand was pretty consistent in 2023 and, in some of the island markets, higher than in 2022," Mr Morley added. "It's more a reflection of the local market as our economy is ramping back up. The banks have money to lend, and things are looking a little less risky.....

"I don't think we're fully into a buyer's market right now, but there's definitely a trend in transition towards it. That is justified by the increase in days on the market and the decrease in the listing-to-sales price." He suggested that the surge in new properties becoming available related to the time required to develop new housing and/or subdivisions by developers seeking to exploit the post-COVID boom.

"If you purchase a piece of property and the sale closes today, and you meet with an architect to build a house, that process is going to take two years between the approvals, design and construction," Mr Morley explained.

"You have a lag there; a delay in inventory coming on the market. That's one of the issues: The timeline required to get the product to the point where it can actually be sold, whether you are constructing a home or developing a subdivision with lots. The lag time with lots in a subdivision coming on is not as big as building a house."

Morley Realty, in its analysis of market trends, said: "Another consistent market change found in the fourth quarter 2023 data is the significant increase in the volume of new listings, year-over-year, in all the island markets in both homes and land.

"The fourth quarter 2023 data, quarter-over-quarter, shows that there was a decline in the number of new listings from the 2023 third quarter in the Eleuthera, Exuma, Grand Bahama and New Providence markets, and only the Abaco market had an increase in the number of new listings of both homes and land.

"The data shows that, year-over-year, Abaco had the highest increase of new listings of homes (413 percent) and New Providence had the highest increase of new listings of land (221 percent)." As for the other significant market trends, Morley Realty said: "Days on market, year-over-year, for home sales in all five island markets decreased across all five island markets from the apparent buyer demand.

"Days on the market, year-over-year, for land sales increased in the Exuma, Grand Bahama and New Providence markets most likely because of the significant increase in the inventory of new listings during 2023. In comparison, the days on the market for both home and land sales, quarter-over-quarter, in the Abaco and Eleuthera markets [fell], while increasing in the Exuma and New Providence markets.

"The listing-to-sale price ratio, year-over-year, decreased for home sales in the Abaco, Grand Bahama and New Providence markets, meaning that property owners were more flexible in their sales prices than in 2022," it added.

"The listing-to-sale price ratio, year-over-year, for land sales across all five island markets increased and also increased across all five island markets quarter-over-quarter, indicating that landowners were being less flexible in their sale prices....

"The increase in the inventory of properties is providing buyers with more selection and may soon result in an increase in the days on market , a decrease in the listing-to-sales price ratio, and a shift towards lower median prices despite the apparent strong purchasing demand... Regardless of the uncertainty caused by changes in market conditions, people will always need to buy and sell real estate."