The face of real estate has been changing.
President of Association of Real Estate Agents Sally Singh explores this concept in an article based on a presentation at GA Farrell and Associates Ltd’s residential seminar on Thursday, March 14 at the Hilton Trinidad Hotel and Conference Centre.
Post-pandemic, a lot has changed in the world and, by extension, in real estate.
According to the economic bulletin review published by the Central Bank in January 2024, the consolidated system credit grew buoyantly, reflecting an upward trend in economic activity.
Compared to year-on-year, credit to the private sector which grew by 7.2 per cent by November 2023.
Over this period, consumer lending experienced the strongest growth.
Notably, there were increases in the loan categories of land and real estate (9.4 per cent) and home improvement/renovation (15.9 per cent).
There was also vibrant lending in the business sector.
In November, business lending increased by 5.6 per cent year-on-year, broadening the growth pattern of the previous months.
Business loans by November 2023 grew in the sectors of hotel and guesthouses by 33.4 per cent and insurance and real estate by 6.2 per cent compared to March that year.
Real estate mortgage lending continued to expand, reaching 6.6 per cent year on year in November 2023, up from 6.4 per cent in May 2023.
Recently, agents observed that more purchasers were taking mortgages from commercial banks.
This trend backed up with the Central Bank’s figures in its latest publication, showed commercial banks’ real estate mortgage lending increased 6.6 per cent, while non-bank mortgage lending declined by 4.5 per cent, on a year-on-year basis.
At the end of September 2023, interest rates on new and outstanding real estate mortgages increased slightly to 5.02 per cent upward from 4.88 per cent at the end of March 2023.
Interestingly, in spite of this slight increase in interest rates, overall real estate mortgage lending remained strong.
Conversely, commercial bank interest rates on outstanding mortgages decreased from 5.22 per cent in March 2023 to 5.18 per cent by September.
According to the Central Bank, this favourable situation could be attributed to an improved labour market, easing price pressures and lower economic uncertainty.
The data is a backdrop to post-COVID where, in T&T, there has been an uptick in the real estate market.
During COVID we all had to stay indoors, post-COVID potential purchasers are looking for homes that offer more space such as backyards to enjoy the outdoors and fresh air.
Additionally, buyers are seeking properties that would afford them more privacy, as it was sometimes difficult to achieve this during the lockdown.
As we are all aware, during COVID many people continued working.
This was unlike real estate agents who unfortunately are not officially recognised as the essential workers we are.
The Association of Real Estate Agents (AREA) submitted a request to the Ministry of Labour and Small Enterprise to consider real estate as an essential service and we are looking forward to a positive response.
Those who were lucky to still be working then had to scramble and find makeshift office spaces in their homes.
Even children had to have an area in the home conducive to online classes.
With this fresh on the minds of buyers, they are now looking for properties to accommodate these spaces as there are still threats of potential lockdowns in the future.
Also, many organisations have retained hybrid work arrangements post-pandemic so work from home will continue.
Unfortunately, COVID was the breaking point for many couples.
Post-COVID there were many divorces.
The close proximity of couples brought their domestic arrangements into sharper focus and as a result, a significant number of relationships could not survive the intensity of the COVID lifestyle.
This caused another change in the residential sales and rental market.
Now faced with a single income, these potential buyers had a significantly smaller budget and have had to temper the size of their living space to smaller studios, condos, townhomes or stand-alone houses.
The rental market also saw an increase in demand for properties under $6,000 per month for those in between purchasing and those who could no longer afford to purchase a home.
Many buyers today are no longer interested in older properties and fixer-uppers, as purchasers’ tastes have shifted.
Previously, potential homeowners were open to all properties within a certain price range making provisions for updating and renovating the property, even gutting the house and redoing the interior and exterior.
Now, due to lifestyle choices and changing tastes, buyers are more sophisticated and are looking to purchase properties that are modern and have a luxurious feel.
Buyers are also looking for turn-key properties where they do not have to deal with costly and stressful renovations.
This shift in taste can be seen across the board as even those with modest budgets expect more for their dollars than in the past.
We are seeing where potential purchasers feel that if they have to compromise, they would make offers substantially lower than the listing prices and even the valuation amounts.
Many believe that cable channels like HGTV have fostered a trend and even a lifestyle where the TV programmes have elevated the expectations of what properties should look like now.
Buyers are now more willing to move out of urban and more residential areas because newer and more affordable homes are available in less developed communities.
The cost of land and labour in the city and more established residential areas have made it more difficult for developers to attain a certain return on investment (ROI), and as a result, they have moved to areas where they can achieve higher profits.
New and modern houses and townhouses are now available and in demand in areas that were previously not considered by purchasers.
We are also noticing a trend among retirees and younger first-time homeowners who are looking to purchase modern townhomes and apartments.
This demand by these homeowners is fuelled by their lack of zeal or interest to maintain a stand-alone home.
These potential purchasers are at a stage where they want a convenient lifestyle that is relatively hassle-free.
The market is also seeing more informed buyers who are not only cognizant of their budget but are eagerly looking at investment properties to offset their mortgages.
These potential purchasers want to “House Hack.” It’s been around for some time but the trend is definitely growing.
According to FortuneBuilders.com, “At its core, house hacking is about buying a property, living in part of it, and renting out the other parts. This strategy can significantly lower or completely cover your mortgage payments and other housing costs.”
Unlike previous generations where purchasers bought a property primarily for residential use, the millennials, xennials and Gen Zs want to earn extra income to not only pay off their mortgages but maintain a lifestyle before them becoming a mortgagee.
There are some buyers who already have their first home and have paid off their loans and are looking to purchase a second property as rental investment such as a multi-family house or an apartment building to build equity.
It’s also worth mentioning that there are buyers who are interested in properties that can be converted to multi-family units and resold as one or two-bedroom units.
We are also seeing where some young professionals are taking mortgages and purchasing properties with the intention to rent them as they continue to live comfortably in their parents’ home.
In this way, the rental income covers the loan monthly payment, or at least a significant portion of it, as the buyers build equity.
A trend that has been consistent in south and central is the demand for land on which to build.
Land is more available in these areas plus buyers prefer to build, according to their personal specs.
According to a senior banker, many of their clients want their property “to do something” for them.
As a result, they prefer to build a house that they may have the option to rent either immediately or even have their business in the same location.
Again we see the house hacking scenario.
We are also seeing that Southerners are not keen on large residential developments, preferring smaller intimate gated compounds where the square footage is spacious and the maintenance fees are reasonable.
Since this article is specific to our market in T&T, it would be remiss not to comment on the effect of the crime rate on real estate taste and demand for properties.
Some would say we are at the stage where even criminals are concerned about crime.
To feel safe and secure, buyers are opting for communal living in gated contemporary developments with a mix of townhomes, condominiums, and stand-alone homes.