As we move into the 2nd half of 2024, I thought I’d take this opportunity to provide a recap of the Cayman Islands real estate market for the first half of 2024 with respect to volume, transactions, inventory, and overall pricing as well as provide some insight as to where I believe our market will be heading throughout the rest of the year.
Please note that all figures included in this article are taken from CIREBA and are quoted in US dollars.
A look at sold transactions and volume
For the first half of 2024 we saw 461 sold transactions totaling $578,390,208. In comparison, the first six months of 2023 saw 378 sold transactions totaling $447,371,845. This is a 22% increase in transactions and a 29% increase in overall sales volume.
It is also important to compare the first half of this year to the last half of 2023. The last six months of 2023 saw 346 sold transactions totaling $505,732,566. This is a 33% increase in transactions and a 14% increase in overall sales volume.
Historically, the percentage increases have been larger for sales volume compared to transactions. The 33% increase in transactions and the 14% increase in overall sales volume from the 2nd half of 2023 compared to the first have of 2024 is a unique situation directly impacted by the sales of 67 units at Lakeside.
In December 2023, I listed 72 units at Lakeside with prices ranging from CI $249,000 to CI $339,000; all of which have closed except 5 units that are still pending/conditional. The 67 units that have closed represent 15% of all the sold transactions in the first half of 2024.
New listings
For the first half of 2024 we saw 876 new transactions totaling $1,517,960,746. In comparison, the first six months of 2023 saw 828 new listing transactions totaling $1,493,908,409. This is a 5.8% increase in transactions and a 1.6% increase in overall new listing volume.
When comparing the first half of this year to the last half of 2023. The last six months of 2023 saw 778 new listing transactions totaling $1,200,707,879. This is a 12.6% increase in transactions and a 26.4% increase in overall new listing volume.
The overall number of new listings that have been hitting the market over the last year and a half has increased over the last three quarters. A lot of these new listings are new developments which are at a priced under $500,000 such as YARL which is being listed by Mark Gaus at RE/MAX Cayman Islands. There are 27 listings alone currently in the MLS for this development.
Similarly, Highpoint Residences is a new development listed by Nikki Thomas at RE/MAX Cayman Islands. There are 17 active listings in the MLS for this development with most priced under $800,000.
Therefore, the active listings for just these two developments amounts to 44 new listings that have hit the market in the last 6 months, which is 5% of all new listings.
As suspected the lower priced properties are selling much faster than higher priced inventory.
Average price per listing – solds and new listings
The average price per sold listing has been increasing year-over-year. In 2019, the average price per listing was $770,492. In 2020, that climbed to $987,131 a 28% year-over-year increase and in 2021, that climbed again to $1,016,433 a 3% year-over-year increase. In 2022, that number rose to $1,097,337, which is an 8% year-over-year increase and a staggering 42.4% increase in just 3 years.
In 2023, the average price per sold listing was $1,313,128 a 19.7% increase over 2022.
For the first half of 2024 the average price per sold listing is $1,254,642. This is down by 4.5% compared to 2023. It is important to keep in mind that one of the key factors in this decline is due to the number of lower priced properties which closed during the first half of this year, which includes the 67 units at Lakeside as noted above. Given that approximately 15% of all sold transactions in the first half of the year were these Lakeside units this decrease isn’t surprising.
When you look at new listings, we are seeing the same trend with respect to pricing. In 2019, the average price per new listing was $981,687. In 2020, that climbed to $1,119,016 a 14% year-over-year increase and in 2021, that climbed again to $1,528,875 a 37% year-over-year increase. In 2022, that number rose to $1,830,883, which is an 19.8% year-over-year increase and a huge 86.5% increase in just 3 years.
In 2023, the average price per new listing was $1,709,369 a 6.3% decrease over 2022 but as I stated above this is not surprising given the impact the 72 units at Lakeside had on the overall market.
For the first half of 2024 the average price per new listing is $1,732,831. This is up by 1.4% compared to 2023.
Inventory is up
The average monthly number of active listings at the end of 2023 was 1,610 compared to 1,841 in 2024, which is a 14% increase. As of writing this article, there are currently 1,848 active listings of which 365 are pending and 244 are pending/conditional which means only 1,239 are available for sale.
There are several things which should be taken into consideration when looking at inventory. Our population continues to increase, and it currently estimated at over 80,000 which is a huge jump over the last few years.
So, yes, year-over-year, there is slightly more inventory in the market, but the population size is increasing, and we know from experience that many people when they move to Cayman start out as renters and eventually purchase property.
The value of existing inventory
Not surprisingly the value of the active listings in the marketplace has continued to rise. In December 2022, the value of active listing inventory hit $3 billion for the first time in our industry’s history. Ever since then this number has been climbing higher and higher and increased to over $3.5 billion in June 2024.
The balance of 2024
For the first half of the 2024 the Cayman Islands real estate market has been getting back to normal. We are back to seeing our usual seasonal shifts within the housing market which include a slow down as we head into the summer months. For example, March 2024 saw sold volume over $112 million whereas as June has slowed down to $80 million.
When looking into the future, there are several factors which contribute to the health of the Cayman Islands real estate market including interest rates, inflation, as well as the uncertainty about the upcoming US election.
As of today, the benchmark interest rate in the United States is 5.50%. The next Federal Reserve meeting is this month but “experts largely agree that the Federal Reserve won’t cut rates at its upcoming July meeting and that means mortgage rates likely won’t fall either.”[i]
This is directly tied to Consumer Price Index numbers or inflation. In the US, inflation “came in at 3.3% last month – slightly below the previous months’ readings, but still a far cry from the Fed’s 2% goal.”[ii]
Is it possible for the US Federal Reserve to drop interest rates before the end of this year? It depends on who you ask! It is possible but it’s not guaranteed.
“Officials now estimate they’ll lower the federal funds rate by a quarter of a percentage point to a range of 5% to 5.25% by year’s end, according to their median estimate. That’s equivalent to one quarter point cut, fewer than the three decreases they projected in March. Most economists expected the first cut in September.”[iii]
The US Federal Reserve meets at the end of this month then again in September, November and December.
Of note, interest rates in Canada and with the European Central Bank dropped by 25 basis points in June but the UK has not yet reduced interest rates. Given its overall inflation ease to 2.3% in April it wouldn’t be unrealistic to see a rate drop in the UK in August.[iv]
As I’ve touched on in several articles, the Cayman Islands has a unique real estate market. We are a very desired location and people are continuing to relocate for numerous reasons. The more people who move here, the more demand for housing.
When buying or selling property, it is important to work with someone you can trust, who is an expert in their field, who has multiple years of experience especially with major economic transition periods like we saw in the early 2000s and are experiencing now.
If you have any questions regarding buying or selling property in the Cayman Islands or anything related, please do not hesitate to reach out to the Bovell Team at +1 345 945 4000.
[i] CBS News, July 9, 2024
[ii] CBS News, July 9, 2024
[iii] USA Today, June 12, 2024
[iv] Reuters, June 12, 2024