Guam's economic boom?

Regardless of how you feel about Guam's military build-up, it could not have come at a better time.

The economic situation on the mainland is going from bad to grim, it seems.

Although it's not official, the recession is apparent. Housing prices in some areas are already half of what they were two years ago. That's mostly in areas outside the main cities. Unemployment is rising. Everybody I know is nervous and cutting back.

To just see how bad housing is, check out the "Top Discounts" list to the right on the Northern Virginia Housing Bubble Fallout blog. Most of those communities are at least an hour from downtown DC, and most vulnerable.

In contrast, Guam is about to get a $15 billion investment in new military-related construction as a result of the build-up. This will create a lot of jobs and demand for services.

This is an island of only 176,000 people. When the build-up is completed, the island's population may well be over 200,000 -- a very large jump. Some 8,000 Marines and 10,000 dependents are expected and there will certainly be large numbers of civilian workers added as well.

This build-up will certainly help Guam's unemployment rate, which was at 6% in May up from 5% the same period last year, from 6,863 to 8,487 workers.

With all these new people, I don't think Guam's housing prices will tumble like the mainland and it should be easier to find jobs in everything from construction to restaurants.

The negative may be an investor driven push on housing prices that may push those prices well above incomes. This could put housing increasingly out-of-reach for young people, prompting some to leave for the mainland for more affordable housing, assuming they can find a job. It’s already difficult for Guam to hold on to its young men and women, and it would be ironic if a boom makes it even more difficult.

Regardless, Guam should be relatively insulated from the impact of the downturn. The build-up is a huge economic stimulus. Assuming my math isn’t seriously messed up, the U.S. will spend approximately $85,000 for every man, woman and child living on Guam as a result of the build-up. That's a a lot better than the $600 economic stimulus check. That’s going to have a huge impact. But everything has its downside. The housing bubble created a lot of wealth for people who knew when to buy and when to sell. Most didn't, apparently. The long-term affect of the military build-up on the culture, environment and the cost of living on Guam, is another question all together.

A new feature on DC Blogs

In addition to writing on this blog every now and then, I run DC Blogs in Washington. I just started this new feature, the DC Blogs Weekly Top 10. It will give you a good idea of range of topics that people write about. Also check out the DC Blogs live feed.

Tennis without TV

Wimbledon is on the TV and I am sitting at my computer doing some work. All you hear in the background is "ughhhhh" and "yugghhhh" and other obnoxious gym noises with each hit of the tennis ball. Now I know why you will never hear tennis matches on the radio.

Guam and visas

The military build up on Guam has an interesting twist to it, namely the exemption from visa limits.

I wrote this take on it for Computerworld.

My conclusion is that the cap exemption won't have much impact on Guam -- at least in terms of becoming an alternative work location by U.S. firms that can't get a H-1B visa in the U.S.

Any person on Guam will be working remotely. But on a broader point, I really do think that Guam could be an attractive location for some workers, especially writers and other content producers, who want to be in the U.S. but work in a time zone that is friendly to late shift work. And work on a tropical island as well ....

Guam covers its political bet

I still can't get over how close the Guam Democratic primary was. Barack Obama won by seven votes -- seven votes -- over Hillary Clinton.

The Guam vote may represent the broader division. Its voter split forecasted this Tuesday's divide, with Obama winning North Carolina and Clinton, Indiana.

Did Guam gain from this contest? If national news coverage counts for something, then, yes, Guam did get something. But beyond that ...

Maybe the split in the vote was the best possible result for Guam. It wasn't much of a victory for Obama or a loss for Clinton. A recount may (and one is being sought) change the primary result, but not its impact. But by dividing its vote between the two candidates, Guam may have covered its political bet if a Democrat wins in November.

The Guam primary

The New York Times calls the Guam Democratic primary on May 3rd., the island's "moment in the sun." (Subscription required) This may be true but will it matter?

The NYT reports:

With four delegates up for grabs in caucuses on May 3, Guam is a player in the Democratic primaries for the first time. Though island residents cannot vote in the general election, they can help choose a presidential nominee. In fact, Guamanians need not be registered voters to participate.

This strikes me as a huge opportunity for Guam to draw attention to its political status as well as push Hillary Clinton and Barack Obama for changes. The candidates can't campaign for support without responding to local concerns.

Today, Guam is represented in Congress by a non-voting delegate. It is marginalized politically because it has no political power. The Democrat primary is an opportunity for the people of this island to tell the country what Guam is about.

***
Note:

Guam is some 14 hours ahead of the East Coast. Which means when it is Saturday, May 3rd at 7 p.m. on Gaum, it will be 5 a.m. on Saturday, May 3rd in Washington. See: Guam Time Converter

Guam housing, and dream housing

I sometimes wonder what make the perfect home on Guam. I wouldn’t call these dream houses but I would look at them, if price were no object.

Here’s a nice house for $525,000. I like the idea of the swimming pool right outside.

I’m not crazy about the color of this house and the kitchen seems a little out of date for a house costing $630,000. But the balconies look awesome. Still partial to the swimming pool house.

I would probably buy a condo – although having a little yard may be a must. This Tamuning condo, 9th floor, is $380,000 and has 24 hour security, so I suspect the condo fee is probably a little on the high side. But if I was prepared to spend this much on a condo, a house may be a better option. The major plus on a condo is less concern about it when traveling.

This condo is worth a look. It’s a two bedroom in Tumon. At 742 square feet one of those bedrooms must be small. But $105,000? Let’s say you get 100% financing at 6.5% – the principal and interest will be $663. Taxes probably add another $200, so now its $883. You’ll need PMI which and I’ll use a high estimate of $100, which increases the monthly total to $983. I’ll have to guess at the condo fee. It's probably somewhere between $100 and $300, so I'll add $150 to the monthly bill. The total monthly cost of owning: $1,133. That is very comparable to a rent, and considering the military build up and demand in housing certain to follow, something in this price range has the potential of being a very good deal and a safe investment.


If I wanted to stay in that price range, I might be tempted to consider this property on the southern side in Inarajan. It’s plain, but was built in 1993, has car port seems to have a decent amount of land. At $129,000 it seems as if it's priced to sell.