We don't have a housing crisis - we have too many empty houses

In 2000, stepping down as chairman of the BHC, I left the late Minister Nelson Bascome, who was at the time the Minister for Housing, an analysis of Bermuda’s housing problem.

Essentially, what I had found was that even in 1999/2000, Bermuda had a surplus of housing. Bermuda had about 2,000 empty housing units*. By housing unit, I meant anything from a near-derelict multi-bedroom mansion on a hill in Tucker’s Town (there was one) to a studio in ‘back-a-town’ (there were several).

Financially, it made far better sense to renovate or upgrade or re-build existing stock and convert all that could be converted into housing units that could then be put on the housing market at affordable rents.

The likelihood was that well-managed and honest work should have seen units rejuvenated and brought to rentable condition for an average unit cost of $100,000 or less. Thus housing recovery costs would not be as high as would be the case with new builds where the average cost recovery would work out at least three times as much.

Once put into operation, such a plan would have enabled the Bermuda Housing Corporation to re-introduce housing units at an average rate of a minimum 30 units per year — every year, into the foreseeable future.

The biggest stumbling block to the plan was the need to use the Government’s power to force owners of near-derelict properties, or of properties that were tending towards dereliction, to allow Government, in the guise of the BHC to step in, finance the renovation or fix-up, find and place a paying tenant, and then recover basic costs with all excess going to the owners. Ownership —deeds and so on — would always remain with the owners. The legislation to achieve that was already on the law books, had been for several years, and just needed tweaking.

National chorus

Nothing happened about that. Instead, there was a national hue and cry about a “housing crisis”. The ruling PLP cried it. The Opposition UBP echoed. It was a strangely united, national chorus. But this national chorus was being sung within the context of a 13,000 acre island that actually had about two thousand empty housing units in all price ranges.

That higher number has come about because the national response to the non-existent “housing crisis” was more new-builds - Loughlands, Perimeter Lane, Southside, and so on... In addition, there are now more than 100 more (additional) ‘affordable’ housing units under construction in Warwick with more said to be planned for Sandys. As well, there has been a leaching-out of Bermudians as more and more Bermudians migrate.

Admirable as the new-build idea was, it was then and it still is, a strategic mistake. Why? Because the new-build process added to national costs. The ‘subsidizing’ process transferred much of these far higher costs from home buyers and renters on to other taxpayers. More scarce land resources were taken up.

In February 2011 — and we are just beginning to see the start — Bermuda will wake up to the awful reality that we Bermudians self-created our very own Bermudian housing bubble.

With BHC plans — currently stalled — to complete all those units at Southside; private sector condo-building almost stopped; expatriate renters leaving, sneaking out, disappearing, not being replaced, not applying for work permits in the numbers of the fast disappearing past; Bermuda now has a housing bubble that is about to burst.

By nature, real estate agents are eternal optimists — dreamers even. They are in the business of selling dreams. Realists, not realtors, need to count the ‘empties’.

Many people may disagree with these thoughts. Many disagreed then — in 2000. But there is a reality and a way forward.

Why not count the number of empty housing units in Bermuda in February, 2011? That would, once and for all, settle about 90 per cent of the argument. I would be proven to be either right or ignominiously wrong.