How the military housing allowance structure warps Guam's rental market
- Admin
- 2 hours ago
- 3 min read
By Jayvee Vallejera
Sen. William A. Parkinson wants to add the 38th Guam Legislature’s voice to the clamor for the U.S. military to shift its housing compensation system for servicemembers to one that doesn’t artificially inflate housing costs in Guam and price out most civilians from the limited number of rental homes in the U.S. territory.
Parkinson has introduced a resolution calling for federal reform to address one of the root causes of Guam's distorted
rental market, the overseas housing allowance, or OHA, which he said puts housing costs beyond the reach of many working families on Guam.
Resolution 117-38 urges the U.S. Congress and the Department
of War to transition Guam from OHA to the basic housing allowance system, which applies in all 50 states.
Both allowance structures compensate service members who choose to live outside military bases, but they are very different systems.
OHA reimburses U.S. servicemembers for their actual rent costs up to a maximum based on the servicemember’s rank. Higher-ranking members have higher housing allowance ceilings, allowing them to rent more expensive units.
BAH, on the other hand, is a fixed payment system. Servicemembers receive a flat housing allowance based on local rental rates and can keep any leftover funds if they find more affordable housing.
Servicemembers on Guam currently receive the overseas housing allowance, to which the real estate industry partly attributes higher rental prices in certain markets, particularly in neighborhoods favored by military personnel.
According to a 2013 report commissioned by the U.S. Navy and conducted by the Center for Naval Analyses, “military servicemembers dominate the high-end housing market on Guam. Landlords are legally permitted to price discriminate based on OHA.”
This means Guam landlords charge different rents for the same apartment unit depending on the tenant's OHA level.
“There is no incentive for service members to negotiate for cheaper rent, since they do not benefit from any savings,” Parkinson said in a news release.
The CNA says that initial basic housing allowance rates will be difficult to determine on Guam. Still, it will be much lower than current overseas housing maximum rates, since servicemembers on Guam currently rent housing that is considerably larger than basic allowance standards.
The system has also resulted in many U.S. servicemembers choosing to live outside of military bases, effectively leaving many military housing units vacant.
“Current maximum OHA levels are high enough to encourage servicemembers to live off-base, leaving exceptionally high vacancy rates in on-base military housing,” the CNA said.
The CNA report quotes a Guam realtor as stating that it is “very difficult to compete with the military renter because of the generous housing allowance.”
Parkinson said the distortion effectively removes pricing discipline and causes landlords to peg rents to the highest allowable OHA rates, which are frequently well above what local families can afford.
“This creates a two-tier market,” Parkinson said. “Service members with federally-backed subsidies are bidding up rents, while local families are left to compete in an inflated market without similar support. This is just bad economics, and it's unjust.”
The resolution aims to correct this by urging adoption of the BAH system on Guam to encourage real bargaining that he said helps “keep landlords honest.”
The CNA study projects that switching from OHA to BAH on Guam would reduce the Department of War's housing costs by roughly 6 percent.
“Guam has large numbers of active duty servicemembers living in the private sector; switching to BAH there will save 6 percent or more in the long-run cost of housing allowances,” the CNA report said.
Parkinson further argued it would help restore price competition and reduce the upward pressure on rents for both military and civilian tenants.
“BAH introduces choice and competition. OHA props up artificially high prices. If we want the free market to work, we need to level the playing field,” Parkinson said.
Guam has seen median rent prices rise dramatically in the past decade. Two-bedroom apartments now regularly list for $2,000 or more, which is double the rates many families paid just 10 years ago.
At the same time, data shows that more than 50 percent of Guam households are now considered “housing cost-burdened,” meaning they spend more than 30 percent of their income on rent.
“This is a generational issue,” Parkinson said.
“We cannot allow market distortions and federal inaction to push our teachers, nurses, and young families off-island. Guam must be a place where people can afford to live, raise kids, and build a future.”
He said this isn’t a partisan issue but a pocketbook issue. “The people of Guam deserve a housing market that works for them, not just for a privileged few. The free market can fix this but only if we stop rigging it with bad policy.
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