Delaware is having a hard time keeping pace with an increase in home values, mostly because there’s been a jump everywhere but in the state of Delaware.
It’s predicted that home prices will increase approximately seven to nine percent this year across the U.S and nearly double those numbers by 2017. However, the increases will be smaller in the First State, and realtors in all three counties in Delaware blame a unique set of issues from stable home prices to a large inventory especially in Kent and New Castle counties.
Old vs. new
Realtor Tom Burns who works primarily in Kent County says there is not a lot of turnover in neighborhoods such as East Lake in Dover, which is more stabilized. However, Burns said at one time Kent County was enjoying a lot of new construction, which accounted for almost a third of the marketplace. That has since dried up.
“The challenges are specifically in real estate where people are gravitating to newer properties, so anything that’s 15 or 25 years old is often going to be the bridesmaid when people are out looking. The consumer is looking for the best prices on the newer properties,” said Burns of Burns and Ellis Realtors.
According to Burns, Delaware has not had a substantial increase in employment up and down the state which is why increasing home prices nationally will differ from what’s happening here. And federal rules and regulations don’t help the real estate market either.
“One of the frustrations that I have had through this past recession is the failure at much higher levels to recognize is that the only thing that can ever solve a recession is housing, and housing was held back because of the rules and regulations and the mortgage regulation that is still being held back,” said Burns.
In New Castle County, that particular market has seen an 8.4 % increase in home prices, but nothing compared to numbers nationally, which continue to rise.
“Our market is kind of stable in the prices. Now definitely if you go into certain pockets of the market you may see some places that jumped 11 percent, 12 percent, you can see some that may have dropped 11 or 12 percent, so it really depends upon the pocket that you are in whether or not you are seeing a larger appreciation in the median sale prices compared to something else,” said Gene Millman of Emory Hill Real Estate.
As a result, realtors are now seeing homes stay on the market for shorter periods.
“I’ve seen that definitely in the Hockessin area, I’ve seen that in the North Wilmington area where if there are low inventories in a certain price range then you really see the seller if they priced their home correctly in the market, it’s going to sell relatively quickly, ” said Millman.
Importance of interest rates
While stability may bit a bit of good news, Millman continues to keep his eyes locked on interest rates, a major factor in the marketplace.
“I think the couple things that really are out of our control and that we kind of need to keep our fingers crossed with number one is that if the feds continue to keep the interest rates the way they are,” said Millman.
Interest rates are slightly higher than they were a year ago and have impacted the first time buyer to a degree. But if rates remain low and the employment base stays strong, then New Castle County according to Millman will continue to move forward in an upward position in the real estate market. That’s something realtors across the state all agree on.
“Every other recession ever historically, it’s always been housing that led the way. Housing right now is starting to get ahead of steam and as long as we can keep regulations out of the way, we’ll get ahead and the economy will do very well,” said Burns.
As for Sussex County especially the areas closer to the beach towns, they’re starting to come back. There are some expensive homes going up. The closer you get to the water, sales pick up, but so do the prices. Western Sussex County is a victim of a bad economy with many towns struggling to sell their housing inventory.