Delaware Mortgage Demand Lessens; Buyer’s Market Prevails

If you look around the Delaware real estate market these days, you’ll see two words rarely observed in the past few years: “price reduced.”

It’s something home buyers have been longing to see, and a sign that the financial pendulum has swung in their direction.

Charles Martin, President of the Kent County Association of Realtors (KCAR), said there are more homes to choose from and better prices than in recent years, making it an ideal time for house hunting.

“What’s happening now is the market has returned to normal after three years of being very heated,” he said.

From 2003-2005, it was a seller’s market in Delaware, with owners getting top dollar and buyers struggling to find affordable housing.

Martin said homeowners watched their property values appreciate about 10 percent per year during that period, instead of the typical 3 percent.

Ruth Briggs-King, executive vice president of the Sussex County Association of Realtors, described the home mortgage market from 2002-2005 as atypical, driven by low interest rates, a good economy and increased housing demand.

A lot of out-of-state homeowners with considerable equity were moving to Delaware, prepared to spend big bucks on homes they considered bargains.

With so much demand, area homeowners had little difficulty selling their homes quickly, and for lofty asking prices. But experts believed it was only a matter of time before the real estate bubble burst.

“It was an anomaly and it couldn’t be sustained. It would’ve priced too many people out of the market,” Briggs-King said.

As expected, the housing market cooled this year. There are more choices for buyers now because builders have exceeded demand. As a result, look for less development in the coming years and fewer out-of-state buyers coming to Delaware.

“The New Jersey and Pennsylvania real estate market are not as healthy, and they do have an impact on our market,” Martin said.

With less competition from out-of-state buyers and more available homes, and Delaware home loan rates still at relative lows, experts agree things are finally looking up for local home buyers.

“There’s more opportunity to pick and choose. This is a terrific time to be in the market as a buyer,” Martin said.

So if it’s a good time to buy, does that necessarily mean it’s a bad time to sell a home? Not according to Martin, who stressed that property values are still appreciating, just not at the levels they were in 2003, 2004 and 2005.

Rather than double-digit growth, you are probably looking at 3-5 percent annually, which is modest but good over the long haul.

The median house price in Sussex County dropped from $288,750 last year to $275,000 this year, but the list/sell ratio has remained at 97 percent.

However, homes are staying on the market longer as there are more choices for buyers and they have time to look around and compare options.

“Sellers are beginning to realize that they’re not going to get premium price for their property, but more realistic values,” Martin said.

He said homes that are worth less than $200,000 are selling best in today’s market, because there are plenty of home buyers and not as many properties.

But in the $200,000-plus range, there are so many options that it’s driving prices down. Just how slow the market will get is uncertain. The housing market hinges on such things as employment and wage rates, and the First State is looking strong in both categories. Overall, experts feel property values will see appreciation of 3-4 percent annually through 2010.