Delaware Housing Market Slowed in ‘06; Officials Optimistic For ‘07

The building boom in Delaware came to a grinding halt as 2006 closed, but many officials see the slow down as part of a cycle, reflecting national patterns, the Milford Chronicle reports.

According to data released by city planner Gary Norris, there were no permits issued in November for new single-family residences, and only 17 permits issued from July-November 2006. Yet the city issued 270 permits for the entire year, reported city manager Richard D. Carmean.

“We took a nosedive in April,” Carmean said.

If houses aren’t being built and sold, the city is not taking in funds from the transfer of ownership fee at the time of sale as well as money from city-issued permits.

“It is down substantially, even with sales of existing homes,” he said. “The market is not driven right now. We’re waiting for the market to pick up, but it’s not limited to just Milford.”

The city planner believes that with Delaware mortgage rates remaining low, many of the major residential projects that got the city’s preliminary site plan approvals are still in the works, giving developers an opportunity to take their time getting go through the design and engineering processes.

After the city gives the go-ahead for the concept, a real estate developer must create a design that passes the scrutiny of the state fire marshal’s office, the Department of Transportation and the conservation office.

Then, before the project is officially under way, developers must get final approval in public meetings from the planning commission.

“Either developers are playing it close to the vest or there’s a downtown in the [Delaware housing market],” Carmean said.

Citing newly released U.S. Census Bureau numbers, he says people are still choosing Delaware as a relocation destination.

“From July 2005 to ‘06, more than 11,000 people moved here. That’s a 1.5 percent increase. People still find Delaware attractive,” he said. “Compared to other states in the region, Maryland, New Jersey, Pennsylvania and Virginia, Delaware had the highest percentage of increase.”

In large portions of the above states, mortgage loans are markedly pricier than in Delaware. And while nobody’s starting actual construction on new homes, the interest in Milford has not lagged.

“I think developers are land banking. I’m still talking to developers. Somebody is always interested in Milford. It’s just a respite in the growth,” Carmean said.

He believes home builders must reconsider the type of product they offer.

“The new buzzword is affordable housing, and to achieve affordable housing, they would have to build smaller houses. Now they are pricing many people out of the housing market. Maybe developers will have to go back to starter houses. The industry is retrenching, rethinking,” he added.

“They are not selling property in Pennsylvania, New Jersey and New York right now, so they are not buying homes, or second homes. Truthfully, I anticipate it will start again. It’s good to get a breather in the workloads.”