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Rapid price increases in Delaware's housing market are putting younger and lower-income homebuyers at a disadvantage. | DBT PHOTO BY JACOB OWENS[/caption]
DOVER — Homeownership has dropped for young and middle-aged Delawareans in the last decade, and to keep up with the rate the state is now growing, 24,000 units will need to be built by 2030, according to a new report.
For affordable units — or those that don’t exceed more than 30% of the household gross monthly income — the state needs to add 1,200 units per year.
The 2023 Delaware Housing Needs Assessment was unveiled during a Wednesday morning press conference by Delaware State Housing Authority (DSHA) Director Eugene Young Jr. The study was prepared by Root Policy Research and is conducted every five years as a way to take a snapshot of trends and issues in the First State, as well as forecasting needs for the future.
Single-family homes continue to be the largest share of Delaware’s residences, marking 58% in 2021, while 19% were multi-family complexes – both stayed the same from 2010, according to the report. Buying a home is challenging until the household earns more than $80,000 per year, and three-quarters of Delaware’s renters earn that, but only 20% of homes for sale are affordable to them.
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Doug Motley, who serves on the Delaware State Council on Housing, and Root Policy Research Founder Heidi Aggler discuss some of the early findings of the 2023 Delaware Housing Needs Assessment. | PHOTO COURTESY OF DELAWARE STATE HOUSING AUTHORITY[/caption]
“There’s definitely a mismatch between your distribution of renter households by income and what’s on the market for them,” Root Policy Research Founder Heidi Aggler said during the press conference. “If you think about the $35,000 to $60,000 [income] category and what share of units are affordable, it's not a lot. It’s really hard to buy in Delaware right now.”
Aggler added there was less than 10% of affordable home purchases for that income bracket that were made in the state in 2022. Wilmington had the highest share at 9%, while rural pockets of the state west of U.S. Route 13 had the lowest share between 2% and 4%.
Roughly 50,000 renters in Delaware are cost-burdened, defined as paying more than 30% of their gross income on utilities, rent and more, while 25,000 renters are severely cost-burdened, paying more than 50% of their gross income in household costs.
On the whole, Delaware’s homeownership rate of 71% is higher than the national average, but it has been declining for all ages under 65. The most notable drop was for those ages 33 to 44, or the Millennial generation, where the rate dropped from 71% to 63%.
More than 80% of white Delawareans are homeowners compared to 52% Hispanic or Latino and 51% Black homeowners. Southern New Castle County, or the Middletown area, has the highest ownership rate in Delaware, including an 80% rate for Black households.
Aggler said that unlike other states, Delaware’s housing production has caught up since the 2008 recession. There also didn’t seem to be much of a constraint when it came to the time between issuing permits and breaking ground.
“Good on you for making production available and reducing those constraints, although there’s more work to do,” she said. “One thing that did make Delaware unique is it really represents all facets of America. Geographically, you have very rural areas, rural resort areas and urban areas. For a small state, you have needs that reflect a much larger state. It will take a lot of innovation, partnerships and resources to be able to address that facet of needs.”
The report recommends increased funding for programs to maintain affordable housing, particularly to build at least 250 rental units per year priced for those who earn less than $32,000 and 800 homes priced for households that earn less than $66,000 or less.
Continued support for existing loan programs as well as increasing access to people of color could help bridge the race homeownership divide. Rehabilitation funding could also bring more inventory to the market.
But Aggler also stressed that the state needs to consider changes to its own zoning laws on the books. Even with funding, the potential solutions could be curtailed if the local and statewide policies don’t encourage diverse housing.
“One thing that I would say that I've observed that doesn't work well is when you have too much specificity,” Aggler said. “Take density bonuses for example, where developers get to put more units on a site differently than what zoning allows. That works differently depending on the market context.
“You need as a state to think about how do we put the right regulations in place, but how do we not overdo it so that we want our local markets to be able to respond effectively,” she added.
The full 2023 Delaware Housing Needs Assessment will be released this fall.
