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Delaware’s population grew by 10.2% in the last decade, and Sussex County likely saw the bulk of it. The housing market may settle in a calmer atmosphere in the new year. | DBT PHOTO BY JACOB OWENS[/caption]
The housing market has been exceptionally hot in recent years, and Sussex County was no exception with its beach real estate and influx of retirees. The medium home prices hovered around $480,000 in Sussex County, per a report from Long and Foster.
With rising interest rates, what’s next in what has been a booming market? George Thomasson, board president of the Sussex Association of Realtors, sees a calmer horizon.
“The market has just kind of stabilized, and that’s really what we want,” he said, as opposed to peaks and valleys. He sees the ideal as a market that doesn’t favor either buyers or sellers too much.
Concurring with Thomasson, some real estate economists predict home prices nationwide should not fall much despite the changing market. Lisa Sturtevant, an economist with Bright MLS, which tracks real estate statistics and home listings in the region, is one of those. But she does caution that a stable national average price doesn’t mean individual areas won’t see fluctuations. Sussex County is high on her list of areas in the region that could see a home price drop in the coming year.
She listed a variety of factors that could contribute, including a decline in telecommuting as the COVID-19 pandemic eases.
“The ‘Zoom town’ phenomenon certainly was real in Sussex County and in Worcester County, Md., and along the coast there,” she said.
People saved more money and bought second homes at the beach, perhaps able to work at jobs in D.C. or Philadelphia remotely. They now may need to commute again, or they may realize they aren’t making as much rental income on the second home as they thought they would. Or, with the stock market not doing as well they may be trying to sell that second home as a way to bring in cash.
These factors contribute to 70% more homes available on the market than at this time last year, Sturtevant says – Sussex County had 1,342 active listings in November, as compared to 788 in November 2021. That striking increase potentially means lower prices as inventory grows.
Add in higher interest rates and you might think Realtors would bemoan the market settling down, but Thomasson said interest rates are still relatively low compared to decades ago, and it’s better to have a stable market.
There were downsides to the high demand, he said, like people skipping home inspections to make sure their offer was considered amid a glut of other offers.
But even with the cooling off, the market is not plunging as it has in the past. Sturtevant said we did not see a real estate bubble despite high demand. “If prices do come down from their peak, they’re still going to be above where they were in 2019, perhaps by a lot,” he added.
That may be good news for coastal homeowners, but it’s not quite as exciting for those worried about the notorious lack of affordable housing in Sussex, where many in the workforce like police, hospital staff and restaurant workers, not to mention those in poverty, are often priced out.
“That’s a major issue that we are trying to get some resolution to,” Thomasson said, noting it will take a cooperative effort between groups like Realtors, developers and the government.
The Sussex County Council is limited in how it can respond to the fluctuations of the real estate market, but it recently passed an ordinance aiming to make it easier for developers to build projects that include affordable housing. Brandy Nauman, director of community development with the county, said she had recently received word that a developer was requesting to proceed with a project under the new rules.
Another part of the effort, a homebuyer assistance program, quickly went through its funding, she said. “We believe the demand; that certainly showed what the need is,” she said.
Those hoping for help from the market, or just wanting a bargain on a beach house, may be waiting in vain.
“If you’re a buyer and you’re expecting (prices) to fall dramatically, I think that is sort of a fool’s errand,” Sturtevant said.
A lot of people look back to 2006 and 2007 when prices fell 30 to 40%, she said, but “we’re not going to see anything like that.”
In fact, despite more new homes being actively listed, the supply is still historically low, she said, adding, “It’s still kind of a seller’s market.”
