The housing market has been unusually hot in recent years, and Sussex County has been no exception with its beachfront real estate and influx of retirees. Average home prices hovered around $480,000 in Sussex County, according to a report by Long and Foster. With interest rates rising, what’s next in what has been a booming market?
Delaware’s population has grown by 10.2% over the past decade, and Sussex County has likely seen the bulk of it. The housing market could settle into a calmer atmosphere in the new year. | DBT PHOTO BY JACOB OWENS
The housing market has been exceptionally hot in recent years, and Sussex County was no exception with its seaside properties and influx of retirees. Average home prices hovered around $480,000 in Sussex County, according to a report by Long and Foster.
With interest rates rising, what’s next in what has been a booming market? George Thomasson, Chairman of the Board of Directors of Association of Sussex Estate Agentssees a calmer horizon.
“The market has kind of stabilized, and that’s really what we want,” he said, as opposed to the peaks and valleys. He sees the ideal as a market that does not favor buyers or sellers too much.
Agreeing with Thomasson, some real estate economists are predicting that home prices nationwide aren’t likely to drop much despite the shift in the market. Lisa Sturtevant, economist at Bright MLS, which tracks real estate statistics and listings in the area, is one of them. But she cautions that a stable national average price does not mean that individual areas will not experience fluctuations. Sussex County is high on its list of areas in the region that could see a drop in house prices over the coming year.
She listed a variety of factors that could contribute to this, including a decline in telecommuting as the COVID-19 pandemic subsides.
“The ‘Zoom town’ phenomenon was certainly real in Sussex County and Worcester County, Maryland, and along the coast there,” she said.
People saved more money and bought second homes at the beach, maybe able to work remotely in DC or Philadelphia. They may need to commute again or realize that they are not earning as much rental income on the second home as they thought. Or, the stock market isn’t doing as well, so maybe they’re trying to sell that second home to make some money.
These factors contribute to 70% more homes available on the market than at the same time last year, says Sturtevant – Sussex County had 1,342 active listings in November, up from 788 in November 2021. This striking increase means potentially lower prices as inventory increases.
Add in higher interest rates and you might think real estate agents would bemoan the market stabilizing, but Thomasson said interest rates are still relatively low from decades ago and it’s best to have a stable market.
There were downsides to high demand, he said, like people skipping home inspections to make sure their offer was considered among a glut of other offers.
But even with the cooling, the market is not plunging like it has in the past. Sturtevant said we haven’t seen a housing bubble despite strong demand. “If prices go down from their peak, they will still be above where they were in 2019, possibly by a lot,” he added.
This may be good news for coastal owners, but it’s not as exciting for those worried about the notorious lack of affordable housing in Sussex, where many workers like police, hospital staff and restaurant workers, not to mention those living in poverty, are often overpriced.
“It’s a major problem that we’re trying to solve,” Thomasson said, noting it will take a cooperative effort between groups like real estate agents, developers and the government.
Sussex County Council is limited in its ability to react to fluctuations in the housing market, but it recently passed an order to make it easier for developers to build projects that include affordable housing. Brandy Nauman, the county’s director of community development, said she recently learned that a developer was asking to continue with a project under the new rules.
Another part of the effort, a homebuyer assistance program, was quickly funded, she said. “We believe the demand; it certainly showed what the need is,” she said.
Those hoping for help from the market, or just wanting to grab a bargain on a beach house, may be waiting in vain.
“If you’re a buyer and you expect (prices) to drop dramatically, I think that’s kind of a wild ride,” Sturtevant said.
Many people remember 2006 and 2007 when prices fell 30-40%, she said, but “we’re not going to see anything like that.”
In fact, although more new homes are being actively listed, supply is still historically low, she said, adding, “It’s still kind of a seller’s market.”
