New-home bonanza at beach is happening west of Del. 1

Rehoboth Beach-based Schell Brothers is one of the many builders seeing a need for housing west of Route 1. The company has built in Bayside, which was developed by the Carl M. Freeman Companies. Freeman recently announced that it was developing Tidewater Landing on 140 acres in Lewes.

by Pam George
Special to Delaware Business Times

When it comes to real estate in coastal Sussex County, the billboards and staked posters promoting new homes are the signs of the times. They’re near the “lighthouse” at Del. 1 and U.S. 9, which was built as a beacon for Coastal Club, a new community. Don’t let the name fool you. Coastal Club is at least a 15-minute drive from the beach, depending on traffic, and that’s not unusual.

Christopher Higgins

“Almost all of our communities are four to five miles from Route 1 and the eastern side of Route 113, where the growth is,” said Christopher Higgins, director of marketing for Bridgeville-based Insight Homes.

That is also true for Rehoboth Beach-based Schell Brothers. “Practically all of our projects currently for sale are west of Route 1,” said Tim Green, director of development and planning for Rehoboth Beach-based Schell Brothers, which is building in Coastal Club. “That’s truly where the market is going.”

As proof, witness the Carl M. Freeman Companies’ recent announcement that it was developing the community Tidewater Landing along Robisonville Road in Lewes, which is west of Del. 1.

Chris Garland

“We like the Lewes-Rehoboth Beach market — we haven’t been up there before — and the interesting thing is that the demographic is more year-round than Bayside,” said Chris Garland, senior vice president of the Carl M. Freeman Companies. “We’re anxious to get into year-round communities.”

Sussex County’s lifeblood

The Carl M. Freeman Companies is one of many developers turning farmland into residential developments. That, in turn, is filling Sussex County’s coffers. The 3 percent transfer tax is the single largest source of the county’s revenue. For the 2016 fiscal year, the county budgeted $16 million in transfer taxes. In reality, the tax generated more than $23 million. The county expects that to continue this year.

Joe Maggio

Although still not equal to the amount generated before the recession, when the building boom boosted it to $35.3 million, the tax is a significant improvement from the $13.6 million earned in 2009, when projects ground to a halt. “Now they’re back,” said Joe Maggio, a real estate agent in the area who sells new construction.

The Carl M. Freeman Companies, which has an office in Selbyville, is a prime example. The company developed strong roots in the area in 1972 with the development of Sea Colony just south of Bethany Beach. It also developed Bear Trap Dunes in Ocean View and Bayside, a golf course community near Fenwick Island. Bayside is also home to The Freeman at Bayside, a performing arts venue.

Tidewater Landing, located on a 140-acre parcel along Love Creek, is the company’s first Delaware community since Bayside. Plans call for 195 singe-family homes. Other projects in the Lewes Rehoboth Hundred area include Saddle Ridge, located on the site of Windswept Stables, on Del. 24. In December, the Sussex County Council approved a conditional-use application for Arbor-Lyn on 35 acres along Warrington Road between Old Landing Road and Del. 24.

A growing acceptance

Most of these developments are 10 to 20 minutes from Del. 1. But sales are also brisk up to a half-hour or more west of Route 1. Higgins of Insight Homes points to Hawthorne in the Harbeson-Georgetown area.

Indeed, many buyers are increasingly willing to purchase property anywhere between Georgetown and Lewes, Millsboro and Rehoboth and Selbyville and Bethany Beach.

Many of the buyers plan to retire to the area, and that’s a demographic that will find Tidewater Landing attractive, Garland said. The homes here will deliver what these buyers want, namely one-floor living or first-floor owner’s suites. There will be a clubhouse and pool.

Buyers of all ages from New Jersey and New York are amazed by Sussex County’s low property taxes and no sales tax. That’s not to say the homes with waterfront views are a bargain, and the sticker shocks sends more than a few west of Del. 1. “They think they will get a huge house — 4,500 square feet — on an acre lot with water view for $400,000,” Higgins said. “They realize that they can’t, so they go farther out.”

Maggio said buyers who come into Joe Maggio Realty often have a budget and high expectations. “People coming from Jersey or Connecticut wants to spend $325,000 or $340,000, they want new and they want at least 2,500 square feet, and they don’t want to be on top of their neighbor,” he said. “They want single-family homes.”

The farther west they move from Route 1, the more bang they can get for their buck.

Today’s buyers also want what they want right when they buy it. That was the case for Robin Murphy and her family, who now reside full time in Pelican Point in the Long Neck/Millsboro area. “I knew I wouldn’t need to remodel,” she said.

She’s not alone. Pete Green, a mortgage banker in Rehoboth, said 30 percent of his business is now made of customers purchasing new homes, a 20 percent boost since 2009.

As a full-time resident, Murphy is fine with being outside the tourist district. So is Darren Purcell, whose family owns Lloyd’s Market in downtown Lewes. He and his wife, who recently wed, decided on new construction in River Rock Run, located in Milton. Built by Milford-based Country Life Homes, the property has ¾ of an acre on a wooded lot.

“Houses aren’t crammed together; there’s room to breathe,” he said. “It’s just far enough away from the hustle and bustle. … There’s no way that I could have afforded to buy in in-town Lewes or Hawkseye,” which is in the Lewes city limits.

Meeting the demand

As the communities have grown, so have the services, which has helped attract buyers. Witness the growth at The Peninsula, an 800-acre gated community, which opened in Long Neck in 2005. At that time, there weren’t many outlying services for residents in the upscale development. It was considered “out there.” For that and many other reasons, the prop-erty faltered during the crash, leaving some residents under water with their mortgage.

Rehoboth Beach-based Ocean Atlantic purchased the development and unsold lots from Wells Fargo. Schell Brothers is now building homes here, and a clubhouse recently opened. There is a Giant and Harris Teeter nearby, along with medical offices. Sales in The Peninsula have taken off, and Schell Brothers is building in neighboring Peninsula Lakes.

It’s not unusual for several builders to market a single community, particularly if there are more than 200 homes. Some specialize in a certain type of housing, such as town homes. The market for retirees will keep growing, Garland predicts. With several builders, the developer can fill the community faster and get a return on the investment.

Homegrown builders like Schell and Insight might share a community with Ryan Homes and NV Homes, both part of NVR, based in Reston, Va. K. Hovnanian Homes, headquartered in Red Bank, N.J., has several projects in the coastal area.

Are there enough slices for everyone? Some say there’s still plenty of farmland for development. Even so, Schell Brothers is now exploring Richmond, Va., and Insight is entering North Carolina and other states.

Locally, the development concerns many longtime residents. “It’s rapidly going crazy, as far as construction,” said Purcell, who faces traffic going from Milton to his family business in downtown Lewes. “It’s getting to be a nightmare getting in and out of town.”

With so much new housing on hand, you might expect an upcoming glut of new homes. Not anytime soon, Maggio said. “We’re absorbing the inventory as fast as it comes online.”

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