By Kathy Canavan
Special to Delaware Business Times
Real estate agent Bayard Williams listed an attractive Newark home last month. Within 48 hours after he put his RE/MAX Town & Country sign out, he received a stunning 13 requests for showings and collected five offers from prospective buyers. Every one of them was above the asking price.
The winning buyer offered all cash. Williams, president of the Delaware Association of Realtors, said he’s done more cash deals this year than he has in his entire career.
One reason: a tighter market. The inventory of single-family homes in northern New Castle County fell 38 percent this year. There were 2,001 homes for sale in the second quarter of 2017. That slipped to just 1,242 in the second quarter of this year.
Patterson-Schwartz agent Steve Crifasi said there are pockets of North Wilmington, like the Fairfax area, where inventory has dropped 44 percent this year.
While northern New Castle County figures are dramatic, single-family inventory dropped 16.5 percent statewide — from 3,452 homes in the second quarter of last year to 2,879 this second quarter, according to MLS figures.
“Selling my clients’ houses is so easy,” Long & Foster agent Mia Burch said. “It’s quick, and I get multiple offers. If we stage it right, we sell it in a week. But I cannot find a house that my client can go to.”
Condo inventory statewide also dropped precipitously — from 2,772 in the second quarter of 2017 to 566 in the second quarter this year.
There’s a mashup of reasons why inventory is short. Williams said Delaware was a little slower to recover from the Recession than some surrounding states, because it lost so many high-paying jobs when major employers like General Motors shut down and multinational companies like DuPont cut back. That slow recovery caused ripples in the housing market, convincing some homeowners who ordinarily would have moved to stay put rather than putting their homes on the market.
Williams said some potential sellers may not be moving because their credit scores were dinged during the downturn and they might not qualify for a larger mortgage.
He said homeowners who lost equity in their homes during the Recession might not have ready cash for closing costs on a move-up home.
In addition, he said, owners who refinanced when interest rates were very low might be settling in because rates have inched back up. “If you locked in at the 3 percent range, would you buy a new house at 4.5 percent? You might say, ‘My house isn’t perfect but it’s OK. I’ll just stay put. I can’t afford a new payment,’ ” Williams said.
“In certain areas now there is no new construction because there’s no more land, and the inventory has been eaten up,” Crifasi of Patterson-Schwartz said. “Sales are good, but what will happen now is you’ll see sales going down, but they won’t be down because of the economy. They’ll be down because, if you don’t have the product on the shelf, you can’t sell it.”
Agents say neighborhoods like Fairfax and the surrounding North Wilmington communities hit the sweet spot for homebuyers — desirable, affordable and in close proximity to jobs and the interstate. “When something comes on the market in Fairfax or Deerhurst or the surrounding communities they always go very quickly,” Williams said.
Those established areas are often landlocked. Williams said any pockets of new construction in North Wilmington are usually priced at $500,000 or more.
With inventory low, agents said many buyers are moving south. “I’m selling a lot of homes in Smyrna right now,” Williams said.
Agents say home prices in Middletown are inching up too, despite a 45-minute commute to Wilmington’s central business district.
While new construction was once was an easy option, it is limited now because many construction companies folded during the Recession, forcing tradesmen to leave the industry. As the economy improves, builders find it hard to hire skilled tradesman to work their developments.
Even builders with teams at the ready can’t response to demand instantly. As Williams put it, “It takes a long time to turn a cornfield into a housing community, and it’s very expensive.”