Economic Forecast: Housing
GEORGETOWN – Sussex County has long been home to Delaware’s beaches and poultry industry, but it is also now home to a booming housing industry.
In just the past few months, the county has received proposals from developers for communities of 610 and 675 homes, and another seeking 224 apartments. Those proposals are just part of a continuing trend in the southernmost county, as new developments are sprouting up from the coast to the Maryland state line.
The county grew nearly 16% between 2010 and 2018, adding more than 30,000 new residents, according to the U.S. Census Bureau. In comparison, New Castle County grew about 4%, or roughly 20,000 people, in the same period, while Kent County added about 12,000 residents for nearly 10% growth.
Alyssa Titus, director of marketing for Schell Brothers, a Rehoboth Beach-based developer and homebuilder that is working on 14 communities in Sussex County, has seen that growth up close. She oversees the company’s publicity efforts in markets like New Jersey and New York, often attending trade shows where she meets prospective buyers.
“Clearly there’s a ton of growth in the county and we’ve really capitalized on the transitional buyer, or those who are looking to sell their home and relocate in retirement,” she told Delaware Business Times. “We’ve been lucky enough to find those pockets of people who are looking for that beach life and want to take advantage of Delaware’s favorable tax structure.”
Titus said that the company often sells the “life in Delaware” story and before selling a Schell Brothers home. While proximity to the beaches is important to some buyers, others are searching for amenities, she explained.
“What we’ve found is that Millsboro is still the beach for them coming from New Jersey or New York; a 20-minute ride to the beach is better than the hour or more they were used to,” she said.
The influx of new homes and residents has led to a new set of challenges for Sussex County though, including availability of affordable housing, density planning and traffic congestion. In 2019, the Sussex County Council even commissioned a report on the housing market and opportunities for lower-income residents to purchase a home.
The report’s consultants concluded that the county needed to add about 1,500 homes a year for the next decade to meet demand – a pace it is already exceeding by 33%. They added that Sussex County home prices are often prohibitive for many of those in the county workforce who will serve the newly arriving residents.
“Currently, there are nearly 10,700 households in Sussex County that are severely cost burdened, spending more than half of their income on housing each month,” the report issued in October concluded. “To help mitigate current and future housing challenges, support economic growth and promote a high quality of life for county residents, Sussex County should encourage the production of rental and for-sale homes affordable to households in different income ranges.”
The consultants offered three strategies to help Sussex County increase its housing affordability, including modifying the zoning code to incentivize it in growth areas, establishing a Local Housing Trust Fund to help drive the building of below-market-rate homes, and preserving the existing affordable housing stock through offering incentives. The council is expected to weigh those recommendations in 2020 as it addresses its housing challenges.
County Council Vice President I.G. Burton, who also served on the county’s planning and zoning commission for 11 years, has seen the concerns over the housing boom from a front-row seat for years.
He said the county’s Comprehensive Plan, a document that lays out the county’s land use and planning for the subsequent decade, was not prepared for that boom when it was completed in 2007. The council approved an updated plan in 2019 that aimed to better prepare for the next decade by tightening restrictions on housing density and reviewing buffering, among other measures.
“The rubber band really got tight in the last 10 years,” Burton told Delaware Business Times. “Everyone followed the Comp Plan, but it just really got tight.”
Rising home prices are good for the building industry and property tax coffers but bring a new set of challenges. With the average food service and retail worker make less than $30,000 a year at the businesses that serve tourists at the Delaware beaches, most either live in substandard housing or are forced to commute from further away, exacerbating traffic congestion, consultants concluded.
Nearly half of the Sussex County workforce earn incomes that allow them to comfortably buy a home up to $250,000, but only 25% of the homes on the market are listed under $250,000, consultants found. That drives residents further to the west, or out of the county completely.
“To not have the workforce housing, and with it the ability to serve these new residents, is playing the short ball and we need to play the long ball,” Burton said. “The housing available isn’t enough to sustain the services that all of these new residents will rely upon.”
It’s not just a commerce question when it comes to housing, but also one of public safety. Burton said that he’s heard from the Rehoboth Beach Fire Co. about its housing struggles because young firefighters cannot afford to live in the city.
“It doesn’t do a homeowner much good if their house is on fire and they have to wait for the firefighter to commute into town to reach the fire engine,” he noted.
Burton said that the consultant’s recommendations “challenge us,” but having housing in the right place for
the right people will be essential to the county’s future.
“Without the service providers, the health care workers, etc., you’re not going to have the people still coming here,” he said.
By Jacob Owens
DBT Associate Editor