Market Conditions

If you were thinking about buying Coastal Delaware real estate, now is the time to make up your mind.

The long-awaited housing recovery is in full swing. Home prices shot up in America's largest cities in May, rising at a pace not seen since the bubble days, according to a closely watched gauge.

The recent Standard & Poor's/Case-Shiller index of 20 large U.S. cities indicated that average home prices across the 20 cities have now reached their spring 2004 level. For the first time, two cities — Denver and Dallas — surpassed the peaks they reached before the 2008 financial crisis. All cities tracked by the index saw prices rise from a year earlier and the previous month.

Low mortgage rates, a shortage of homes for sale and heavy investor demand have

The Sussex County Association of REALTORS® (SCAOR) released 1st quarter sales numbers last week that show a continuously strengthening real estate market in Delaware’s southernmost county. Stronger than even 2012, the data is the latest in a series of strong reports.

“For the past several quarters, we know that our local markets here in Sussex County were being driven by enticing buying opportunities, which were caused by burgeoning inventories,” says Bob McVey, 2013 president of SCAOR. “But what we’re seeing now is shrinking inventories, but strengthening home prices and home sales due to an increased optimism nationwide in regards to the American economy. The Federal Reserve keeping interest rates low is obviously helping as well, as buyers can get a

Pricing in today’s Rehoboth Beach real estate market, as it is in the markets for every other saleable item, will be determined by the concept of ‘supply and demand’.

According to dictionary.com:

“The relationship between supply and demand determines the price of a commodity. This relationship is thought to be the driving force in a free market.”

In real estate, supply and demand is represented as the current month’s supply of homes for sale (the number of homes for sale divided by the number of homes sold in the previous month).

While there is no steadfast rule that will apply to pricing in every category of housing, here is a great guideline:

• 1-4 months supply creates a sellers’ market where there are not enough homes to satisfy buyer

There is a lot of optimism regarding house prices. The most recent Home Price Expectation Survey projects a 3% — 3.5% increase in values for each of the next 5 years. We concur that most parts of the country will see varying levels of appreciation over that time. However, we must realize that we will not see 2006 values any time soon.

Barclays’ U.S. residential credit strategy team recently predicted that 2006 values would return in 2021. From an article in DSNews:

“While the floor appears to have materialized, they stress that home prices are likely to recover slowly over the next 4 to 5 years.

“We expect on average a 3-4 percent annual increase in home prices [nationally] in coming years,” they said in an updated market outlook.

At that

The National Association of Homebuilders recently released its Improving Markets Index for the month of February. The report attempts to identify U.S. metropolitan areas in which the economy is improving, demonstrating "measurable and sustained growth".

259 U.S. markets are qualified as "improving" this month, a 17-market jump from the month prior and includes participants from all 50 states as well as the District of Columbia. Experts point to improving market conditions in at least one market in all 50 states as a strong indication that the housing recovery is gaining substantial momentum. 

This increasing momentum may suggest that now may be a very good time to purchase a home. Compared to September 2011, when there were just 12 improving metro

The Sussex County Association of REALTORS® (SCAOR) released numbers recently that prove what public perception has held to be true for several months now – real estate is on the rise, in southern Delaware and across the country.

Year end totals for 2012 show a 14 percent increase in sales over the previous year, with more than 4,000 real estate transactions taking place in Sussex County during the calendar year. That equates to nearly 11 sales every single day of 2012.

Additionally, the average single-family home in Sussex County sold for $327,122 last year, up 9 percent over 2011.

“We’ve known for some time that our real estate markets in southern Delaware were on the rebound, but it’s nice to see that confirmed in actual data,” says Bob McVey, the

The other day Marc Davison, a good friend and founder of the marketing, design & strategy firm 1000watt, forwarded us a booklet released by Ford entitled 13 TRENDS FOR 2013. It is a must read for all businesses as it clearly states the thirteen consumer trends that will help business dominate 2013. However, we had one objection to something mentioned in the report.

In Chapter 12, they make the statement:

“The home-ownership dream is dissolving.”

Ford substantiates this claim by saying that

“Just 12% of whites between age 18 and 34 told Pew that owning a home was ‘one of the most important things’ in their life.”

We were so shocked by this assertion that we decided to research the claim. The citation at the back of the Ford publication

The Weather Channel has nothing to do with it. What’s happening up in the ski resorts, likewise. The ‘snowball effect’ being discussed in print and on TV won’t soften anytime soon (even if the groundhog was right about winter being over.)

This is an economic snowball — one that’s gathering momentum following what CNN’s Money website describes as “the best year for U.S. real estate market in five years.” Businesses that stand to benefit from growth in the Rehoboth Beach housing market are watching closely.

The Wall Street Journal’s snowball report took form in last Monday’s Marketplace section, where the top headline read “Housing Recovery Opens Spigot…Makers of Products From Carpets to Air Conditioners Feel Effects of Rebound.”

It was even more

Mortgage rates worsened last week amid evidence of an improving economy. Conforming mortgage rates climbed in Coastal Delaware and nationwide, rising to a 4-month high.

Freddie Mac has the average 30-year fixed rate mortgage rate at 3.53% for borrowers willing to pay 0.7 discount points plus a full set of closing costs.

There was plenty of news on which for rates to move last week.

First, the Federal Open Market Committee (FOMC) met and voted to hold the Fed Funds Rate in its current target range near 0.00 percent. The Fed also recommitted to purchasing mortgage-backed securities (MBS) and Treasury securities on the open market until such time as the national Unemployment Rate reaches 6.5%, or until inflation rates rise.

Then, Friday, it was