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Delaware is a rather popular place for those who are looking to explore big cities, visit incredible beaches, or simply find better business opportunities. From the last census for the state of Delaware in 2020, its population increased by approximately 28,439 people, and according to "PopulationU," the population is estimated to be 1.02 million residents for 2023, so the numbers are only expected to go higher.

What does this mean for you as a property manager? In states where there's a higher demand for housing, home prices rise, making the market more competitive.

Overall, the Delaware real estate market involves a network of buyers/sellers looking for investment opportunities in the area. Recent data suggests that the housing market is changing, as the Delaware median home prices went up by 11.7% after March 2023, although the number of sold homes dropped by a surprising 28.3%.

What does this mean for those wanting to rent their Delaware property? Will the housing market in Delaware crash soon? This article will cover everything you should know about the topic!

Delaware Housing Market Trends You Must Keep in Mind

There are several market trends you should keep in mind before evaluating if the Delaware housing market is appropriate for you to invest in. Here are a few trends you should definitely consider at all times.

Median Home Prices

Overall, it refers to the middle sale price among all properties. This rate is ranked from highest to lowest.

As mentioned in the introduction of this article, the median home prices in Delaware increased by 11.7% compared to data from 2023.

Homes Sold

As its name implies, it refers to the total number of home sales during a specific period. The national average for homes sold is decreasing, and according to Redfin, the seasonally adjusted figure for last year (2022) decreased to 5.1 million in January from 6.49 million in the month of September of last year.

Finally, we ended up with 28.3% in fewer sold homes for 2023, which is considered an all-time low.

Inventory

It refers to the total number of unsold real estate units, whether they're residential or commercial. According to data from September 2022, the inventory of unsold existing properties stayed at 3.2 months, which is considered low. In other words, existing-home sales fell approximately 2.4% in March 2023.

Mortgage Interest Rates

According to data from Redfin, the U.S. Housing Market set the national average 30-year fixed rate for mortgages at 6.5%, as well as up 2.4 points year over year.

Mortgage Application Rates

It refers to the total number of mortgage applications received compared to previous years. According to data from 2022, mortgage applications were 41% lower than in 2021.

Median Days on the Market

The median days on the market for Delaware increased by nine days year over year, which gives us a total of 25 median days on the market for March 2023.

Foreclosures

A foreclosure happens when someone takes possession of a mortgaged property if the person (mortgagor) doesn't make their payments. Data from September 2022 suggests that approximately 21,869 properties in the U.S. started foreclosure processes that year, which involves a 113% increase from the year before.

What Factors Are Affecting the Delaware Housing Market?

Now that you know all of the recent housing market trends you can expect, let's take a look at some factors that could affect Delaware's housing market over the following years.

Mortgage Rates

Interest rates have impacted the Delaware market recently. When the cost of getting a mortgage gets lower, the demand for more homes typically increases, which also translates to higher home prices in the area.

Unfortunately, these rates have priced several buyers out of the market.

Delaware's Economy

As you may have expected, the housing market of Delaware will depend heavily on the state's overall economy. Some common economic indicators to watch out for include:

  • Employment Ratio
  • Manufacturing Activities
  • GPDs
  • Prices of Goods
  • And more

As a rule of thumb, the lower the buying power that the people have, the harder it will be for them to afford a home or file for a mortgage. All of this will affect the housing market in general.

It's also important to note that, while the state's economy will affect the local housing market, the country's economic power, in general, will also affect all the housing markets from time to time.

Demographics

Delaware's demographics are defined based on:

  • Race
  • Age
  • Income
  • Gender
  • Growth
  • Migration Patterns

These demographics will make it easier to determine which types of properties are in higher demand in Delaware. Now, if there's any substantial change in a country's or state's demographics, their housing markets could get affected.

Government Interventions/Policies

It's essential to understand your local government's policies to be able to predict a state's demand and supply. Moreover, that will also allow you to identify false real estate news.

Some common policies or factors that influence the demand for real estate in Delaware include tax credits, subsidiaries, and deductions.

Is the Delaware Real Estate Market Likely to Crash?

A crash in any real estate market is a common concern many people have regardless of where they are. Regarding Delaware, economists claim that, while the market will definitely slow down, it's highly unlikely to crash.

There are a few reasons why the housing market in Delaware is unlikely to crash, and we'll cover all of them below:

New Buyers

Overall, there's a higher demand for homes across different demographics, especially Hispanics and Millennials; both of these demographics are considered to be in their prime buying years. This leads to low inventory.

Low Inventory

Considering the scarcity of inventory we mentioned before (supply of 3.2 months), buyers are forced to bid up prices.

Lending Standards

Today, most lenders place high standards on renters/borrowers. Typically, those who get approved for their mortgages have excellent credit. This change to stricter lending standards decreases the chances of a real estate market crash.

Foreclosure Drops

Considering most homeowners own more equity in their homes, there's no big threat surrounding a foreclosure crisis. Generally speaking, homeowners are in a better position than they were 15 years ago, which decreases the chances of a housing market crash due to foreclosures.

Changes in Newly Constructed Housing Supply

The levels of supply for newly constructed homes haven't gone up since 2007, and there's also no indicator that the supply levels will increase quickly.

Essential Statistics About the Local and National Housing Market

Let's take a look at some statistics about the Delaware market you should be aware of. Keep in mind these statistics represent data from 2022 and 2023.

  • In Q2, 2022, housing affordability levels declined significantly. This was because the monthly mortgage payments on the average existing single-family home with 20% in down payments increased by half from the previous year and almost a third from the first quarter of this year.
  • The average commitment rate for a 30-year, conventional, and fixed-rate mortgage was 6.11% in September 2022.
  • Median home prices in Delaware increased 11.7%, according to data from March 2023.
  • The median sale price for all home types in Delaware is $309,200 in March 2023.
  • Lewes, Dover, Milford, and Wilmington are among the top 10 metros in Delaware with the fastest-growing sales prices.
  • The number of homes for sale (for all home types) in the Delaware housing supply decreased by 13.1% in March 2023, with approximately 1,676 homes for sale.
  • About 32.9% of homes in Delaware sold below the list price in March 2023.
  • Newark is currently the most competitive city in Delaware, followed up by Pike Creek Valley, Wilmington Manor, Elsmere, and Brookside.
  • In August 2022, Delaware had the second-highest foreclosure rate with one foreclosure filing for every 2,387 homes. Illinois got first place.

Delaware Housing Market Predictions You May Consider

There are a few predictions you could consider for the Delaware housing market. While they don't guarantee anything, you may keep them in mind before investing in the future:

  • Mortgage rates will likely increase due to potential recessions, geopolitical tensions, and inflation rates.
  • Higher interest rates could represent up to 10% drops in home sales for the following months.
  • Due to low inventory, some economists believe that home prices won't drop in 2023. However, others believe that some sellers will lower their prices to current levels.
  • In general, the average home value may drop by 5% to 10% due to unaffordability.
  • Some economists believe that the housing inventory could finally increase, as homes become unaffordable and interest rates rise.
  • Even though home prices could fall, experts believe that it won't be enough to offset the higher interest rates. This could cause the monthly mortgage rates to stay high, making homes less affordable.

Bottom Line - Is the DE Housing Market Good for You Today?

That's about everything you should know about the Delaware housing market. As you can see, there are many factors you must consider, especially as a property manager.

Once you understand everything that can affect the housing market, you will be able to make better and smarter decisions. Overall, it's safe to say that today represents a good opportunity to invest in the DE housing market, but you must first ensure you do proper research to ensure you invest in appealing real estate properties.

FAQs

Is the Median Sale Price for Delaware Properties Likely to Fall?

Home values in Delaware are currently increasing, specifically considering the 11.7% increase in comparison to last year, although the number of homes sold fell by 28.3%. Even though prices could fall due to the effects of the COVID-19 pandemic, the effect won't be as harsh as the one that came from the Great Recession, for example.

What Are Some Economic Indicators That You're Dealing with a Balanced Market?

The most common indicator that you're dealing with a balanced market is that the supply and demand rates are close to even. In other words, home prices are rising in line with the average inflation rates.

How Do You Know You're in a Housing Market Bubble?

You're in a bubble when there's a steep incline in home prices, an increasing demand, and a limited supply. As more people jump into the market, the demand increases even more, which can cause home prices to reach unstable levels.

All of this can make the market unaffordable for most buyers. Some common factors that can cause a housing market bubble include:

  • Low interest rates
  • Economic prosperity
  • Credit Access
  • Wider mortgage offerings like conventional loans, ARMs, and government-sponsored loans.

In Delaware, the current state of the market seems to be forming a bubble-like projection. This is because of low inventory, high mortgage rates, and higher home prices.

David is the co-founder & CMO of DoorLoop, a best-selling author, legal CLE speaker, and real estate investor. When he's not hanging with his three children, he's writing articles here!

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The information on this website is from public sources, for informational purposes only and not intended for legal or accounting advice. DoorLoop does not guarantee its accuracy and is not liable for any damages or inaccuracies.

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