Let’s talk history and home appreciation in Delaware
This was part of a discussion I had with a prospective buyer yesterday who has been doing her online research. She expressed concern about buying in a community that may not be appreciating or which may actually lose money over time. So we spent some time analyzing specific situations and this is what I shared with her –
Home prices peaked in 2005/2006.
In Delaware, that is the same time that several 55+ communities began development and sale of new homes. Timing is everything and unfortunately, the market began to slow down in 2007 and the long cold housing market lasted nearly 4 years.
This slowdown caused many communities to stop selling completely and others to hang on by a thread. In some communities, the clubhouse and pool were never built. In others, they were built but the expense created a heavy burden with fewer homeowners paying HOA or Condo fees.
Several other changes in the real estate market were happening about the same time.
- Taste was changing and the trend headed toward more open floor plans with large great rooms and away from formal living and dining rooms
- Baby Boomers were working longer and delaying retirement
As the market started to improve in 2011/2012, new construction all over Delaware began again in earnest.
Sales in communities targeted to Baby Boomers and new Retirees have soared since then. At Active Adults Realty, which opened on December 9, 2011, we have seen our sales grow every year by double digits. In just 5 years we have grown our team from 3 agents to a dozen and we have grown our number of transactions from just 16 in 2011 to 176 and over $55M in sales in this year – 2016.
2011 had many milestones for us and for the real estate market. It is the year that the first Baby Boomers turned 65! Now there are 10,000 Baby Boomers a day turning 65 and many of them are moving this way – to Delaware.
But, back to the question, “Will a new Delaware home appreciate?”
If you are a Buyer, it is true that some of the earlier homes are selling today for less than they sold for in 2005/2006. Some of the floor plans might be a bit dated and they may not have all of today’s bells and whistles, but they present a good value and an opportunity to buy into some great communities. Take a look at some of the existing homes for sale in neighborhoods like Heritage Shores or Independence. You may find a home like this one at 23800 Samuel Adams Circle for only $360,000.00 on a great lot backing to trees. The average sales price in 2016 for new homes in Independence was $435,000.00.
At Heritage Shores, there are many reasons why an existing home is a better value. Take a look at this home at 66 Emily’s Pintail for just $319,950 located on the Arthur Hill Championship Golf Course. A popular “Bridgebranch” built by Lennar in 2005, it is still one of the most popular floor plans in Heritage Shores but is no longer being built. If you are interested in either community, or any other community anywhere in Delaware, give me a call at 302-424-2890 (or email me) and we can talk about some of the other financial advantages to an existing home.
Now if you are a Seller…
You have to be prepared to compete with new home builders in your own community and the many other communities that have sprung up in the past 10 years.
Despite the popularity of that show on HGTV, Baby Boomers who are now retiring and searching for their new retirement lifestyle are not interested in a Fixer Upper. In fact, they want exactly what they want with little compromise. That is what the builders offer, a chance to make all their own selections and create the home of their dreams. In this environment, it is incumbent on the Seller to understand current trends and tastes and do as much as possible to show their home in its best light. There are only two ways to compete and win –
- Price – find the right price at which your home will sell
- Features – make modifications, renovations or updates to meet today’s buyers wish list
Let’s define “Market Value”
Another client asked me what they meant on HGTV when they said “The asking price of this home is $x, but Market Value is $y.” I replied “Market Value is what the Buyer is willing to pay for a home.” It has nothing to do with what the Seller paid or what the Seller thinks is the current value.
Got questions? We have the answers before you buy. Give us a call at 302-424-2890 (or email me), let’s talk.