The springtime housing season is finally here, with scores of new communities being unveiled or maturing into fine neighborhoods from the Wilmington suburbs to the state’s southern tip and beaches.
As we know from our friends at the Delaware Association of Realtors this is good news for sellers, who in January were looking at a more-than 10 percent increase in listing prices and more-than-6 percent increase in sold prices from that time last year. And it’s mostly good for buyers who want lots of choices since we’re looking at a nearly 30 percent increase in the number of properties available compared to last year.
Look behind these overall stats and you’ll see why it’s important to price your home strategically if you’re selling and to understand crucial market forces if you’re buying. And regardless of whether prices go up or down, Delaware continues to be a great place to save money on taxes.
Interest rates are a factor.
There was a 31 percent decrease in the number of homes sold in January compared to a year ago. Although there are lots of reasons for this there’s no doubt that the sharp rise in home mortgage interest rates had a lot to do with it. It made housing more expensive for buyers who are borrowing and undoubtedly led to a 33 percent increase in the number of days homes were on the market prior to going under contract. That said, the 6+ percent increase in sold prices shows the enduring appeal of our homes and communities.
If you’re buying, you have to think carefully about your choices.
If you’re looking to buy you can probably feel less pressure since – in many parts of the state – the intense competition for properties we saw during the Covid pandemic has eased a bit. Again, that’s partly due to interest rates, but I believe it could also be influenced by the large number of homes available this spring and – equally important – a wider variety of lifestyle choices with so many different types of communities coming to fruition.
At Active Adults, we’ve worked to make the search easier and a lot more fun with our Buyer’s Guide, summarized in this recent post. It’s written to help you zero in on your field of choices, whether you’re looking for a 55+ community requiring minimal maintenance and with lots of great amenities right outside your door, or more varied communities where you can prioritize proximity to the beach or cultural and recreational activities. We’re also happy to spotlight other resources suited to different types of home shoppers.
If you’re a first-time homebuyer you can save a lot of money on one of the biggest out-of-pocket costs: The transfer tax.
That’s because Delaware offers a First Time Home Buyers Credit that reduces the buyer’s portion of the state transfer tax by one-half of the 1 percent increase established in 2017. It applies if your contract is for less than $400,000, and it’s capped at $2,000, which is still a considerable amount of cash for many first-time buyers. Also note that if you were a first-timer who paid the full amount after August 2017 you can apply for a rebate.
There are also a couple of important rules. One, you cannot have owned any direct interest in residential real estate in the past, and two, you have to live in the property as your principal residence. Here are some simple details: https://revenue.delaware.gov/first-time-home-buyer-tax-credit/.
If you’re 65 or older you can reduce what you pay in school taxes – IF you act before April 30.
A few weeks ago I spotlighted this incentive to lower these taxes based on three different scenarios: one for folks who moved into their home prior to December 31, 2012, one for those who moved in after January 1, 2013 but before January 1, 2018, and one for those who moved in after January 1, 2018 – which is a bit less exciting since you’ll need to reside in the home for 10 years before you can get the credit.
Delaware’s real estate taxes are still among the nation’s lowest.
If you’re thinking of moving here from New York, New Jersey, Washington, D.C. or other high-tax locales you’re in for a pleasant shock when you look at the state and local tax rates for properties Delaware-wide. You’re also apt to pay a lower income tax rate, with your personal rate likely falling between 2.2 and 6.6 percent depending on your income, and your standard deduction if you’re married and filing jointly at $6,500.
Delaware’s also a great place for business owners, as evidenced by the fact that more than 50 percent of the publicly traded companies in the U.S. and more than 60 percent of the Fortune 500 companies are located here.
You can get details on all of this and more from this recent post.
Contact us to cut through the clutter and find the home that’s right for you.
We’re realtors who live and breathe all of this stuff, so you’re probably not surprised to see me capping this post by encouraging you to work with us to find your home or sell the one you’ve outgrown. Ultimately, it’s our mission to make the whole process much easier and more rewarding for your finances and the quality of your life. Check out this list of Active Adults Agents and let us know how we can help.