Mobility Magazine of Worldwide ERC, August 2016
By Tom Reynolds CRP, SRPA, Louise Jeffers, SRA and John Ciminera, SRA
The Delaware Market is located just south of metropolitan Philadelphia and west of the Delaware River. Delaware is known as “the First State,” because it was the first to ratify the U.S. Constitution in 1787. The State of Delaware is the corporate home or place of incorporation for more companies than any other state in the country. The U.S. Office of Management and Budget officially defines the region as the Philadelphia-Camden-Wilmington Metropolitan Statistical Area, and it is the seventh largest metropolitan area in the U.S., with a population of approximately 6 million as of the 2015 U.S. Census Bureau Estimate.
Industries with the largest increase in jobs in Delaware over the last year, according to the U.S. Bureau of Labor Statistics, were education and health services, followed by government. The largest job growth percentage was seen in professional and business services, and the poorest growth was in chemical and pharmaceutical research-and-development science-industry jobs. Historically, DuPont Co. was one of the state’s largest employers but the company’s recent merger with Dow Chemical brought substantial layoffs. This is having an impact on the New Castle County economy and the buyers’ consumer confidence.
The Delaware unemployment rate was 4.2 percent as of April, while the national average was 5.0 percent. The Delaware unemployment rate is down 0.7 percentage points from the previous year, a slight improvement. Economically, the area is known for its relative stability, average-to-low unemployment rates, and affordable cost of living.
The Delaware real estate market is presently experiencing the same real estate market conditions that are being felt nationwide. Residential inventory levels have started to decline, and new construction has improved slightly. Foreclosures do not constitute much of the market today. Many homeowners are concerned about employment stability and consumer confidence in the economy in all price ranges. Job losses and declining consumer confidence over the last five years have contributed to a general contraction in the Delaware real estate market.
While the national housing inventory hit a new low in January of 2013, market activity has gradually improved since then, and inventory levels started to decline. The last 12 months, the average sale price of homes and the number of closed sales has increased slightly. The inventory levels range from four to eight months’ supply, depending on the specific location and price range. The average days on market for New Castle County have held steady, with a comfortable 63 DOM, and Kent and Sussex Counties have had 90 DOM for the last 12 months. The suburban counties just north of Delaware in Pennsylvania (Delaware and Chester) have all experienced more market activity and a lower inventory of homes for sale. These counties in Pennsylvania draw some families who work in Delaware but prefer a short commute in order to have better schools.
Consumer confidence and job security remain low. The historically low mortgage rates, however, have created a market favorable to buyers with good jobs and good credit.
A slight oversupply in the marketplace, low consumer confidence, and low interest rates are expected to continue through the rest of 2016. Employment remains the key factor affecting the local housing market. This will be remembered as a year that marked the beginning of the changes for the State of Delaware that came along with the newly merged DowDuPont and the new Chemours Company, spun off from DuPont in 2015.
The residential real estate market will start to improve as economic indicators for both the regional and national economies demonstrate positive improvement. It is anticipated that for the next year the State of Delaware will remain a buyer’s market.
R.Tom Reynolds, SRPA, CRP, is with Reynolds Appraisal Company, and is the 2016 President of RAC (Relocation Appraisers and Consultants). He can be reached at +1 302 575-0955, or TomReynolds@RAC.net. Other local members of RAC who assisted are Louise Jeffers, SRA is with Reape Jeffers & Assoc. She can be reached at 610-527-7540, or LJeffers@ReapeJeffers.com. John Ciminara, SRA, He can be reached at 610-891-0673, or JBCiminera@comcast.net .