2023 Delaware Housing Market

Delaware Housing Market

Delaware’s real estate landscape has taken a notable turn.

Statistics show a 0.14% decline in the median sales price compared to the previous year, coupled with a 29.7% drop in total home sales. As mortgage rates are on a downward trajectory, sitting at 6.79%, new buyers are venturing into the market.

While Delaware’s housing market seems to be gaining momentum, there’s uncertainty looming, mainly due to possible spikes in interest rates and looming recession concerns.

Latest News from the Delaware Real Estate Scene

  • Buyer’s Edge: In contrast to the booming market seen after the pandemic, Delaware is currently projected to witness a 20% reduction in housing prices.
  • Surge in Mortgage Rates: Between May 2022 and May 2023, mortgage rates shot up from 5.10% to 6.79%.
  • Return of the Sellers: There was an 83.3% increase in property listings in April 2023, a rise from 421 listings in December the previous year.
  • Properties Stay Longer on the Market: On average, homes in Delaware lingered on the market for 17 days, a significant increase from 7 days the previous year.

      Source: Redfin

Current trends in Delaware’s housing market mirror the broader U.S. trend of robust demand but limited supply. The decrease in house prices statewide corresponds to a dip in sales.

Snapshot of the Delaware Housing Market

  • Median Home Prices: The average price of a home in Delaware stands at $318,700, witnessing a 0.14% decline year-on-year. Predictions for 2023 anticipate the median sale price to fall by approximately 4%.
  • Home Sales Data: According to data from April 2023, there’s been a significant 29.7% YoY decrease in home sales.
  • Rental Rates: In 2023, renters are, on average, parting with $1,271 per month.
  • Properties Awaiting Sale: In February, there was a 0.8% increase in homes awaiting sale for three consecutive months, bringing the total to 2,397 pending listings in Delaware.
  • Time on Market: On average, properties remain on the market for 17 days, a seven-day increase from the previous year.

Forecasts from Zillow for the Delaware property market hint at a 4.4% appreciation in the national Zillow Home Value Index by March 2023. This is expected to see a subsequent 0.6% increase in the following year. Moreover, NAR is projecting sales of 4.78 million existing homes in 2023.

Potential for a Market Crash in Delaware?

While some economists predict a slowdown in 2023, a full-blown crash seems unlikely. With mortgage rates stabilizing post the recent banking crisis, buyer confidence appears to be rebounding.

Top Reasons Why a Market Crash Appears Improbable

  • Limited Housing Supply: As of April 2023, there’s only a 2.6 months’ supply, making bidding wars common and ensuring stable prices.
  • Constraints in New Construction: The number of new homes being built hasn’t matched pre-2007 levels, making quick inventory boosts unlikely.
  • Fresh Demand: New groups of homebuyers, especially Millennials and Hispanics, are actively looking for properties.
  • Rigorous Loan Requirements: Unlike the pre-2008 era of easy mortgages, modern-day lenders in Delaware demand high creditworthiness from prospective borrowers.
  • Minimal Foreclosures: The vast majority of homeowners today have significant equity in their homes, making large-scale foreclosures less likely.

As for 2023, it’s hard to pinpoint whether it leans more towards sellers or buyers. High mortgage rates have deterred many potential buyers, while limited inventory and fewer listings suggest sellers are also wary.

Recent events, such as the Silicon Valley Bank’s downturn, have caused fluctuations in the mortgage and housing prices. Post a Federal announcement, the weekly mortgage rates declined to 6.32% from 6.42%, prompting a 17% surge in mortgage applications in the February-March period.

See Also
DC Housing Market

The Way Forward for Delaware’s Housing Market

The overarching health of the economy will dictate the trajectory of the housing market. A sluggish economy restricts borrowing, leading to fewer property transactions.

As per ADP, even with a consistent unemployment rate of 3.7% in May 2023, several states reported encouraging job growth figures. For the future:

  • Mortgage Rates: As of June 2023, the 30-year fixed-rate mortgage hovers around 6.79%, a dip from 6.42% the preceding week.
  • Consumer Confidence: The surge in mortgage applications indicates consumers are feeling more confident about entering the housing market.
  • Economic Factors: If a recession were to hit, housing prices might take a plunge. However, the structure and health of Delaware’s housing market as of now make it somewhat resilient to a sharp downturn.

 


Frequently Asked Questions about the 2023 Delaware Housing Market

  1. Is the Delaware housing market in 2023 a buyer’s or seller’s market?While trends lean towards a balanced scenario, limited inventory and high mortgage rates make it difficult to clearly designate 2023 as a buyer’s or seller’s market.
  2. Why has there been a decline in home sales in Delaware this year?Multiple factors are in play: the rising mortgage rates have made financing more expensive, and there’s a general economic uncertainty that might be causing buyers to hesitate.
  3. What is the average time a home stays on the market in Delaware in 2023?Homes in Delaware are on the market for an average of 17 days before they get sold.
  4. How have mortgage rates changed from the previous year?Between May 2022 and May 2023, the mortgage rates in Delaware increased from 5.10% to 6.79%.
  5. Are housing prices expected to fall or rise by the end of 2023?Predictions suggest a potential 20% reduction in housing prices, but this can change based on broader economic conditions.
  6. Is there a risk of a housing market crash in Delaware?While some economists forecast a slowdown, current indicators, such as limited housing supply and rigorous loan requirements, suggest that a full-blown crash is unlikely.
  7. How are rental rates in Delaware in 2023 compared to home prices?Renters are on average paying $1,271 per month in 2023, while the median home price stands at $318,700.
  8. Why is there a limited supply of homes in Delaware?Several reasons contribute: a constraint in new construction, homeowners choosing to hold onto their properties longer, and demand outstripping supply.
  9. What impact did the Silicon Valley Bank downturn have on the Delaware housing market?The downturn caused fluctuations in both the mortgage and housing prices in Delaware and influenced consumer confidence.
  10. With the current trends, is it advisable to buy a home in Delaware in 2023?

This depends on individual financial situations, goals, and market predictions. It’s always recommended to consult with a local real estate expert before making such decisions.