The age of explosive growth might be over, but local real estate officials say the market is beginning to boom once again in the Middletown-Odessa-Townsend area.
“The perfect storm in housing is moving out to sea,” Bob Weir, the chief executive officer at the New Castle County Board of Realtors, said this month. “The supply had sort of stalled, while the demand was being negatively affected by the lack of available financing and a general lack of confidence in the economy. But I think we’re finally starting to see that change.”
While residential building permits issued in Middletown and Townsend hit a five-year low in 2011, new construction appeared to finally start bouncing back in 2012 – a trend officials in both towns says has continued through the first quarter of this year.
“You can see new construction happening again, although most of what you see is on lots that were already recorded, where builders held off, or sold them off, during the last few years,” said Beverly Fawcett, a real estate agency with Patterson Price Real Estate in Middletown since 2001. “I think what happened is, people got sick of waiting to buy and mortgage rates are ridiculously low right now, so there really isn’t a better time and people are taking advantage of that.”
As new construction regains its footing, the market for existing homes is full gear, according to Fawcett and other local real estate agents.
“I think some sellers who were holding out for offers close to what they spent on purchasing their home have resigned themselves to the fact they’re not going to turn a profit,” she said.
Helena Davidson, a real estate agent at ReMax 1st Choice since 2004, agreed.
“We’re seeing multiple offers on property that is priced properly,” she said. “But as those existing properties get bought up, I would expect to see the price of homes start to increase, especially if there is a lag before the construction of new homes catches up to meet the demand.”
Financing, meanwhile, remains a difficulty for many, including those looking for homes on the higher end of the price scale, the real estate agents said.
“If you’re looking for a home under $400,000, you’ll likely qualify for an FHA-backed loan, but when it comes to luxury homes and developing farms, you still can’t get financing,” Fawcett said.
Davidson said she’s seeing the same trend.
“For a while, the market had shifted away from what we call McMansions to smaller homes, but those clients are coming back seeking those larger houses,” she said. “Right now they just have to wait.”
Page 2 of 2 - A return of interested buyers also is occurring in the commercial real estate market, according to Jeff Shahan, a partner at Wilmington-based commercial real estate broker SB Real Estate, which has several listing in the M.O.T. area.
“I think Middletown felt the downturn in the economy first and is coming out of it first, due in part to the diversity of the marketplace,” he said, adding that the existing presence of large retailers, combined with this week’s opening of Christiana Care’s Emergency Department and the recent announcement of a 12-screen movie theater at Westown Town Center are among the positive signs being noticed by potential investors.
“Having Wal-Mart here is a big deal because they understand the largest retailer in the world is not haphazardly selecting sites,” he said. “Amazon also is a big help because an operation like that needs other businesses to support that facility, such as contractors, plumbers and HVAC people. I think you might see the newer box stores get a little smaller, but I would expect the retail market to continue to boom.”
That retail growth also helps to attract new residents, which in turn helps to spur investment in new homes, industry officials said.
“It’s all related, because new construction means carpenters, electricians, people who hang drywall and other workers who have been laid off over the last couple of years are just starting to get work again,” Fawcett said. “As they get jobs working the area, they also might start looking to move into new homes.”
Overall employment growth was cited by each of the industry experts as the one unknown most likely to make or break the recent upswing in the real estate market.
“Jobs are the biggest thing, particularly jobs for those people coming out of college or those who are currently under-employed,” Weir said. “Those folks could really pump up the market if they were to become first-time homebuyers or former first-time home buyers looking for something bigger. But as long as they’re not being provided high salary jobs, it will have an impact on the market as a whole.”