Delaware home prices grow faster in 2018 than any state but Oregon

Karl Baker | The News Journal

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The pendulum that is Delaware's housing market appears to be swinging in favor of sellers.

The average price of a Delaware home spiked 3.9 percent during the first three months of 2018, the biggest jump in any state except Oregon, according to federal data released last week.

Real estate agents and home shoppers last month told The News Journal that they were witnessing a sudden lack of inventory — the number of homes on the market — that created an unforeseen price surge.

This week's data puts the surge into a national perspective, showing Delaware's price jump in 2018 edged out even the states that are home to red-hot urban housing markets, such as Colorado, Washington, Texas and Nevada.

Still, Delaware has a long way to go before it can match the sustained growth experienced in much of the western United States.

Home prices in Nevada, after suffering one of the steepest declines during the Great Recession, have grown 78 percent in five years. In Washington, it has been a 60-percent jump.

Even with its recent surge, Delaware home prices during the past five years increased a paltry 16 percent, slower than all but six states, according to the federal data.

Delaware's home market was stagnating as recently as last year, when prices increased just 2.2 percent during the 12 months before Oct. 1.

That slow growth likely was driven by a large number of homes in foreclosure or otherwise being sold in distress at fire-sale prices, Bruce Plummer, president of the Delaware Association of Realtors, told the News Journal in November.

Real-estate broker Pete Davisson suspects that potential buyers who have waited on the sidelines in recent years now have finally been stepping into the market.

With an improving economy and signs that interest rates could jump significantly in the future, people may be buying homes now so that they can be settled before the fall school year begins, said Davisson, who focuses on commercial real estate, but also monitors the entire market.

"My guess would be there is so much pent-up demand in Delaware because the previous year or two or three years have been mostly flat," said Davisson, the founding partner at Jackson Cross Partners.

The United States as a whole also is coming off a year in which home prices rose at the fastest 12-month pace in more than three years.

The market for commercial developers, building condos, apartments and hotels also is growing rosier, Davisson said — even within Wilmington where Delaware's real-estate challenges often exist.

"What is not positive, unfortunately, is what Wilmington has depended upon for 35 years and that is the office leasing market," he said.

Delaware's population growth, which can fuel demand for often-limited supplies of homes, has outpaced that of the United States as a whole. U.S. Census estimates released this month indicates that the number of people in Delaware is inching up to the 1 million mark, growing 7.1 percent between 2010 and 2017.

Contact Karl Baker at kbaker@delawareonline.com or (302) 324-2329. Follow him on Twitter @kbaker6.

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