Two unstoppable forces—time and taxes—will benefit Delaware’s housing market for years to come. Low resale inventory and high property taxes in the Northeast and Mid-Atlantic states will keep retirees flowing to the state.
The state’s affordable home values, age-designed housing, low taxes, and low cost of living make it a uniquely positioned destination for baby boomers looking to settle into a new lifestyle that doesn’t include a massive master-planned community.
BUILDER spoke with Zonda senior vice president Dan Fulton about one of the less talked about housing markets in the country.
BUILDER: What does the new-home market look like in Delaware?
Fulton: Sussex County is one of the few markets on the East Coast with the housing stock to satisfy the demand of the growing retiree market. More than 10,000 baby boomers turn 65 every day, and many of them are ready to retire. In Sussex County, more than 4,000 housing units are permitted annually, and most of those home designs are targeted to the retirees or pre-retirees who plan to retire in two to seven years.
BUILDER: What kind of housing stock can people expect to find?
Fulton: There’s a lot of new construction, and it’s not necessarily age-restricted like it is in other places. You don’t get age-restricted because a lot of people who move into Delaware are vacation home buyers, who intend to retire to the home in the future. They buy that secondary home with the expectation of moving there. The new product is targeted to this community—you see a lot of ranches, first-floor master bedrooms, etc.
BUILDER: What’s the quality of life like?
Fulton: The cost of living is much lower. It’s a tax-friendly state and coastal, so it’s a collecting point for people escaping New York and New Jersey. The beach lifestyle is also appealing with a wide selection of restaurants and shops. Grandparents enjoy living in a destination location where families like to visit.
BUILDER: Is there anything unique about a Delaware buyer and their situations?
Fulton: They are mostly empty nesters who want to move, and they should easily be able to sell their existing home. Low inventory levels in the Northeast and Mid-Atlantic are likely the result of rising interest rates and less housing turnover by homeowners who are choosing to stay in their family home longer. We believe this low inventory trend will continue as mortgage rates remain high. They have equity in their homes and shouldn’t have any problem selling quickly in the large metros they are leaving.
BUILDER: How sensitive are buyers to mortgage rates?
Fulton: Rising mortgage rates are less relevant to those buyers fleeing high-tax states due to property tax savings and all-cash purchases. Even with higher rates, Sussex County’s low cost of living will continue to be a major draw. Homeowners in the Northeast could be paying six to eight times the property taxes than a typical homeowner in Sussex County, and that makes up for higher rates.
BUILDER: How much of a difference are we talking?
Fulton: I have a lot of examples. But you can take a house in Delaware that was listed at $423,000 with a property tax bill around $2,000. A similar house in New York—same size—listed at $848,000 but came with a tax bill of $19,000. You can see why someone would flee for lower taxes; the difference in taxing is significant. And remember these are mostly empty nesters who will be all-cash buyers, so taxes are their primary housing expense.
