Lewes, DE

Buyers who think the tax credit extension will give them more time to buy should be careful how long they wait...for 2 reasons. 1) Tighter credit standards are coming. Fannie Mae will very soon be reducing their allowable debt-to-income ratios which will therefore reduce the monthly mortgage amount a buyer will qualify for. 2) Mortgage rates are set to climb. The Fed ended their $300 billion Treasury bond purchases on 10/29 and will stop buying mortgage bonds in March. This will create an oversupply of bonds in the market looking for buyers. When there's too much of anything the price typically drops. When bond prices drop, the yield (or rate of return) goes up. The only way to get the $$ to pay higher yields is to charge borrowers higher rates. And none of this takes into account inflation (which bond investors hate). Though inflation remains relatively tame right now, we as a country can't continue spending billions that we don't have (which devalues the dollar) and expect that prices are not going to climb. Do your buyers a favor and tell them they can't afford to wait!

When someone says progress, I'm usually the first in line, especially if it means an improvement in local resources and added value to current markets. However, sometimes progress is not the best avenue when it aggressively effects niche areas. Lewes Delaware is good example. Lewes is a quaint town nestled in the coastal area of Sussex County. As with all tourist areas, there has been growth, but the majority of it has been out from the town center towards the main highway several miles away. This growth has not seemingly affected the attractiveness of Lewes, especially its historic seafaring downtown. Currently, there is a proposal to build a 300,000 square foot shopping mall and a 20,000 square foot office complex, just steps away from the downtown section of Lewes. Expectantly, the local residents are not pleased with this proposed development as they feel, as do I, this would heavily taint the historic charm of Lewes. What gives Lewes residents a real salt-in-the wound rub, is the proposed development is just outside the reach of the town limits, leaving area residents with little say in the matter. As a local myself, I see plenty of opportunity where this shopping mall could be built, off the coastal highway. Its location would then be with other like-in-kind commercial properties leaving the downtown section of Lewes with its idyllic charm.

According to current market information in Sussex County Delaware, the Aug 2009 home sales are almost parallel to this time last year. In Aug, there were 43, 2-bedroom, 136, 3-bedroom, and 51, 4+-bedroom homes sold. Last August, there were 46, 2-bedroom, 134, 3-bedroom, and 58, 4+-bedrooms homes sold. The marked increase was in 3-bedroom home sales. The best news for sellers is the average number of days on the market dropped from 211 in Aug 08' to a current 176 days on the market. As in Kent County, 3-bedroom homes are outpacing the rest. The average sale price for 3-bedroom homes leaped from a Aug 08' price of $244,632, to a current average of $292,170, a $47,500, 19% increase over the previous year's sales price. The highest home price range (with the most sales) was in the $180,000 to $199,999 range with 19 homes selling. What does all this mean for you? If you are a seller in Sussex County with a 3-bedroom home and if it is priced well within the market, you can expect it will sell in reasonable period of time. It certainly appears the market is swinging back to a seller's market, inch by inch.

It's no secret that the Federal Government has been selling billions of dollars worth of bonds and notes to finance all of the spending programs it has instituted. But it is a little known fact that the Treasury Department has been purchasing their own bonds in an effort to soak up this excess supply and keep long term interest rates low. It is also not commonly known that mortgage rates are NOT directly tied to the performance of Treasury Bonds (though they do some times travel in the same direction), but are actually dictated by the performance of Mortgage Backed Securities or mortgage bonds. So mortgage bonds actually compete with Treasury bonds in the open market for investor dollars.

So what does all of this have to do with the real estate market? Well, the Treasury's bond-purchase program is going to end come October. And if you know anything about the rules of supply and demand, then you can see what is probably going to happen once that occurs. When the Treasury stops buying its own bonds/notes, the supply is going to increase dramatically. Investors, be they foreign or domestic, are only going to have so much of an appetite for this additional supply and when there's too much of a given product in the marketplace, the price of that product tends to drop to attract more buyers. When the price of bonds drops, the yield (or interest rate the bond pays) has to go up as well. And since mortgage bonds tend to travel in a similar direction, it stands to reason that long-term mortgage rates willl rise as well.

It's highly unlikely you're going to hear about any of this in the mainstream media until this begins to happen. So it's up to you, the realtor, to start advising your potential buyers (especially those that are sitting on the fence waiting for home prices to drop further) to start getting serious about purchasing now. If they wait much longer, the price reduction they may be able to get will be more than offset by a potentially higher mortgage rate. If we all knew the perfect time to pull the trigger on buying a home, a car or stocks, then the Cayman Islands would be a very crowded place. Better to take advantage of today's low home prices and mortgage rates now...before they're gone.

Bill couldn't create the kind of havoc the Weather Channel is talking about, could he? Back in 1996, I lived in Wilmington, North Carolina. I had escaped the Washington, DC, Beltway and was searching for a new place to call home. Then along came Fran and Bertha, two hurricanes in the same year and both caused a fair amount of damage. No one wanted to talk to this Northerner about new career opportunities for a burnt-out boomer. All they wanted to talk about was how hard it was to get their insurance agent to call them back!

If it weren't for those two hurricanes, I might still be living in Wilmington, North Carolina. But then I wouldn't have moved again to Coastal Delaware. I wouldn't have met my husband BILL to whom I have now been married for almost 7 years. I wouldn't be a Realtor in Lewes, Delaware, and we wouldn't be in the process of renovating our next home in Lewes, Delaware.

The beauty of living near the Coast in Delaware is that we usually don't see the kind of hurricane activity that our neighbors to the south can experience. AND, as many Baby Boomers are learning, Delaware is so centrally located in the heart of the Mid-Atlantic Region. We are within a short drive to Annapolis and Baltimore, Maryland, Washington, DC, Northern Virginia, Philadelphia, Pennsylvanie, all of New Jersey and New York City or Long Island.

So, let's hope Hurricane BILL passes us by this weekend and heads out to sea. And if you haven't yet visited Lewes, Delaware, come see us this fall. Lewes is a year round place to visit and a great town in which to live.