Our weekly Real Estate Market Watch gives detailed information on the current real estate market in eastern Sussex County, Delaware. Click on any of the links below to view the reports.
Lewes and Rehoboth Area Real Estate
Lewes, Rehoboth and Dewey Beaches Real Estate
Bethany and Ocean View Area Real Estate
Bethany Beach and Fenwick Island Real Estate
First-time homebuyers dominated the U.S. real estate market in 2009, accounting for roughly half of all residential transaction, according to the National Association of REALTORS®.
That trend is likely to continue well into the new year. That’s because interest rates are hovering near all-time lows, home-price affordability is near all-time highs and a third factor – Congress’ extension of the first-time homebuyer tax credit until April 30, 2010 – make conditions quite favorable for those considering homeownership for the first time.
Still, with the prospect of making one of the largest investments you’ll ever make in your life, you can easily become overwhelmed. Some of the questions you may be asking are: Will I be able to afford the home of my dreams? Do I have enough money for a down payment? Will I qualify for the tax credit? Will I make smart home buying decisions? If you go into the process prepared, your first purchase – like the current timing – can be just right.
Resources–Before starting out, educate yourself on the process. Attend a homebuyer seminar in your market, and check out myriad real estate resources online. Among those helpful online resources is prudentialrealestate.com, through which you can access millions of property listings and gain environmental reports, property profiles and value-range estimates for just about any residence in America.
Your real estate professional also is a great resource. Don’t hesitate to let him or her know that you are new to the process. Your real estate professional will expect you to have questions at each step, from house hunting to making an offer through closing.
The costs involved in the purchase of a home can seem overwhelming to first-time homebuyers. There are mortgage costs, the down payment, and closing costs to think about.
Affordability–By looking at your income and debt ratio, your sales professional can help you calculate how much you can afford each month in mortgage payments. But before determining your price range, you should also take into consideration other factors that will affect your monthly budget once you are a homeowner, such as property taxes, insurance, homeowner association dues, utilities and maintenance. And if your down payment is less than 20 percent of the cost of the home, you will be responsible for private mortgage insurance, more commonly referred to as PMI.
Mortgage payment–Fear of being rejected for a home loan is one of the main concerns for first-time homebuyers. To lessen the stress, you may want to get pre-approved for a loan before looking at prospective homes. This will not only help you feel more confident, it will also give you an advantage where there are multiple offers for a specific property. In addition, the fact that your loan has already been approved is of great value to the seller because it shortens the purchase process, and there is less of a chance that the buyer will back out of the sale. If you don’t have a specific mortgage lender in mind, ask your sales professional for a recommendation.
Down payment–The down payment amount varies depending on the value of the home you choose and your mortgage lender. Your real estate professional will be able to explain the different options available to you.
Tax credit–The first-time homebuyer tax credit, a key component of the American Recovery and Reinvestment Act of 2009, equates to as much as $8,000, or 10% of a principal residence’s purchase price, and is available to those who have not owned a principal residence in the past three years. You can use the tax credit to help purchase your home or help pay for its closing costs, or the credit can be used to remodel, refurnish and repair your property. See your tax advisor for details about the tax-credit program and how you may benefit.
Making offers–Don’t feel pressured into making an offer on the first home you see. This is a common mistake of many first-time homebuyers. Make sure you view different homes to get a feel for the marketplace. When you decide on a home to make a bid on, work with your real estate professional to get all of your questions answered before making an offer. But don’t wait too long to make an offer. The longer you wait, the greater the chance other prospective buyers may place offers, making it harder for you to negotiate a good deal.
Above all, remember there are no silly questions. Make sure you understand and are comfortable with every aspect of the transaction. Your real estate professional can be an invaluable asset in helping you make educated decisions so that your first home purchase is a rewarding experience.
Bringing the Dream of Homeownership Within Reach
As part of its plan to stimulate the U.S. housing market and address the economic challenges facing our nation, Congress has passed new legislation that:
Here is a link to a chart that fully details the credit:
http://www.prugallo.com/documents/homebuyer_tax_credit.PDF
To qualify as a “first-time home buyer” the purchaser or his/her spouse may not have owned a residence during the three years prior to the purchase.
If you or your client purchased a home between January 1, 2009 and November 6, 2009, please see: 2009 First-Time Home Buyer Tax Credit.
The Extended Home Buyer Tax Credit may be applied to primary residences, including: single-family homes, condos, townhomes, and co-ops.
The maximum allowable credit for first-time home buyers is $8,000.
The maximum allowable credit for current homeowners is $6,500.
Each home buyer’s tax credit is determined by two additional factors:
Price
Under the Extended Home Buyer Tax Credit, credit may only be awarded on homes purchased for $800,000 or less.
Buyer Income
Under the Extended Home Buyer Tax Credit, which is effective on November 7, 2009, single buyers with incomes up to $125,000 and married couples with incomes up to $225,000—may receive the maximum tax credit.
These income limits have changed from the 2009 First-Time Home Buyer Tax Credit limits. If you or your client purchased a home between January 1, 2009 and November 6, 2009, please see 2009 First-Time Home Buyer Tax Credit.
Yes, some buyers may still be eligible for the credit.
The credit decreases for buyers who earn between $125,000 and $145,000 for single buyers and between $225,000 and $245,000 for home buyers filing jointly. The amount of the tax credit decreases as his/her income approaches the maximum limit. Home buyers earning more than the maximum qualifying income—over $145,000 for singles and over $245,000 for couples are not eligible for the credit.
Under the Extended Home Buyer Tax Credit, as long as a written binding contract to purchase is in effect on April 30, 2010, the purchaser will have until July 1, 2010 to close.
No. The buyer does not need to repay the tax credit, if he/she occupies the home for three years or more. However, if the property is sold during this three-year period, the full amount credit will be recouped on the sale.
Information obtained from the National Association of REALTORS
The Rehoboth Beach Main Street organization has selected Bette Gallo, President of Prudential Gallo, REALTORS, as its 2009 Rehoboth Beach Citizen of the Year.
Bette was asked to be a member of the board of directors of Rehoboth Beach Main Street from its beginning in 1995. She served as Treasurer for several years and heen an active board member for many more. In the formative years of Rehoboth Beach Main Street, Bette was very influential in educating business owners on the value of The Rehoboth Beach Main Street Organization and encouraged membership from those who were skeptical. Most folks didn’t realize that RBMS was focused on enhancinig the ”downtown” Rehoboth business climate and didn’t see the need for another organization. As is evident when we look outside these doors, we all realize the positive impact that RBMS has made on our city. Bette was also a great help in influencing business owners to upgrade their outdoor signage to enhance Rehoboth streetscapes. 
Bette was able to have this impact on our vibrant business community and the city because she and Sal have played an active role in the community for over 30 years. Although Prudential Gallo, REALTORS is celebrating their 30th year in business this year, Bette’s Rehoboth Beach business experience goes back to 1973. She and Sal created many “firsts” in our beach community! They introduced “subs” to the area when they opened The Yellow Submarine in the ocean block “Rehoboth Mall” on Rehoboth Avenue. As is true for all of their businesses, the Yellow Submarine was truly a family affair . . . all the kids pitched in and even Sal’s mother made the home-made cannolis . . . another “first” for the beach resort! Always thinking ahead, Bette and Sal then opened the “L & S” Clothing Outlet, a pre-curser to our Outlet Stores, selling manufacturer overstocks! in the years following, they also ran an ice-cream shop, a jewelry store and were partners in creating The California Sunshine Shops . . . all of which they which they gave up when they opened “Gallo Realty” and began focusing on Real Estate in 1979.
With experience in all types of resort businesses, it was natural that Bette’s niche turned out to be commercial leasing and sales in downtown Rehoboth. She became the “Go To” person for anyone thinking of buying, selling or leasing in Rehoboth Beach. With many years of successful businesses under her belt, Bette knew what worked and what didn’t. It was, and is, general knowledge in the business community that as a REALTOR, Bette can be trusted to give you the straight scoop! Her purpose is never to “make the commission”, but to make sure that her customers and clients are successful in their endeavor. Bette has probably talked more would-be business or property owners out of leasing or buying than she’s assisted in “writing the lease or contract!” She truly believes that filling downtown Rehoboth’s streets with viable & successful businesses and restaurants is what makes our city a place that people want to visit, live and work.
Although not a native, she spent every summer in Rehoboth Beach as a child and could call no other place home. She and her family are very visible supporters of all types of organizations in Rehoboth Beach and the surrounding resort. Here are just a few ways that Bette and her family and firm positively impact our resort region:
The following information comes from Kiplinger.com. Here are several reasons that make Delaware a great place to retire to.
The First State is one of the tax-friendliest states for retirees. It has no sales tax. Its income-tax rates are modest. Social Security benefits are exempt from state income taxes, and taxpayers 60 and older may also exclude $12,500 of investment and qualified pension income, including out-of-state government pensions. Homeowners 65 and older may get a real estate credit equal to half of the school property tax, up to $500.
STATE SALES TAX
None, although the state collects a gross receipts tax of 1.92%.
INCOME-TAX RANGE
2.2% – 5.95%. For 2010, the state has increased the top marginal tax rate to 6.95% on income over $60,000.
EXEMPTIONS FOR RETIREMENT INCOME
Social Security and Railroad Retirement benefits are exempt. Taxpayers 60 and older can exclude $12,500 of investment and qualified pension income. They may qualify for an additional tax credit of $110. Out-of-state government pensions qualify for the pension and retirement exemption. Under age 60, $2,000 is exempt. If you are 65 or older on December 31, you are eligible for an additional standard deduction of $2,500 (if you do not itemize).
PROPERTY TAXES
All real property in the state is subject to tax unless specifically exempt. Personal property, tangible and intangible property is exempt. Real estate is subject to county, school district, vocational school district and municipal property taxes. The state offers various property tax relief programs for residents age 65 and older and for residents with disabilities. Homeowners 65 and older can get a credit equal to half of the school property taxes, up to $500.
INHERITANCE AND ESTATE TAXES
In July 2005 the legislature eliminated the requirement to file a Delaware estate tax return for dates on which the federal estate tax law does not allow a credit for state death tax (currently 2005 through 2010). It also eliminated the special lien on the gross estate tax if the decedent dies on a date on which the federal estate tax does not allow credit for state death taxes paid.
State tax data courtesy Retirement Living Information Center. Visit RetirementLiving.com for a complete rundown of taxes in Delaware.
The short sale is becoming more common on the sales market today, but a few years ago, it was almost unheard of. But today, prospective home-buyers and home-sellers may hear the term and should be prepared for the pluses and minuses of such a transaction – the Good, the Bad and the Ugly!
The Good
A short sale is when the bank agrees to discount the loan balance for a seller who owes more on his mortgage than the home is currently worth in reference to its market value. The advantages to the seller is that a short-sale transaction usually does less harm to the seller’s credit record than a foreclosure would. For the buyer, the advantages of buying a property through a short-sale process is the selling price can often be at or below market value. Another up-side of the situation is that the homeowners are generally still current on their payments and living in the home. Therefore many of these properties are not distressed, as some foreclosed properties are.
The Bad
Because the seller’s lender must approve the price and agree to take the loss, there are extra steps to negotiate. It may take three times as long as a regular home sale (up to 6 months). Here is a link to an article that appearred in the USA Today about how short-sale transactions are starting to become very frustrating.
http://www.emailthis.clickability.com/et/emailThis?clickMap=viewThis&etMailToID=772781268
Both buyers and sellers must be prepared for this delay, and this can often be frustrating for both parties. The seller is anxious to see if he can avoid foreclosure, and the buyer is nervous about losing the deal to another offer that the bank may accept. Another pitfall for the buyer, is that a long delay waiting for a response from the bank can cause the buyer to lose an interest rate lock, or perhaps prevent them from purchasing another property while they’re tied-up in the short-sale transaction.
Sellers should also be aware that just becuase their bank accepts a short-sale contract, it does not necessarily let them off the hook. Some banks may require the seller to take out a personal loan for the difference, or may attach a lien to other assets of the seller.
The Ugly
In many short-sale situations, the bank may require the seller to keep the property on the market and to submit other offers, even though the seller has already accepted a buyer’s offer. To the buyer, this means that the signed contract that they have with the seller can be bounced out by the bank if another stronger offer is submitted to them. I have found over the last several months in some of these short-sale transactions that the seller, and in most cases, the buyer, has misinformation on how the process works. Every transaction is unique in its circumstances, and what you have heard happening in one deal may not have any effect on the transaction that you are presently negotiating.
The best advice that I can offer is make sure you fully understand what you are getting into, ask your REALTOR and your attorney for advice, make sure there is clear language in your contract regarding the short-sale, and most of all — BE PATIENT!
By Lucia Mutikani
WASHINGTON (Reuters) – Pending sales of previously owned U.S. homes rose in March for a second straight month, while construction spending edged higher, according to reports on Monday that suggested a moderation in the housing slump.
The reports, which boosted U.S. stock prices, were the latest in a series that appeared to support views that the recession, which entered its 17th month in May, was close to finding a bottom.
The National Association of Realtors said its Pending Home Sales Index, based on contracts signed in March, rose 3.2 percent to 84.6 as first-time buyers waded into the market to take advantage of favorable prices and mortgage rates.
A separate report from the Commerce Department showed U.S. construction spending rose 0.3 percent in March, the first increase in six months.
Michael Darda, chief economist at MKM Partners in Greenwich, Connecticut, said the pending home sales report added to evidence that sales have reached a bottom.
“That’s critical because once sales bottom, it’s only a matter of time before you work off excess inventories. That’s the key to stabilization in the financial system and the economy at large. We’re closer to that than people thought just a few months ago.”
U.S. stocks rose on the data and on hopes stress tests of the nation’s top banks will not reveal any unexpectedly large capital shortfalls. The blue chip Dow Jones industrial was up more than 2 percent in morning trade. Government bond prices were slightly lower.
The collapse of the U.S. housing market and the resulting credit crisis pushed the economy into deep recession and analysts have watched home sales for signs of an end to the economic downturn.
NAR Chief Economist Lawrence Yun attributed the rise in signed contracts for home purchases to first-time buyers taking advantage of the combination of low prices and mortgage rates, as well as an $8,000 tax credit, which made housing more affordable.
“We need several months of sustained growth to demonstrate a recovery in housing, which is necessary for the overall economy to turn around,” said Yun.
The NAR’s Housing Affordability Index edged down to 166.7 in March from a record 174.4 in February due to higher home prices in March. The index was 30.8 percentage points higher than a year ago.
The index is a broad measure of housing affordability linking the relationship between home prices, mortgage interest rates and family income.
A separate report from the Commerce Department showed that while construction spending rose, private construction slipped 0.1 percent, pulled lower by a 4.2 percent decrease in residential building.
However, public construction, which had tapered off in winter, increased 1.1 percent in March and 1.3 percent in February. Most of the boost came from state and local governments, whose spending rose 1.3 percent in March.
(Reporting by Lucia Mutikani and Lisa Lambert; Editing by Dan Grebler)
If you want confirmation that moving to the Delaware beaches is a popular idea, pick up a copy of the May edition of Coastal Living magazine.
In that edition, two Lewes residents reveal their secrets for creating beautiful gardens and perfect settings for warm-weather social occasions. Patience, skill, good advice, and careful planning result in high-reward, low-maintenance blooms and greenery for spring, summer, and fall.
The magazine’s advice on making that move to the beach? Research the location carefully, ask your future neighbors about issues, and get your credit in order. Have your REALTOR explain the details of any special insurance needed to be near the coast.
Finally, the issue lists its favorite “seafood dives,” including: Ed’s Chicken and Crabs in Dewey Beach; Fenwick Crab House in Fenwick Island; Mickey’s Family Crabhouse in Bethany Beach; and the Purple Parrot Bar and Grill in Rehoboth Beach.
Owning a vacation home is a dream for many people, one that may seem out of reach or a lavish extravagance in these troubled economic times. But these times are different than those downturns in the past, so it is wise to remain open to all options of investment.
Many investors are viewing the stock market with a less than favorable eye. So where to invest? Consider that vacation home. No matter what the Dow Jones is doing, the things that attract visitors to Sussex County remain: beaches, small historic towns, rural expanses, a slower, friendlier way of life.
Home prices have fallen in coastal Sussex County, though not as drastically as in Miami, Fla., or Las Vegas, Nev. However, those homes that were out of financial reach two years ago just might be in your price-range now. Contact a Prudential Gallo, REALTORS sales agent to find out about your buying power.
Vacation homes in Lewes and Rehoboth Beach are renting for the summer season at a brisk pace. This affordable, family vacation is very attractive to the thousands of visitors who enjoy this area every year. And because fuel prices are remaining steady, below $2 per gallon, travel experts are predicting high numbers of both weekly and day visitors to the beaches.
What if you don’t know anything about how to find vacation tenants? Prudential Gallo, REALTORS offers full service to prospective buyers of vacation homes, with its sales and rentals departments in both Lewes and Rehoboth Beach. Experienced rental department agents can manage all aspects of this process, including: pricing the stay, contracting with guests, cleaning and maintaining the unit, collecting fees, and advertising the home.
Don’t miss an opportunity to get into an investment market, when prices and interest rates are in your favor. Contact a Prudential Gallo agent to see if this is the time for you to make your move.
Towns in coastal Sussex County are seeking creative ways to increase their revenue to close budget gaps. Some are raising parking rates, some are raising taxes, some are raising fines.
The City of Rehoboth Beach has raised some of the lower-priced meters from $1 per hour to $1.25 per hour. The meters close to the beach and on Rehoboth Avenue are to remain at $1.50 per hour.
However, the City has raised the parking ticket fee to $30.
The City of Lewes raised its property-tax rate from 39 cents per $100 of assessed property to 49 cents per $100 of assessed property. The city’s change to twice-a-week trash pickup has been reduced by several weeks. City lifeguards will work one hour less each day.
The Town of Bethany Beach, which doubled its property-tax rate in 2007, raised the rate again this year by one-half of 1 cent. Parking meter fees changed from $1 per hour to $1.50 per hour.
For more details, visit the Cape Gazette newspaper or the News Journal online.
