Longtime local Realtor Frank Serio recently called the current state of the real estate market in coastal Sussex County “baffling.” After some optimism at the end of March, local home sales plummeted 30 percent in April. A few potential buyers are even walking from deposits worth thousands in order to cut their losses as sellers slash prices, local Realtors have said.
Some have called the sluggish pace a product of tax season, when many are less apt to spend money, and bad weather at the beginning of the month. Others – including Serio, who predicted a slow but steady ascension in the market after March – were not as optimistic.
“The whole marketplace has been slow. I don’t know what to attribute it to,” Serio said earlier this week. “With 12 years in the business, this is certainly baffling.”
Only 37 homes were sold in Bethany, North Bethany, South Bethany, Ocean View, Millville, Fenwick Island and their immediate surroundings in the last month, according to multiple listing service numbers. Some 53 sold in March.
In recent up years, home sales traditionally jumped from March to April, likely a sign of better weather. Home sales rose from 76 to 98 from March to April of 2004, and from 79 to 112 in 2005.
Sales followed this year’s pattern last year, though, when the market was at its lowest point. After 47 homes sold in the same areas in March of 2006, local sellers only unloaded 34 last April.
Local Realtor Vickie York said the April tax-season decline in sales has historically been normal but was abnormal through the recent real estate boom.
First-quarter sales were at their lowest this year, with some optimistic signs at the end of March. On the last day of the first quarter of 2007, only 92 homes had sold in the aforementioned areas – 15 fewer than in the poor 2006 market. Sellers sold 203 homes in the area in the first quarter of 2005. The 82 homes under contract in those areas at the end of March this year were expected by some to prop up the sagging market. Only 55 homes were under contract at the end of April.
Serio and Bethany Realtor Kathy Goodman, who boasted an excellent first quarter and was also optimistic after March, said they have seen sellers walk away from deposits worth thousands, abandoning some of those contracts recently.
Worried they will lose equity with prices falling after a purchase, potential buyers seem more willing to toss $10,000 or $20,000 deposits than watch the house next door sell for $200,000 less than they paid, some have said.
Listings on some of the highest-priced homes advertised in the Coastal Point have dropped between $200,000 and $300,000 in one week. The tactic to unload homes at the lower prices might be backfiring, however, with many unwilling to invest with prices still falling so dramatically.
“As a buyer, I think that would be a tough decision,” said Goodman, who recently had a client walk from a deposit. “As a Realtor, when you’re pricing a home you have to see what the last house sold for and expect that yours is going to be about the same.”
Goodman and others still remain optimistic, though, touting the beach market as one that will never go away. But sellers might have to live with the fact that numbers have historically been, and could be for some time into future, lower than those experienced at the height of the boom, she said.
“This isn’t the first time it’s been quiet like this. That was the first time it was (that) busy,” said Goodman, who began selling real estate in the area in the early-’90s, of the boom period. “This isn’t that unusual. It’s all relevant.”
York agreed.
“It’s back to being where it was 10 or 11 years ago, when there wasn’t a substantial amount of inventory,” she said. “What we have to convince the buyers is they’re investing in a lifestyle. They’re creating memories here. It’s not just an investment.”
The real estate market, which flourished in the area for years, began to turn downward in late 2005 and is still struggling to recover. Many have blamed over-saturation of the market, at least in part, for the slide. Since 2000, county officials have issued more than 6,300 permits to build homes in the Coastal Point’s coverage area, according to Sussex County records.