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The trouble in the real estate market is easy- supply and demand.
My daughter explained it to me when she had 7th grade social studies class. When there is more of something (say houses) than people want, prices will fall. At some point, when the prices fall enough, more people will want that something (say houses). Demand rises- and the extra supply goes away. Then the market balances.
Check out what is happening in California- one of the four states that killed real estate- click here
Prices are much lower- and sales are much higher. Too bad this doesn’t fit the media’s preferred narrative. If they reported stuff like this, the economy might improve. They don’t seem to want that.
As I have said in my previous posts, the real estate market isn’t national, but the media has made it national. Once the real estate market became national, four states helped crash the entire real estate market. The foreclosure rate here in Sussex County, Delaware is less than 1%. It’s over 8% in Nevada. Real Estate in the Milton, Lewes, Rehoboth Beach area does not have a foreclosure problem. We have a Nevada/CNBC problem. CNBC went to Vegas and thought that we all had the same issues. They were wrong, and the entire nation has lost trillions in wealth.
Capstone has sold over 50 homes in the last few years, and we never took a sub-prime loan. Our Mortgage broker never sold them when they were available. As the market turns, we will continue to offer tremendous value for people looking for a green home near the Delaware Beaches. We have the best values in new homes in Holland Mills, Pemberton, Cannery Village, and The Estates at Carriage Springs.
As good as our pricing might be in the Milton, Rehoboth, Lewes area, we can’t compete with the pricing from short sales and foreclosures. The good news is that we really don’t have to- there aren’t that many of them. The bad news is that all of our buyers think they are everywhere, and that’s the level of pricing they want. Capstone will continue to educate and work with people, and we will offer the best homes in the Delaware Beach area for the money.
In a previous post, I argued that there was no “national” real estate market. To that end, I have found another blogger who confirms that there is no “national” foreclosure problem. Everything is local, and the post linked here will explain that foreclosures seem to be very decentralized.
Four States the Make up the National Forclosure Market
The bottom line is this: Capstone Homes builds homes in Milton- near Lewes and Rehoboth Beach. We offer quality homes and beach lifestyle for people looking for 55+ lifestyle without the 55+ restrictions. Our homes are priced to reflect the market- and we have many energy efficient features that let our Capstone Home offer years of value. Our Holland Mills community offers a site built, 3BR 2BA home for $189,900 with a Geothermal HVAC system. Who in their right minds thinks it’s not a good time to buy? Please.
Now if I can just convince the media that Delaware is not a suburb of Las Vegas.
The irony of the timing of this isn’t lost on Capstone Homes- this great article courtesy of Coastalsussex.com-
It’s about Lewes, and it tells us everything we already knew about here. At least it makes us feel like moving to the Cape Region was a great decision.
Capstone homes is a eco-friendly, green builder, building quality new homes near Lewes.
Here’s something to think about. According to CNBC, the S&P 500 closed at 735.09 today. That’s about the same level it was in 1997, I think. Here’s a page that shows a rolling average of 10-year-returns for S&P stocks:
Rolling Ten Year Average for the S&P 500
What this tells you is that the S&P is 4.28% lower than it was a decade ago. That means that if you invested $100 in January 1999, you would have $95.72 today- and there is no need to adjust for inflation.
In case you can’t draw your own conclusions- that’s lousy. A bank CD would do much better than that. Your mattress would have done better than that.
The median home price for a single family house in the United States is about $175,000. In 1999, the price was $161,000. That means that there is a good chance that if you purchased real estate in 1999, it would be worth more today than you paid for it 10 years ago.
I guess real estate isn’t so bad after all.
Look at it this way- the Case/Shiller/S&P says that home prices have returned to early 2004 levels. In May 2004, the S&P was around 1050. Don’t you wish the stock market had ONLY crashed as bad as real estate?
Case Shiller back to 2004 Residential Prices
The bottom line is this- over the long term, Real Estate makes sense as an investment. Purchasing a new home at the Delaware Beaches is a much safer place to put money than the stock market…
Interesting, huh?
Buying a home at the Delaware beaches is about lifestyle.
People want to live in this area because it allows people to live a certain way. People move to Lewes, Rehoboth, and Milton because they want the beauty and recreation of coastal living. It’s fun to live near the beach. The beach brings all kinds of fun things with it- fishing, golf, etc. People live here because it allows them to do what they want with their lives.
People choose the Rehoboth beach area (which locales call the Cape Region) because, unlike other beach areas, we have some small town country charm. It makes the area feel less seasonal. Ocean City, MD, which is directly to the south of the Cape Region, is a much larger destination beach resort. It has miles of high-rise condos and all the shops that goes with them. It has a huge boardwark that is made of concrete.
The catch with Ocean City is that it is a ghost town in the off-season. Some people like the Jersey shore, but New Jersey is an expensive place when you are on a retirement budget. Going south is an option- Myrtle Beach, Florida, but those places might not be that close to the ones you love.
That leaves the Cape Region. Living at the beach is awesome- even when the tourists are here. People live here because it allows someone to retire or own a second home at a price that is reasonable.
Did I mention taxes? Sussex County, Delware has some of the lowest property taxes in the mid-Atlantic. That’s a great thing. Some people can move here (from northeastern states) and reduce their property taxes by 90%. Just a word or warning when you get here- don’t expect services like you may have had before you moved. Property taxes are low which means that government is small. We don’t have a Park and Rec department. We don’t have county parks at all. There are a number of things we don’t have. The good news is that we do have the Rehoboth Bay, the Delaware Bay, and the Atlantic Ocean. If those don’t make for good parks for you, then don’t come here.
Oh, yeah, one last thing- come here for Punkin’ Chunkin’. The weekend after Halloween, you can drive to a field near Bridgeville and watch a bunch of people throw pumpkins for distance. You can also watch a bunch of drunk rednecks. It’s awesome. When I say throw a pumpkin, I mean some of the machines will throw them over 4,000 feet. 60,000 watch this thing over a weekend.
Reason enough to move in my book.
Okay- let’s be honest: How can building a new home possibly be “green”? As a builder- I am going to take a piece of ground that has nothing on it, and I am going to place a new structure. How can that be good for the environment? It can’t.
Take cars as an example- I would say that the Toyota Prius is arguably the ultimate symbol of a “Green” car in America. How can you seriously say that a car is green? If you take the totality of the impact of a car on the environment- instead of just emissions and fuel efficiency- the Toyota Prius has a huge impact on the environment (when the energy consumed to produce the car and the impact on the environment when the car is disposed of are taken into account) that is as bad as any other car on the road. Driving a Prius just makes someone feel better, I guess.
Being responsible to the environment is about finding the balance between conservation and consumption. Human beings have to consume natural resources to live, but I think we are required to do so in a way that is mindful that we are also required to conserve resources of the earth. Balance. I don’t believe that limitless consumption is justified (even if someone can afford it), and I don’t really want to be lectured by a former vice president who flies a private jet all over the world collecting checks and crying wolf about the end of the world. Balance is the key.
The problem is that as the population grows, humans are going to have to live somehwere. That means new homes. To Capstone, building “Green” at the Delaware beaches has more to do with the energy consumption of the home itself.
Capstone is committed to building homes in the Lewes/Milton/Rehoboth Beach are smaller that other homes. A smaller home that makes better use of space will use less energy over time. There is no better way to conserve energy in a new home than to build a smaller new home.
The second is energy efficiency- and Capstone Homes puts the two most important things into its new homes at the Delaware Beaches. Windows- the single greatest source of energy loss in a home are through the windows. People can argue about walls and foundations and ceilings all day long, but most of the heat (or cooling) that escapes from a house is going to leave through the windows. Capstone Homes installs windows with Low-E glass in all of its homes- 100% of the time. These windows lose 30% less energy than a regular window. That’s real savings and real energy conservation. That makes a difference in a new home at the Delaware beaches.
The second most important thing is the HVAC system. Capstone only installs energy star rated HVAC systems in its homes in the Lewes/Rehoboth Beach/Milton area. For 2009, that means a 95+% efficient propane heat and 14 seer AC. Those are the new standards for HVAC in 2009, and Capstone Homes puts those in our standard package.
Green Building is possible, and Capstone is committed to building homes that use less energy. Less energy over the life of the home is better for everyone (especially the people paying the utility bills).
More to come on Green Building…
There is some good news coming out of Washington this week.
If you have not owned a home in the last three years, the federal government thinks you’re a first time homebuyer. If you buy a house, the federal government will let you deduct $8,000 from your income taxes.
There are some limitations, but, at the end of the day, this will allow a home buyer to save $8,000 on their total tax bill. If that $8,000 exceeds the homebuyer’s total tax bill, then a refund will be issued. That’s a great deal. When you add that tax refund to the other tax advantages to owning a home (deduction mortgage interests, property taxes, etc), there is a huge financial incentive to buy a new home now.
When you factor in the affordability of homes in the current market, it makes homeownership unbeatable. Add the low mortgage rates to the equation, and this becomes a historic opportunity. Historic as in once-in-a-lifetime.
Let’s take Capstone’s Holland Mills community. Holland Mills is located about five miles from Five Points, which is basically Lewes. Five Points is the beginning of the commercial district on Route One that makes the Delaware Beach area. Five Points is just outside Lewes- route one then goes south into Rehoboth Beach, then Dewey Beach. From there, Route One goes to Bethany Beach, Fenwick Island, and on to Ocean City. From Holland Mills, you can be on the Rehoboth Beach boardwalk in 20 minutes. Holland Mills has a Milton address, but it’s actually located between Lewes and Milton. Holland Mills is located just minutes from Lewes and Rehoboth, and we have a number of buyers who are retiring to the area because they love the Lewes Rehoboth Beach area. We also have first time homebuyers.
Capstone builds the Madison model in Holland Mills. Our current promotion is a 3BR, 2BA home with a one-car garage and a geo-thermal heating/air system for $189,900. A first time homebuyer can own that house without spending a penny out of pocket for about $1,300 per month. When you factor in the tax savings, the real cost is much lower when compared to renting.
When you factor in the Geothermal- which can reduce heating and air conditioning bills by up to 70%, you’re talking about a cheap place to live. The final factor is the quality of the Capstone home- we build the best value at the beach. There are other communities in our price range, but when you see everything that is included in a Capstone Home, you will be convinced that Capstone has the best value of any new home builder in the Lewes/Milton/Rehoboth Beach area.
The final advantage is the tax credit from Sussex County for first time homebuyers. Holland Mills is close to Lewes, Rehoboth and Milton, but it is located in unincorporated Sussex County. That means that a first time homebuyer can save an additional 1.5% on the transfer tax by purchasing in Holland Mills. The usual rate is 3%. The rate in Holland Mills with Capstone Homes is 1.5%. It just keeps getting better.
This really is a historic time in value when it comes to new homes. If you are looking for new homes at the Delaware Beaches, Capstone has the best thing going in the Lewes-Rehoboth-Milton area. For more general info about the new tax credit, click here.
For more information about Capstone Homes in Lewes, Milton, Rehoboth, stop by and see us today!
The government rarely fixes problems in the private sector. I think that’s what people need to know about the government’s housing fix.
It seems that many people think Obama’s housing fix is basically going to reward bad behavior. It’s hard to argue that logic. There are some people who are in trouble in their house because of a change in life situation- loss of job, health issues, etc… But that’s not the majority of people.
Most foreclosures are people who never should have bought the house. Obama’s plan will bail out people who made lousy choices, and people who pay taxes will pay for it. That isn’t right. It also isn’t going to work, and it isn’t going to solve the problems. It teaches America that if we really get in trouble, the government will come and help us out. What no one in the government wants to own is the fact that the government is also broke- so we’re going to borrow all this money (which creates tomorrow’s problems) to solve today’s problems.
This isn’t really about politics- I think Bush’s TARP was the disaster in the history of American government. The sad thing is that Obama hasn’t brought change- Obama has done the same thing with the stimulus package. Huge dollars from legislation passed so fast that America can’t even react to it all. I think everyone who is in congress who voted for either of those bills should be replaced- regardless of party affiliation.
We all lived in the great world of wealth for the last few years, and that era has come to an end. Americans need adjust to the new world. Most of us are- we spend less and try to save. I have actually heard people like former treasury secretary Paulson tell Americans that we need to go out and spend more money again- that by saving money we are ruining the economy.
At Capstone- we build smaller homes. We build better homes than anyone in the Lewes-Milton-Rehoboth Beach market. We have a lower profit margin. We get on with life, and we don’t hang on every word of some politician that has never held a job in a for-profit company. We sell excellent new homes at the beach. Obama isn’t coming to my rescue. I don’t need to be rescued.
Well, finally the love affair with government may be coming to an end. Check out what Rick Santelli of CNBC says- he finally says what everyone is thinking about the government. CNBC has been hanging on every word out of Washington since last fall. Maybe it’s time we all just went back to work.
The short answer to my own question is “maybe”.
The answer is “yes” when:
You are dealing with property that is listed by a Realtor. Get a Realtor to represent you. If you are looking for real estate in the Delaware Beach area- Lewes/Milton/Rehoboth Beach areas- the listing agent represents the seller. If you call the listing agent and negotiate with the listing agent, you (as the buyer) aren’t getting represented as you could be. Call another Realtor and have them walk the property with you, and have them work the contract negotiations with you. It will cost you nothing, and it will protect your interests.
The answer is “no” when:
You think you’re going to get a better deal from a builder. For instance, if you come in to the Capstone Homes sales center, a Realtor won’t really help you. We have a contract that is standard, and it doesn’t change. We don’t have much flexibility on prices, and we have to pay your Realtor. They also don’t represent you in a transaction with Capstone Homes- they are being paid a referral fee (and not as your agent). That doesn’t mean that it will hurt you, but it won’t help. Sorry, just being honest. Capstone Homes has great values at the beach, and our sales staff closes more business than most Realtors in a year. Some real estate agents think they will be able to come in and play “hard ball” with a new homes sales person. Good luck. Unlike a listed home, the decision maker is not thinking about this single transaction, and the new home sales agent doesn’t have the flexibility to cut deals. As a builder, it doesn’t make sense to build a house if I’m not going to make money. I do this to make money- without apology. Capstone has the best deals on new homes in Delaware, but Capstone operates to be profitable. Other owners of real property sell for a variety of reasons. If Capstone isn’t going to make money, then it’s cheaper for Capstone to move on to the next client.
The answer is “yes” when:
You don’t know the area well. A realtor should be able to let you know what you wish you knew about each community. If you are buying a second home or retirement home, and you don’t live full-time at the Delaware beaches, then you should have someone showing you around. Most people who buy in the Lewes/Milton/Rehoboth Beach area are not first-time homebuyers. Our buyers are people who know what they want. Tell the agent, and they should be able to lead you there. They should be able to give you a local perspective as you are not a local. Buying a second home at the Delaware beaches is a huge investment. It’s worth it to speak to a professional.
The answer is “no” when:
You’re just kicking the tires. If you’re not a serious buyer, don’t waste an agent’s time. Realtors work in sales. That means they get paid when (and only when) something sells. If you just want to look around, then just look around- alone. Your time is valuable, and so is an agent’s time. Don’t waste their time unless you are planning on buying. When I used to sell real estate, I would not drive people around unless they were prequalified for a loan and had a checkbook in hand. Otherwise, my day is better spent with a serious buyer or with my kids on the beach.
Also- be loyal to your agent (if you are satisfied with their service). The worst thing is when an agent spends all day showing property to people, but the perfect house wasn’t on the list that day. Then, something new pops up, and the people don’t tell their agent. If you see a home that you want to see- call the agent that has been working for you. You will get better service, and you did the right thing.
By the way- if you’re looking for a great real estate company, check our Sunrise Real Estate. Small company- very professional. I own it.
Disclosure: Scott Dailey is a licensed Delaware Realtor.
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