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Capstone Homes builds wonderful homes in the Lewes, Rehoboth, Milton area of the Delaware Beaches.
Most of the homes we build are for second homes and people who are looking to retire. We don’t actually build in 55+ communities, but as I’ve said in previous posts, the vast majority of communities in this area are 55+ by default. I think that a non-age restricted community is actually better for people (and maybe resale value), but I’m not going to have that debate here.
Anyway, if you’re looking for a 55+ community in Delaware, the chances are that you are moving from somewhere else. That means you have a current home to sell. Buying a new home at the Delaware Beaches means you have to sell an existing home somewhere else.
From the perspective of Capstone- this means that we need home inventories to move in other markets before we see this market pick up. Today I am here to tell you that I think the other markets are beginning to stabilize, and that’s one of the steps on the road to recovery.
See this link here. This link compiles multiple list data from the Washington DC metro market. I’m sure it’s not completely accurate, but I think it is good enough to paint a broad stroke of the market.
Typically, this is one of the times of the year where inventory is at its highest- people get through the holidays and the winter, and then the house goes on the market. Inventory is down 18.7% year-over-year. Listing prices are down 11.8%. I think the media has pretty well covered the price drops, but the inventory number is what counts- fewer homes on the market this year than this time last year.
You can boil the entire real estate market problems down to two things: too many homes that are too expensive.
I’m not an economist; I build homes at the Delaware beaches. I don’t think I need a degree to figure out that prices and inventories are down, and it might be time for me to get excited about the summer. If you’re looking for a great new home in the Delaware Beach area- Lewes, Rehoboth, Milton- please check us out.
Capstone is blessed to have a high-visibilty sales center located on Route 9. One of the many benefits to that is the joy of having people stop in a tell us a thing or two about the housing market. Most of the time, it’s great to meet someone, hear their story, and maybe talk about a new home in Milton.
Some of the time, it makes me wish I was an American Idol judge- where I can just say “thank you” and the person has to leave the room.
From time-to-time, people come in and tell us that they are definitely in the market for a new home in the Lewes, Milton, Rehoboth area. These people may be first time homebuyers, or they may be looking to retire to the area. People love the Delaware Beaches. Then these people go on to tell us that they are waiting for the “bottom” of the market to buy a new home in Lewes, Milton or Rehoboth Beach.
It is then that I want to ask to see their crystal ball- the one that tells them when we reach the “bottom” or the market. I don’t ask, but I want to. Are prices going to drop in Lewes? Is the market still falling in Milton? If it keeps dropping- can I afford Rehoboth? It seems to me that if you can walk in off the street and time the real estate market, then I need to be working for you.
The economic mess this country is experiencing has given me the opportunity to reset some priorities in my life. Life is now less about money (which is not necessarily by choice) and more about quality of life. When I’m talking about quality of life, the most important asset in life is not money but TIME.
The catch with time is that none of us know how much of it we really have.
It would be unfortunate to time the housing market (for the sake of money) and lose the quality time of owning a new home at the Delaware Beaches. I would rather look back on the treasured memories that a second home, a first home, or a retirement home can create than I would at a few thousand extra dollars in the bank. Prices are low- the deals on new homes are amazing- don’t lose the time to gain a little more money. A new home is much more than dollars- it’s a lifestyle. Life- and time- are precious and finite. Don’t waste them for the sake of money. If you buy now, you might lost money in the short-term. I don’t think anyone knows where the economy is going. You will gain a quality of life that money cannot buy.
Here’s an interesting article from the Washington Post about people who have decided to buy. Click Here.
Is it possible for someone to own a house in the Cape region that is too far from the beach?
People come into the sales center looking to buy a home near the beach. Some of these people are looking for a second home, and some are looking for a retirement home. (And some people are looking for a first home as well, to be honest.)
Our sales team runs through the usual stuff and the tour of the models, and then we hear something like, “it’s just too far away from the beach”. That’s usually something we hear after we hear that our homes, which are priced from $189,000-249,000 are just in the proper price range.
To be honest, I didn’t grow up anywhere near Lewes or Rehoboth, and I didn’t hear of Milton until I went to college at the University of Delaware. I grew up in Rockville Maryland, and I came to Rehoboth to go to the beach as a kid. I also took the Cape May/ Lewes ferry a few time with my parents. I knew Rehoboth beach was a great place to be, but it was also a 2.5 hour drive.
So this has always been my theory on “how far from the beach”:
First, it’s an issue of cost. The lease expensive option is to do what I did when I was a kid- visit Rehoboth Beach. If you’re on the vacation only budget, then you’re not the person who comes into the Capstone Sales Center. So let’s rule that person out from the equation…
In terms of cost, generally speaking, the further a home is located from the beach, the less expensive the home costs. It costs about the same to build a house in Lewes, Rehoboth Beach, Milton, or Denton, Maryland for that matter. The difference in the value rests in the land.
Since a empty lot just outside of Lewes can easily cost more than a Capstone Home in Holland Mills or Cannery Village, that makes sense. It is hard to find a single family home less than $500,000 in the city limts of Rehoboth Beach (even in this market).
I think there is a rule of diminishing returns when it comes to location and the beach- which means that it can be very expensive to live near the beach without the benefit of being “near-enough” to the beach. The way I see it, once you’re in the car, you’re in the car. Beach property in the Lewes or Rehoboth area amounts to being withing walking distance of the places you love or having to drive to those places. Once you’re in the car, a few extra minutes (and miles) could save tens of thousands of dollars.
Take Holland Mills- it’s about 12 minutes from Five Points, and it’s about 22 minutes from the entrance to Rehoboth Beach. You can purchase a brand new 3BR, 2.5BA home for less than $230,000. If you move that to a community that is located directly next to Five Points, you will spend about $289,000. You can get a similar home (that I might argue is of better quality) for almost $70,000 less from Capstone in Holland Mills. Your new home’s address will be Milton instead or Lewes, but $69,000 buys a very nice fishing boat. Think about it, and then come see us before you purchase a new home.
For Capstone, the main competition we have at the Delaware beaches is from a national homebuilder. To be honest- it’s not that much fun going head-to-head with a company that sells more homes in two weeks (nationwide) than we do in a year. They have lots of smart people who have many different job descriptions. Capstone has me, Jon, and Shawn. We are sales, marketing, production, design, legal, service, warranty, settlement coordination, finance, and whatever else I can’t remember. (Okay- I need to recognize Kathy- our bookkeeper- she is amazing).
Here’s why it makes sense to buy from us:
First- I honestly think we have better value. For the same money or less, we do things that many national homebuilders don’t do. We use Energy Star windows. We use Energy Star heating and air conditioning. We put real trim around our windows. We use larger baseboard trim. These are things you pay for in the base price of the our homes. You have to pay more to get those things from a national builder.
Second- We help the local economy. 80% of our subcontractors live and work in Sussex County, Delaware. We have an Amish guy who puts in our foundations. (He and his five children live near Dover- and he doesn’t own a car or have a phone). Our plumber is from Dagsboro. We buy our building supplies in Milford. Our framer lives in Bridgeville. That means the dollar you spend to purchase a Capstone Home goes into the local community through one of our subcontractors. That dollar can then be spent in other local businesses an circulated around the region. When you purchase the home in the Lewes/Milton/Rehoboth Beach area, you become a local. The Delaware Beaches runs best when it has a growing local economy. A Capstone Home is a better choice because we are a local builder.
I will be honest- I didn’t used to think this way, but the change in the economy has completely changed my thinking. I think Capstone builds the best home for the price and in the best are of the world- who wouldn’t want to live at the beach?
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.
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