Few beach homes for sale in Delaware beaches drive up prices

When Brian Carey recovered from back-to-back brain surgeries three years ago, he told his wife life is too short, that they should follow their dream of selling their townhouse in Annapolis and move to the beach.

So they did.

Two years and many gatherings on their waterfront deck later, Kate Carey said they are the happiest they have ever been.

“We’re completely in heaven,” the 47-year-old said. “We’ve been together 20 years, and we’ve been through a lot together. We deserve where we are right now.”

The Careys are far from the only ones who have discovered a life of luxury in slower, lower Delaware, where waterfront views and the smell of salt air can cost far more than many families earn over a decade.

During their short time there, the Careys have watched other homes in their North Bethany Beach neighborhood get scooped off the market in what seemed like record time.

They purchased their home for $719,000 in 2016, and Kate Carey said if they decided to list their house today — which they wouldn't — they would start their asking price just shy of $1 million.

It is likely their home would sell for that price — and quickly.

“For the buyer and the seller, it’s a powerful time,” said TJ Redefer, a broker at Rehoboth Bay Realty and mayor of Dewey Beach. “The inventory is low. Demand is high. ... I think people are going to tell their grandchildren about when interest rates were below 5 percent, which is remarkable.”

Even with the threat of increasing interest rates as the summer wanes, Sussex County real estate agents do not see the demand for coastal living slowing down.

“Realtors want you to believe that they’re the reason why they buy and sell, but the truth is the price is still the leader in what gets the job done,” Redefer said. “When inventory is low like it is, buyers don’t want to miss the good one. If they see one that’s overpriced, they’re not even going to look.

“You’d think real estate is a business decision all the time, but it’s not,” he said. “If you see a home that you love, it’s no longer about the price. It’s about how can I make my dreams come true?”

For Washington, D.C., resident Mary Brewer, a low price point was key to purchasing a vacation home in Delaware.

The retired legal secretary wanted a beach home that wouldn’t break the bank, but was close enough for a day’s drive. She said it was mainly luck that she scored a bayside single-wide trailer in the Rehoboth Bay Mobile Home Park off Old Landing Road for under $40,000 last year. With a monthly lot rent under $600, she said she has found an affordable way to live the dream.

“I lucked out. I really did,” she said. Brewer said she has noticed that other trailers in the area that go up for sale are often off the market within a month’s time.

“My Realtor was on the ball,” she said. “She read me right, she listened to me, she worked with me and she understood what I was looking for. The community I live in is just amazing.”

Word spreading about Delaware beach property

While Brewer found what she was looking for, picturesque multi-bedroom homes closer to the ocean are known to attract wealthy dreamers like former Vice President Joe Biden, who bought a home in the Cape Henlopen area last summer, and Under Armour founder Kevin Plank. 

Bryce Lingo of Jack Lingo Realtor said working with Biden was simple: He knew exactly what he wanted and where he wanted to be.

And although Lingo said inventory is low, his clients can have their pick based on their price range — his online listings include everything from a $5.6 million oceanfront home near Rehoboth Beach to a $160,000 townhome in Millsboro.

While the area’s real estate market is finally recovering from the debt crisis, inventory is substantially lower because many people are buying property to own and enjoy rather than as investment rental properties, Lingo said.

“There’s an enormous segment of people who are baby boomers who are buying properties along the coast because they know that their children and grandchildren will visit them at the beach,” he said.

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And obviously, it is all about location. The closer to the water, the higher the demand and the higher the price. That is also why undeveloped oceanfront lots sell faster — and at a higher price point — than most houses, because the buyers can then build exactly what they want, Lingo said.

The biggest change Lee Ann Wilkinson has seen over 36 years in real estate is a growing influx of people from New Jersey, New York and even farther away. Now that word has spread, those ideal locations are becoming harder to find, she said.

Wilkinson pointed to a three-story, four-bedroom home in Lewes’ Cape Shores, which sold in June for $1.45 million after being listed for only eight days. Five years ago, that same home sat on the market for more than a year before selling for $1.1 million, which was shy of the then-asking price.

“Even two years ago it wasn’t like this,” she said of the high demand and low inventory. “If it’s priced right, everything will sell.”

As for buyers looking for that perfect beach house and struggling to find it, Wilkinson said they won’t settle for less. They will wait.

Many who cross Lingo’s path are baby boomers, he said, and most want brand-new construction as close to the beach as possible. That’s why the developments popping up on Gills Neck Road in Lewes — neighborhoods such as Showfield and Governors — are selling fast, and for close to half a million dollars.

For the first quarter of 2018, about 50 percent of the 2,662 building permits issued statewide were in Sussex County, nearly matching the pace of 2017, according to a Delaware Housing Authority report. 

“I’d say 80 percent to 90 percent of our buyers don’t have the vision [to fix up older homes] and that’s why people like brand-new construction because most often it’s immediate gratification,” Lingo said.

Lingo said the hottest price point right now is in the $300,000 to $600,000 range, the lower end of which is nearly impossible to find east of Del. 1.

According to Zillow, an online real estate database, the median home value in Sussex County is $268,300 and home values in the area have gone up 5.9 percent over the past year. That puts Sussex just shy of the median value of homes in the Northeast at $275,900, according to the National Association of Realtors.

For those who can afford it, the next hottest market near the beach is new construction east of Del. 1, in the range of $1.5 million to $2 million, Lingo said.

“I see values going up and up and up,” said Sandra Ware, an agent who specializes in land and commercial sales at Berkshire Hathaway in Rehoboth Beach. She said the outer reaches of Beaver Dam Road at Route 5 near Harbeson have become like the Lewes suburbs.

“It’s just like if you have a tremor, and the tremor radiates out and you can graph it,” she said. “It gets bigger and bigger and bigger. Well, the tremor has now gotten all the way out to Route 5 and that’s driving up prices for land tremendously.”

While many locals — and established transplants — complain about increasing development, Ware said the building is not keeping pace with the demand.

As demand continues to grow, it is becoming harder and harder for the average family to afford living in Sussex County.

“The affordable housing we have right now is manufactured, and they’re going for $200,000 and up on its own land,” she said. “The next closest is out by Route 5, and that’s hard to get anything now under $300,000.”

If you’re in the business of selling and buying houses — or building new developments — it’s a great time to be in southern Delaware.

The latest update from the National Association of Realtors found a 0.4 percent decrease in nationwide home sales in May, except in the Northeast, where sales increased by 4.6 percent. However, the report states that uptick is still down about 11 percent from May 2017.

Locally, Wilkinson has found some notable firsts, including a home for sale in Lewes at $4.5 million, which she said is the highest-ever price tag for the town. In her latest industry newsletter, Wilkinson illustrated that the real estate market is riding a tide of success after a record-breaking 2017, which saw 38 percent more sales over the previous year.

"Now we need to worry about what is going to make our area stay as desirable," she said.

Buying 'frenzy'

A change in how properties are listed and shared could increase competition for desirable homes at the beach.

About a month ago, Sussex County’s multiple listing service, known as MLS to those in the know, expanded far beyond the county’s borders to include Realtors and listings from other parts of the state as well as Washington, D.C., Maryland, Virginia, and parts of Pennsylvania and New Jersey.

The MLS system, a database of available properties used by all realtors and brokers with access, now allows real estate agents from other regions to sell those hard-to-find, high-demand properties — if they are licensed in Delaware.

“The competition among agents that are licensed in Delaware has increased to a little bit of a frenzy because there are so few listings,” Ware said. “Now we’ve got competition from those agents coming here, bringing their own buyers or seeking sellers out, making it even more of a frenzy. It’s something I’ve never seen before.”

Neil Dickerson with Keller Williams said he is excited about the change. After working with a similar system in Florida, he said it could make it easier to do business by streamlining data storage and other time-consuming paperwork.

“It’s going to be nice,” he said. “Yes, no doubt it will increase the demand. It’s going to make it competitive. There’s no doubt about it that you’re going to have to stay on your game. But it opens so many more doors.”

Wilkinson, who said she didn’t think opening the listing service to out-of-state real estate agents was a good idea, said it will open the market up, but that it is hard to predict what impact that will have on prices. Lingo also said it is too soon to tell.

While some worry an influx of new Sussex Countians is changing the county’s character, exacerbating traffic problems and infringing on historical farmland, longtime residents and real estate experts like Lingo and Ware say it is a demand that needs to be — and will be — met as it continues to grow.

Sussex County’s estimated 2016 population was 220,251, up 11.7 percent since 2010. According to a 2017 report on population estimates, Sussex is fueling growth in the First State. Of the 6,131 new residents in Delaware in 2016, 4,629 were in the state’s southernmost county.

Lingo, one of four brothers who took over their father's real estate company, can remember when Del. 1 was only two lanes, and he would have to wait six months before the movie theater in Rehoboth Beach would get the latest flicks.

There were two grocery stores between Lewes and Rehoboth Beach, and only a handful of restaurants — including Grotto and Nicolas, of course.

"Even then it was called the 'Nation's Summer Capital' because all of the Washington people came here," he said.

Those childhood memories are a far cry now the appeal of Delaware’s beaches has spread far beyond the well-to-do vacationers from Washington, D.C. And with Bayhealth building a brand-new hospital on the main artery to the beaches, it is likely that the growth will soon turn northward as well.

"The building is trying to keep up with the demand, but the demand is as high as it was in the boom," Lingo said. "I believe it will continue to go west and north."

Contact reporter Maddy Lauria at (302) 345-0608, mlauria@delawareonline.com or on Twitter @MaddyinMilford.

TOP 10 MOST EXPENSIVE BEACH HOMES FOR SALE

1. $6,595,000: Six bedrooms, 6.5 bathrooms, 5,476 square feet on 0.33 acre at 32087 Surf Road in North Bethany

2. $5,895,000: Seven bedrooms, 8.5 bathrooms, 7,000 square feet on 0.38 acre at 30087 Surfside Drive in North Bethany

3. $5,600,000: Six bedrooms, seven bathrooms, 8,399 square feet on 0.34 acre at 1 Hazlett Ave. in Rehoboth Beach

4. $5,450,000: Six bedrooms, five bathrooms, 7,500 square feet on 0.23 acre at 21 Pelicans Way South in North Bethany

5. $5,195,000: Seven bedrooms, 10 bathrooms, 9,500 square feet on 0.52 acre at 27 Hall Ave. in Rehoboth Beach

6. $4,850,000: Seven bedrooms, 5.5 bathrooms, 4,500 square feet at 29797 Ocean Ridge Drive in North Bethany

7. $4,500,000: Four bedrooms, 4.5 bathrooms, 5,582 square feet on 0.22 acre at 126 Breakwater Reach in Lewes

8. $4,500,000: Five bedrooms, four bathrooms, 2,008 square feet on 0.39 acre at 30103 Surfside Drive in North Bethany

9. $4,400,000: Four bedrooms, 4.5 bathrooms, condominium at 319 S. Boardwalk #2 in Rehoboth Beach

10. $3,995,000: Five bedrooms, four bathrooms, 4,500 square feet on 0.25 acre at 39690 Seaside Ave. in South Bethany

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