Del. home prices up in spring

But bad news may be in wings as mortgage crunch affects salesBy J.L. MILLER, The News Journal
Posted Friday, August 31, 2007Read Comments-->08/31/2007 -->
It's common knowledge that housing values in Delaware and across the nation are sinking.
And like so much other common knowledge, it's wrong.
The Office of Federal Housing Enterprise Oversight's quarterly report on housing prices, released Thursday, shows that U.S. home prices this spring increased by 0.1 percent from the previous quarter and 3.2 percent from the same quarter last year.
While the quarterly national appreciation rate was essentially flat, the report shows that housing prices in Delaware appreciated by 1.34 percent in the second quarter of 2007 and by 4.94 percent for the previous 12 months.
That puts the First State in 19th place for home appreciation for the 12-month period. Utah is at the top of the list, with a one-year appreciation rate of 15.28 percent. The once-booming state of Nevada ranked 50th, with a one-year decline of 1.45 percent.
For the quarter that ended June 30, values in Maryland climbed only 0.83 percent. Pennsylvania values lagged behind Maryland at 0.67 percent, with New Jersey -- a previously hot market -- posting a decline of 0.35 percent.
"These newest data show price declines in many areas that were once at the center of the housing boom," said Patrick Lawler, the federal office's chief economist.
"Nevertheless, in most states, prices held their ground or increased slightly," he said.
The report would seem to come as good news to an industry that has been roiled by the collapse of the market for subprime loans, rapidly mounting mortgage foreclosures and a dramatic tightening in credit, even for creditworthy borrowers.
But those problems are significant, and bad news on the home-price front may be waiting just off in the wings.
James B. Lockhart, director of the federal agency, said the recent mortgage market instability is likely to show up in the office's next quarterly report.
Delaware's increase in prices may be a surprise to some, but it isn't to those who are in the industry. And it shows that Delaware's market is more stable than some areas that have swung between bubble and bust.
"Those are excellent statistics. I think it shows that the market in Delaware is secure," said Camilla Conlon, president of the Delaware Association of Realtors.
"Although we had a lot of appreciation here, at the end of the day people in Delaware are business-wise and think that we still have room to grow here," said Conlon, an agent with Jack Lingo Inc. in Rehoboth Beach.
People who have owned their homes for five or more years have seen a healthy appreciation in value, according to the report, which is based on data from sales and refinance transactions.
The five-year appreciation rate in Delaware is 66.39 percent, and a whopping 419.88 percent since 1980. The national five-year average was 50.76 percent and national home prices saw a 309.40 increase since 1980.
Karen Kimbleton, a broker with Re/Max Avenues in Dover, said many people mistakenly believe that housing prices are dropping simply because the rate of appreciation has slowed.
"You have such a multitude of houses on the market right now that [buyers] have more to choose from," Kimbleton said.
"It causes sellers to have to create incentives to make theirs more attractive over another property," she said. "It is, bar none, a buyer's market."
She said such incentives could include closing costs, home warranties or price reductions.
Kimbleton and Conlon both said the credit crunch is having an impact in Delaware for buyers and sellers alike.
Foreclosure filings in Delaware increased in July by 34 percent in New Castle, 43 percent in Kent and 54 percent in Sussex from the previous year.
And people who have been preapproved for a mortgage can discover at the closing table that the program under which they had qualified has been terminated by the lender. Would-be buyers who have already signed a contract can find themselves out of luck.
"If they haven't settled, tough buns," Kimbleton said.