New Castle County Home Values- a Brief History
For the U.S. as a whole, home prices were around 2.9 times incomes from 1985 to 2000. As income grew during this period, home prices also increased in line with income. This is the type of market most people refer to as “normal”.
During the housing boom, values increased at a much faster rate than incomes. The price-to-income ratio peaked at around 5.1 in 2005. Home prices have since fallen so that on average, nationally, prices are around 3.3 times incomes, or about 14% above the historical trend.
In New Castle County in 2000 the median home income was $53,000 and the median home price was $139,000 a home price to income ratio of 2.5%.
By 2007 the median home income in New Castle County had risen to $59,000, but the median home price had risen dramatically to $235,000 a home price to income ratio of 4.0%.
In 2010 in New Castle County, the median home income had risen to $63,600 and the median home price had dropped back to $212,500 a ratio of 3.3%, or in line with the national rate.
In 2011 in New Castle County, the median home income has dropped to $61,400 and the median home price had dropped back to $199,900 a ratio of 3.2%, just slightly above the historically “normal” market.
What does this mean? We can anticipate a slight decline in the market in the coming months, but nowhere near as severe as the last several years.
Unfortunately, a lot of people purchased homes at the height of the market and may have to wait years to get back to even if they ever will. These homeowners are “under water” meaning the mortgage they currently owe is more than the value of the home if they had to sell it today. If they have also been a victim of the unemployment rate, their only solution may be a short sale.
Short Sales and Foreclosures continue to have an effect on the market both nationally and in New Castle County. Until there are less of these “distressed homes”, we will continue to see prices drop especially in neighborhoods that have a larger inventory of these homes.
On the bright side, for those people who purchased in 2000 or earlier ( and didn’t refinance thinking the market would continue to climb) they have seen a substantial increase in their New Castle County home values.