Delaware's economy is feeling dual effects of the housing bust, and the shrinking auto industry. A two to three year supply of unsold homes is sitting on the market with little activity in many areas after housing prices hit record highs during the boom.
In order to get Delaware's housing markets moving again prices will drop further even though they've already dropped an average of 30%. The high inventory of homes is saturating a marketplace that has been slow in some places for more than two years.
Then the pent-up buyer demand for homes will return to Delaware.
The state's economy will be hit harder as a result of the shrinking auto industry. GM is laying off workers in Delaware and Chrysler is making job cuts in Newark at the assembly plant and other job cuts at a parts distribution center. The job losses will add to growing unemployment and more foreclosures in what has become a national epidemic.
It's a tough time in most of Delaware, where business bankruptcy filings have already topped the 2001 recession. Some expect the bankruptcy court to be busy for as long as three years.
 |
| City |
Forecast |
| Wilmington |
− 12.8% |
| Dover |
− 11.2% |
| Smyrna |
− 10.8% |
| Newark |
− 13.8% |
As a result of the tough economy, home sales have been slow in Wilmington, which as the state's largest urban center has roughly 60% of the state's population. Many of the newcomers who were drawn to Wilmington during the boom have moved on to other areas, adding to the onslaught of inventory of homes for sale.
Wilmington will have to see an over-abundance of inventory sold off before home values will increase once again. Housing Predictor forecasts 2009 home sales to be slow throughout most of the community and average home values to deflate 12.9% for the year.
In nearby Newark, sales of homes will remain slow through the year also, but a foreclosure market will help to clear off inventory from the surplus of housing to aid Newark's housing market in the long run. But home values will continue to slide and are forecast to dip an additional 13.8% for the year.
In the state's capitol of Dover, home prices are also on the slide and will remain that way despite political moves on the state level for the year. The onslaught of foreclosures in Dover and growing job losses are growing too rapidly to not have major effects during all of 2009 on the Dover real estate market.
A lack of sales activity driven by fear in the marketplace after blunders by politicians in Washington, D.C. will send the market further south in 2009. Dover is forecast to deflate 11.2% in average home values for the year.
In Smyrna outside of charming Dover's capitol, the sluggish housing market is nearing its third year. Home prices are forecast to deflate further in 2009 at a rate of 10.8%, despite more favorable lending practices expected by mid-year.
