With everything going on in the world right now, is it wise to invest in the Delaware real estate market today?
Table of Contents
- Real Estate Investing in Delaware in 2022
- Top Delaware Real Estate Markets for Rental Properties
- The Bottom Line
In this article, we will discuss certain factors that real estate investors need to know to make wise investment decisions, especially if they’re considering investing in Delaware investment properties.
Real Estate Investing in Delaware in 2022
There are many things to consider in real estate investing. While one of the primary concerns is always capital, another important aspect of investing to be considered is the overall market condition. How healthy is the market to begin with? Lots of opportunities are found in almost all markets, but at the end of the day, you will want to go with one that offers the best income potential that aligns with your goals as an investor.
Investing in the Delaware real estate market is no different. For those considering buying houses for sale in Delaware and converting them into investment properties, an extensive study on recent market conditions and anticipated trends matters. In addition, one also needs to look at up-to-date data for a more accurate real estate market analysis.
The 2021 Delaware Real Estate Market Summary
To better understand the anticipated Delaware housing market trends this year, we first need to know how it performed in the previous year. Its performance in 2021 will provide context and greater insight into what the present market conditions are and why experts made their predictions.
In the past two years, we’ve seen how COVID-19 disrupted the market, but we’ve also seen how pandemic-induced lifestyle changes somehow made the industry recover at a surprising rate.
The Delaware real estate market, in particular, is seen as a seller’s market, considering the global health crisis we’re in. The state’s counties saw increases in median property prices and the number of homes sold in 2021.
Let’s take New Castle investment properties, for example. The median price as of November 2021 was $355,000, while the number of houses sold was 477. Comparing the two stats from a year earlier, median prices went up by an impressive 16.8%, while houses sold went up by 23 units from 454 in 2020. And we’re only talking about single-family homes.
The lifestyle changes brought about by COVID-19, along with the shortage of housing supply, have increased housing demand in the Delaware real estate market. According to the National Association of Realtors (NAR), the US produced 276,000 fewer homes on average per year between 2001 and 2020. They said that if production did not slow down, there would be an additional 5.5 million homes in the 2022 US housing market.
To close the gap in the increasing demand for housing, the US will need to build more than two million homes per year for the next ten years. Given the current global conditions that are adversely affecting the supply chain, it would be a near-impossible feat. It simply means that the law of supply and demand will continue to rule over the 2022 real estate market.
Related: US Housing Market Crash 2022: What to Do as an Investor if It Happens
5 Things Real Estate Investors Can Look Forward to in Delaware for the Remainder of 2022
The thing about real estate markets is that each market comes with its own nuances. It is why understanding the context of the local market is important if you are serious about real estate investing.
Based on the historical performance and foreseeable trends, below are the assessment of industry experts and insiders on how the Delaware real estate market will perform for the remainder of 2022:
1. Delaware will continue to be a somewhat-hot market.
Delaware continues to become a seller’s market making it one to watch out for. Industry insiders predict that days on market will drop from 60 to 40 within the next few months.
As the Delaware real estate market continues to pick up steam, investors and buyers are encouraged to still perform due diligence and not get easily influenced by the fast-paced market movement. A seller’s market tends to pressure buyers into making immediate and impulsive purchases, so we recommend keeping your cool and going over every step of the process carefully.
Generally, when looking for an investment property in a particular market, it is best to do some advanced research and connect with a local real estate agent. The two should never be overlooked as they will give you better chances of landing a good deal, especially in a market like Delaware.
2. Property prices will fluctuate as much as they did in 2021, but prices will generally increase by the end of 2022.
As 2021 saw several price fluctuations in the Delaware housing market, buyers and investors can pretty much expect the same thing for the remainder of 2022. At this point, it is still unknown if the state will see the same amount of fluctuations as the previous year, say in terms of the average house price, but experts agree that the year will end with higher median property prices in most, if not all, counties in the state.
3. The current sudden spike in mortgage rates will significantly impact the Delaware real estate market.
In Q4 2021, real estate industry experts and insiders predicted that the record-low mortgage rates would slightly increase but remain relatively low at 5% by the end of 2022. However, we just recently entered Q2 of 2022, and we already hit nearly 5% last month. It is mainly due to the unforeseen conflict in Eastern Europe, which is affecting the global economy.
Because of the recent global events and the pandemic that still looms over us, mortgage rates will most likely go beyond the previously predicted 5%. The increase will significantly affect the dollar’s buying power and make affordable housing beyond reach for a lot of Delawareans and Americans in general.
4. Despite the easing of pandemic restrictions, people will opt to purchase affordable housing as new normal lifestyles emerge.
For some reason, the pandemic created a world where people found the financial capability to buy homes quickly. From work-from-home arrangements to record-low mortgage rates, lots of home buyers went out looking for more space for themselves and their families.
Even if home prices and mortgage rates continue to go up, many investors are in the market looking for the best places to buy rental property in Delaware to secure an additional income stream. Even those who aren’t really looking to start a rental property business are benefiting from low interest rates.
As we go further into the new normal, lifestyle changes, such as a nomadic lifestyle and greater remote work flexibility, will increase demand for rental properties, which plenty of investors want to take advantage of.
5. More millennials are expected to get into the housing market.
As mentioned above, the pandemic made people rethink their priorities according to the abrupt lifestyle changes it brought. Individuals under the age of 35 who initially considered delaying buying a home found themselves looking for real estate to purchase. With all the uncertainty surrounding us today, millennials are looking to secure their future by investing in a home they can either live in or earn from.
Related: Staging Your Property to Appeal to Millennial Buyers
Top Delaware Real Estate Markets for Rental Properties
For those seriously wondering about how to invest in real estate in Delaware, two of the best investment types are traditional and vacation rental properties.
As we already mentioned earlier, investors should always proceed cautiously and carefully study the market they’re considering. Fortunately, a website like Mashvisor can be easily accessed online. The platform’s already helped thousands of real estate investors make the wisest investment decisions and land the most profitable deals.
Mashvisor includes a massive database that covers almost all housing markets in the US, including the Delaware real estate market. The list of ideal rental properties was gathered using the most recent data found on the company’s server. Any investor armed with the right information and relevant data can make the best possible decision when it comes to real estate investing.
In addition, Mashvisor also provides a rental property calculator that allows investors to crunch the numbers and make sure the calculations are correct. The investment property calculator allows investors to make accurate calculations based on rental comps in a particular market.
To learn more about how we will help you make faster and smarter real estate investment decisions, click here.
Mashvisor’s Rental Property Calculator enables investors to crunch the numbers and make sure the calculations are correct.
Before we move on to our first list, take note that while the cap rate is typically larger (by roughly 0.10%) than cash on cash return, the profitability of the markets identified below is based on the cash on cash return rate. It is because the cash on cash return formula takes into account the method of financing used to purchase a property. It is highly important, especially with the fast-increasing mortgage rates today. It will allow investors who take a loan to obtain a realistic estimate of their ROI.
10 Delaware Locations Ideal for Traditional Rentals
The following locations are some of the best places to live in Delaware, which make them ideal for long-term traditional rental property investments:
1. Delmar
- Median Property Price: $261,600
- Average Price per Square Foot: $185
- Days on Market: 53
- Number of Traditional Listings: 5
- Monthly Traditional Rental Income: $1,240
- Traditional Cash on Cash Return: 4.08%
- Traditional Cap Rate: 4.28%
- Price to Rent Ratio: 18
- Walk Score: 44
2. Dewey Beach
- Median Property Price: $991,980
- Average Price per Square Foot: $1,035
- Days on Market: 77
- Number of Traditional Listings: 1
- Monthly Traditional Rental Income: $6,028
- Traditional Cash on Cash Return: 4.01%
- Traditional Cap Rate: 4.04%
- Price to Rent Ratio: 14
- Walk Score: 35
3. Townsend
- Median Property Price: $432,786
- Average Price per Square Foot: $176
- Days on Market: 380
- Number of Traditional Listings: 2
- Monthly Traditional Rental Income: $1,971
- Traditional Cash on Cash Return: 3.26%
- Traditional Cap Rate: 3.35%
- Price to Rent Ratio: 18
- Walk Score: 33
4. Dover
- Median Property Price: $351,162
- Average Price per Square Foot: $182
- Days on Market: 150
- Number of Traditional Listings: 139
- Monthly Traditional Rental Income: $1,512
- Traditional Cash on Cash Return: 3.24%
- Traditional Cap Rate: 3.34%
- Price to Rent Ratio: 19
- Walk Score: 77
5. Harrington
- Median Property Price: $289,008
- Average Price per Square Foot: $190
- Days on Market: 86
- Number of Traditional Listings: 15
- Monthly Traditional Rental Income: $1,404
- Traditional Cash on Cash Return: 3.19%
- Traditional Cap Rate: 3.29%
- Price to Rent Ratio: 17
- Walk Score: 51
6. Wilmington
- Median Property Price: $425,625
- Average Price per Square Foot: $206
- Days on Market: 106
- Number of Traditional Listings: 197
- Monthly Traditional Rental Income: $1,738
- Traditional Cash on Cash Return: 3.10%
- Traditional Cap Rate: 3.20%
- Price to Rent Ratio: 20
- Walk Score: 80
7. Hockessin
- Median Property Price: $653,967
- Average Price per Square Foot: $172
- Days on Market: 49
- Number of Traditional Listings: 11
- Monthly Traditional Rental Income: $3,051
- Traditional Cash on Cash Return: 3.08%
- Traditional Cap Rate: 3.12%
- Price to Rent Ratio: 18
- Walk Score: 41
8. Camden Wyoming
- Median Property Price: $414,202
- Average Price per Square Foot: $188
- Days on Market: 82
- Number of Traditional Listings: 7
- Monthly Traditional Rental Income: $1,504
- Traditional Cash on Cash Return: 3.00%
- Traditional Cap Rate: 3.10%
- Price to Rent Ratio: 23
- Walk Score: 39
9. Newark
- Median Property Price: $354,928
- Average Price per Square Foot: $206
- Days on Market: 97
- Number of Traditional Listings: 255
- Monthly Traditional Rental Income: $1,573
- Traditional Cash on Cash Return: 3.00%
- Traditional Cap Rate: 3.09%
- Price to Rent Ratio: 19
- Walk Score: 77
10. Seaford
- Median Property Price: $347,363
- Average Price per Square Foot: $184
- Days on Market: 98
- Number of Traditional Listings: 17
- Monthly Traditional Rental Income: $1,288
- Traditional Cash on Cash Return: 2.98%
- Traditional Cap Rate: 3.09%
- Price to Rent Ratio: 22
- Walk Score: 65
Related: Top 30 Locations for Traditional Cash on Cash Return in 2022
10 Delaware Locations Ideal for Vacation Rentals
As for Airbnb properties, the following ten markets show much promise in return on investment:
1. Claymont
- Median Property Price: $350,713
- Average Price per Square Foot: $186
- Days on Market: 181
- Number of Airbnb Listings: 17
- Monthly Airbnb Rental Income: $3,064
- Airbnb Cash on Cash Return: 7.14%
- Airbnb Cap Rate: 7.35%
- Airbnb Daily Rate: $135
- Airbnb Occupancy Rate: 64%
- Walk Score: 49
2. New Castle
- Median Property Price: $248,835
- Average Price per Square Foot: $178
- Days on Market: 35
- Number of Airbnb Listings: 14
- Monthly Airbnb Rental Income: $2,770
- Airbnb Cash on Cash Return: 6.86%
- Airbnb Cap Rate: 7.10%
- Airbnb Daily Rate: $123
- Airbnb Occupancy Rate: 60%
- Walk Score: 52
3. Lincoln
- Median Property Price: $425,038
- Average Price per Square Foot: $219
- Days on Market: 212
- Number of Airbnb Listings: 10
- Monthly Airbnb Rental Income: $3,880
- Airbnb Cash on Cash Return: 6.58%
- Airbnb Cap Rate: 6.73%
- Airbnb Daily Rate: $120
- Airbnb Occupancy Rate: 68%
- Walk Score: 9
4. Milford
- Median Property Price: $577,094
- Average Price per Square Foot: $313
- Days on Market: 50
- Number of Airbnb Listings: 29
- Monthly Airbnb Rental Income: $4,418
- Airbnb Cash on Cash Return: 6.40%
- Airbnb Cap Rate: 6.53%
- Airbnb Daily Rate: $220
- Airbnb Occupancy Rate: 61%
- Walk Score: 82
5. Newark
- Median Property Price: $354,928
- Average Price per Square Foot: $206
- Days on Market: 97
- Number of Airbnb Listings: 23
- Monthly Airbnb Rental Income: $3,151
- Airbnb Cash on Cash Return: 5.66%
- Airbnb Cap Rate: 5.82%
- Airbnb Daily Rate: $155
- Airbnb Occupancy Rate: 67%
- Walk Score: 77
6. Wilmington
- Median Property Price: $425,625
- Average Price per Square Foot: $206
- Days on Market: 106
- Number of Airbnb Listings: 119
- Monthly Airbnb Rental Income: $3,312
- Airbnb Cash on Cash Return: 5.31%
- Airbnb Cap Rate: 5.46%
- Airbnb Daily Rate: $125
- Airbnb Occupancy Rate: 64%
- Walk Score: 80
7. Milton
- Median Property Price: $609,526
- Average Price per Square Foot: $346
- Days on Market: 97
- Number of Airbnb Listings: 27
- Monthly Airbnb Rental Income: $4,129
- Airbnb Cash on Cash Return: 5.02%
- Airbnb Cap Rate: 5.11%
- Airbnb Daily Rate: $253
- Airbnb Occupancy Rate: 62%
- Walk Score: 45
8. Dover
- Median Property Price: $351,162
- Average Price per Square Foot: $182
- Days on Market: 150
- Number of Airbnb Listings: 22
- Monthly Airbnb Rental Income: $2,629
- Airbnb Cash on Cash Return: 4.56%
- Airbnb Cap Rate: 4.69%
- Airbnb Daily Rate: $197
- Airbnb Occupancy Rate: 56%
- Walk Score: 77
9. Georgetown
- Median Property Price: $558,900
- Average Price per Square Foot: $276
- Days on Market: 865
- Number of Airbnb Listings: 7
- Monthly Airbnb Rental Income: $3,468
- Airbnb Cash on Cash Return: 4.36%
- Airbnb Cap Rate: 4.45%
- Airbnb Daily Rate: $236
- Airbnb Occupancy Rate: 45%
- Walk Score: 75
10. Harbeson
- Median Property Price: $510,541
- Average Price per Square Foot: $295
- Days on Market: 127
- Number of Airbnb Listings: 7
- Monthly Airbnb Rental Income: $3,279
- Airbnb Cash on Cash Return: 4.18%
- Airbnb Cap Rate: 4.26%
- Airbnb Daily Rate: $288
- Airbnb Occupancy Rate: 50%
- Walk Score: 24
Related: Where Is Airbnb Hosting Profitable in the 2022 US Housing Market?
The Bottom Line
Investing in real estate is one of the most financially rewarding things anyone can do. It is a lot more secure compared to stocks and bonds. Plus, unless the market is terrible, all types of real estate properties appreciate as time goes by.
Investing in the Delaware real estate market does come with risks, but it also comes with certain benefits not found in other types of investments. If you are serious about investing in any of Delaware’s markets, it is best to work with the right investment tools and professionals to help you make the smartest decisions.
To get access to our real estate investment tools, click here to sign up for a 7-day free trial of Mashvisor today, followed by 15% off for life.