Rehoboth Beach Delaware is called the Nation’s Summer Capital because we are such a common second home and entertainment location for the powerful and influential people of Washington D.C. There are few people making over $75,000 a year in the DC professions who do not frequent this area when they need privacy, space, fresh ocean air and relaxation. It’s not just summer that draws them anymore, they come year ‘round. And it’s not just Rehoboth Beach anymore, they populate Lewes, Dewey Beach, Bethany Beach, Fenwick Island and all the little towns near the Delaware Beaches.
During the past several years all real estate, especially waterfront real estate or beach real estate anywhere has been a phenomenal investment. Rehoboth area increases have been as much as 30-40% per year in the ocean block for the last few years! Part of this surge was just a catch-up from nearly a decade of relatively flat appreciation rates.
While Washington D.C., along with numerous other cities has seen price increases in real estate of 15-30% per year over the last few years. While the rest of the country has little if any appreciation in real estate values this year DC has remained hot, though not as hot as last year. Most areas of our country have had no appreciation in prices on average for this year – except for small portions of some metropolitan areas.
The entire economy has cooled way down. Globally, real estate is not expected to do very well over the next few years. In addition to residential real estate being hard hit — retail, commercial and industrial real estate has been mostly languishing, unsold even at lower prices and even with commercial mortgage rates of half what they were a few years ago.
This Delaware Resort area and Washington D.C. are predictably different from anywhere else. DC is where people flock when any national emergency or military expansion is underway. We are seeing unprecedented buildups in military, government and private sectors as a result of our instant reaction to the attacks and the nearly immediate national decision to mount a world wide high-tech war against the terrorists and their allies. This Delaware Beach area is a part time bedroom, escape, business-meeting and bar community for the Washingtonian influential and powerful elite. Here they can get away and plan in private for what must be done!
The Wall Street Journal posted an interesting article “Where Housing is Headed in Wake of Attacks” on 09/21/2001 by June Fletcher and Danielle Reed regarding the future of real estate –after the attacks. Before the attacks Real Estate sales were the major factor keeping the rest of the economy from plummeting more terribly than it has. The attacks have badly shocked the world real estate market. The residential, commercial, industrial and even the government acquisition of property in the major cities has lagged or stopped almost everywhere. No one knows how long this will last of course.
Since the New York, D. C. Pentagon, and Pennsylvania attacks on the World Trade Center, The Pentagon and the attempts on The White House; we have reason to review many things. General real estate markets world wide have been drastically affected since the war began — and the war may last a long time. Part if not most of the instant real estate market change was due to the banking industry which was one of the most severely affected of all US business. Many of the offices in New York that were destroyed were central banking centers from around the world. We are beginning to recover from the banking difficulties now. In fact our in-house mortgage broker Prosperity Mortgage which uses Wells Fargo funding is up and running full speed, no problems. We have the lowest residential mortgage rates in 40 years right now. But full technical recovery of the banking industry will take a while.
The real estate market of Washington DC, our feeder community, remains strongest in the nation. According to Case, Shiller and Weiss known as CSW; and claimed by the New York Times to be the leading residential real estate analysts in the world; we are heading deeper into a declining real estate market for this country and others, the exception being Washington D.C. CSW is predicting DC to appreciate and to increase in appreciation more than previously predicted. This prediction, of course, includes the residential areas around Metropolitan Washington D.C. such as Northern Virginia, Maryland and to a lesser degree parts of Delaware and Pennsylvania. The bedrooms for those who run our national capital reach out a hundred miles from the center of town. CSW is not predicting the 20% annual real estate property value increases of the last few years but they are predicting a 4.2 % annual increase for the DC related area now instead of the 3.8 % increase they predicted before the horrors and attacks of 9-11. They are predicting downturns in values elsewhere and deeper downturns than before in all the other major markets.
CSW acknowledges that tourism to DC will be hurt some by the attacks. Personally I know that Crystal City has increased traffic of late by sightseers who have recently come to DC and want to view the destruction of part of the Pentagon. Additionally, room rentals are only slightly hurt in the Washington D. C. area as tourists normally in DC for the fall events have been partially replaced by consultants and visiting dignitaries. Along with the upgraded appreciation predictions for the DC area real estate market CSW has farther downgraded it’s prediction for appreciation rates in Atlanta, Boston, Chicago, Cleveland, Denver, Detroit, Los Angeles, Miami, Minneapolis, Nashville, New York, Orlando, Philadelphia, Phoenix, Portland, San Diego, San Francisco, and Seattle.
Here are my personal predictions, based on over thirty years of selling property here in the Delaware resort areas. I also maintain an almost daily connection to the goings on of the DC real estate markets. Washington DC will experience an influx of highly paid professionals for the defense and research industries as well as computer security, personal security and warfare related services.
There will also be a terrific increase in any and all Internet related firms that service the staff of our government and government contractors who will fight the new war. Much of this war will be fought with keyboard, mouse and joystick. These new hi-tech workers and the ones already involved will be under increased stress and accepting increased pay over the next few years as we fight a high-tech war against terrorism. These same factors and more will give increased reasons and funds for more people to visit our beach areas. As always some of these visitors will decide to purchase here. The visitors and new buyers bring others with them and more of these visits are business related now.
Washington DC firms and companies that are financially related to these firms will rapidly be adding highly paid staff and subcontractors. This will require a huge increase in every kind of service industry as well as all the hospitality industry relatives. The more highly paid and more highly stressed war related workers will predictably seek vacation time, relaxation time and close by meeting sites in Rehoboth, Dewey, Bethany, Fenwick and Lewes just as they always have. More and more of these highly paid folks will also need to visit us more often, for longer periods, and increasingly throughout the year for myriad reasons. Many of them will move here and begin to work here from phones, fax, laptops and home computers. We are seeing it happen already. We, as a result, will need to have more and more of our resort infrastructure and more of our businesses open, year ‘round. We will need to employ more and better trained people in every area here and they too will need housing and services. We are growing!
We will see an every increasing growth rate for those who telecommute from here at the beach – part or full time. Already I see a large percentage of our prospective customers and buyers that are now or soon will be working from home. Those who spend long weekends here in the beach area with a laptop and cell phone to handle professional responsibilities are an ever increasing group. Kate and I work from home most of the time. Our waterfront neighbor is a mortgage broker and is often on her balcony with her laptop and phones doing business. Kate often does a full day’s work out at the end of our pier. We are home workers and every month more of our customers are as well. Several of our recent purchasers work at home full or part time.
As a result of all these property appreciating factors; I wonder if our Delaware Beach Area and Rehoboth Beach real estate will actually outstrip the appreciation of DC real estate once again.
By www.JodyHudson.com Copyright September 22, 2001
Jody Hudson is a Realtor with 35 years experience in American and Delaware Real Estate.
Source of this article is: http://www.kate-jody.com/essays/stillbuy.html