All products deteriorate as they age and homes are no exception. The median age of an owner-occupied home in the U.S. is 39 years, according to census data, which may create concerns for all participants in real estate transactions. Buyers may not be attracted to older homes in need of renovation while appraised values for these properties may be lower than that of newly built homes.
The Mid-Atlantic Region of Delaware, New Jersey, New York and Pennsylvania is at the epicenter of these issues. New York has the oldest housing stock in the nation with a median age of 60 years. In Pennsylvania and New Jersey, the median age exceeds 50. Delaware — which is by far the least-populous state in the region with slightly less than 1 million residents — is the only Mid-Atlantic state where more than half of all homes are less than 35 years old.
Homebuilders are addressing supply shortages and outdated stock in portions of the region. According to a March 2021 report from Realtor.com, New York City and Philadelphia are among the leading U.S. metro areas for new-home construction.
At the state level, building permits are on the rise across the region. According to census data, permits for new single-family homes increased in the Mid-Atlantic states by 32% to 50% on a year-over-year basis during the first half of 2021. About 28,000 permits were issued in these four states during the first six months of the year, with Pennsylvania leading the way at nearly 11,000 permits. Still, this region lags other parts of the nation for pending construction activities.
Due in part to its strong corporate legal statutes and an efficient court system, Delaware is a highly popular place for businesses around the globe to incorporate. More than 1 million businesses, including about 60% of all Fortune 500 companies, are incorporated in Delaware. The state also is a well-known haven for financial and insurance companies. These industries generated about $22 billion for Delaware’s economy in 2018. The largest of these companies include student-loan servicers Navient and Sallie Mae.
New Jersey has several industries that rank in the top 10 among all states, including real estate, retail and wholesale trade, and transportation and warehousing. The Garden State’s proximity to New York City and its casinos in Atlantic City also make it a tourist destination. But New Jersey’s decade-long tourism growth ended last year in the wake of the COVID-19 pandemic, with the number of visitors to the state shrinking by 27% and corresponding revenues down 37% from 2019, state officials reported.
New York ranks in the top 10 nationally for its natural environment and health care system, according to U.S. News & World Report. The Adirondack Mountains offer skiing, hiking, fishing and several local breweries. Pennsylvania, meanwhile, has the nation’s sixth-largest economy, and its higher-education system is well-renowned as U.S. News & World Report ranks the University of Pennsylvania, Carnegie Mellon University and Lehigh University among the nation’s 50 best colleges. ●
Zillow reported that the typical U.S. home value this past July was $298,933, up 16.7% year over year. Prices in each of the Mid-Atlantic states accelerated by at least 13.7% during this time, led by New Jersey at 18.5% growth. The Garden State had the region’s highest typical home value in July at $415,066, according to Zillow.
The New York State Association of Realtors reported that for-sale inventory in the Empire State had decreased for 19 consecutive months as of June 2021. More than 13,000 homes were sold statewide that month, a 55% increase from June 2020. A similar trend was reported in New Jersey, where sales of single-family homes jumped by 31% and the number of homes for sale dropped by 31% year over year this past June.
Delaware Realtors reported 1.2 months of for-sale supply in June. Statewide, nearly six in 10 homes sold for more than the list price that month. In Pennsylvania, meanwhile, data from the Federal Housing Finance Agency shows that home values across much of the Pittsburgh and Philadelphia metro areas grew by 20% or more from 2010 to 2020.
Maritime transportation is a major economic driver across the Mid-Atlantic Region as the industry generates about $16 billion per year for the economies of these four states. New York, New Jersey and Pennsylvania rank fifth, 11th and 13th, respectively, among all states for the number of jobs tied to this industry.
In Delaware and New York, trucking companies employ a combined 311,000 people and account for $1.4 billion per year in federal and state road-tax revenues. In New Jersey, 11.6% of the workforce was employed in the transportation, logistics and distribution sector as of 2017, nearly 3 percentage points above the U.S. average. Truckers in Pennsylvania, meanwhile, were battling earlier this year against a legislative proposal that industry advocates said would make the Keystone State’s vehicle registration fees the second highest in the nation.
A strong transportation network sets the stage for international trade throughout the region. In 2020, these four states combined to export some $145 billion in goods. Top export partners include Canada, China, Mexico, Switzerland and the United Kingdom.
What the Locals Say
“We’re definitely seeing a market selling higher than normal conditions. New Jersey has a $100,000 cost increase (for single-family homes) in the past 12 months. It also has to do with a supply-and-demand issue as well. I believe 2010 to 2020 had the lowest new-construction (figures) since the 1930s, so it was one of the decades where we haven’t seen as much new construction as we should have or that we needed. So, I think a combination of that, as well as a lot of first-time homebuyers hitting the market, are definitely driving up prices.”
Advisors Mortgage Group
3 Cities to Watch
According to The Pew Charitable Trusts, Philadelphia’s unemployment rate averaged 12.2% in 2020, much higher than the U.S. average of 8.1%. The city shed some 40,000 jobs last year, including one-third of all positions in the leisure and hospitality sector. The metro area had some 135,000 private businesses as of 2018. Although this number had grown by 30% since 2012, it was the third-lowest figure among the nation’s 15 most-populous metros, the Economy League of Greater Philadelphia reported.
The Federal Reserve Bank of New York noted that Syracuse’s metro-area population declined to 649,000 in 2019, down 1.9% from 2009. Regional job growth of 2.8% from 2014 to 2019 was a fraction of the state’s 7.4% growth during the same period. In July 2021, local officials announced plans to use about $20 million in federal stimulus funds to prepare commercially zoned land for business development. Onandaga County hopes to lure a semiconductor manufacturer that would add up to 5,000 long-term jobs.
Established in 1638 by Swedish settlers, Wilmington began to industrialize in the 1830s when railroads arrived. Today, Delaware’s largest city (population 70,000) has a diverse economy centered on financial and legal services, health care and chemical manufacturing. Wilmington’s costs of living are 11% lower than the U.S. average and many residents commute to Baltimore, Philadelphia, New York City or Washington, D.C. Redfin reported a median home-sales price of $290,000 in June 2021.
Sources: Adirondack Regional Tourism Council; American Maritime Partnership; American Transportation Research Institute; DelawareOnline.com; Economy League of Greater Philadelphia; Federal Reserve Bank of New York; Forbes; Fortune; International Trade Administration; New Jersey Department of Labor and Workforce Development; New Jersey Realtors; PennLive.com; Realtor.com; Stacker; State of Delaware; State of New Jersey; Syracuse.com; U.S. Bureau of Labor Statistics; U.S. Census Bureau; Wilmington Office of Economic Development; Zillow