The media still reports a large inventory of new homes but where are they? Not in Delaware. The days of new home builders continuing to build regardless of sales are behind us. Much of that inventory was blown out last year as builders learned again about the rules of supply and demand. For cash buyers or those who have already sold their home, the selection of homes ready to be occupied is dwindling. This is good for sellers of  nearly new homes in sought after communities. And, when more buyers begin to sell their homes, resales will become even more attractive.

Demand is growing for retirement homes in Delaware but it has been delayed by the inability of buyers to sell their existing homes. When those markets begin to improve, just watch the inventory disappear and sales of existing homes grow. It's already begun.

Everyone has a solution to the housing crisis and the pending recession. If you listen all day like I do, you realize that many of the proposed solutions will only create a worse situation. Does a bailout of the hedge funds, banks or home builders help those who bought a home in 2005/2006? Does it help the homeowner with an ARM that is going to reset to a higher interest rate while the value of their home has declined? Who do they want the government to bail out, if anyone?

Does another corporate buyout restore confidence to those who actually want to buy a new home? Most potential home purchasers also need to sell a home first. Will proposed solutions help any homeowner actually sell their existing home so that they can purchase another? One theory is that you may be selling for less but you are also buying for less. That argument does work unless the value of your current home is now less than your mortgage.

The only proposal that actually targets the consumer wants to allow a tax credit to buyers if they purchase a home that is in foreclosure. Who does that help? Does that protect current homeowners from foreclosure or does it actually encourage the banks to be even tougher since the government wants to reward anyone that buys a foreclosed home with a hefty tax credit. More foreclosures will increase the inventory of unsold homes and that will only exacerbate the problem.

So, what are we to do? As always in real estate, it depends on where you are. I hear horror stories from colleagues in some parts of the country, but I hear good news from others. From North Carolina, I hear that sales in the Calabash area have picked up significantly. Just ask Bonnie Black, RE/MAX at the Beach. From Arizona, the news is not so good according to one of my Curves buddies who just visited friends, one of whom is a Realtor. Here in Coastal Delaware the opportunities for a terrific buy are still around but the inflated inventories of the past year have been whittled down. The Buyers coming to this area to retire have been planning their move for many years and may not be as affected by economic uncertainty as those in other parts of the country.

Monday's report on the state of the housing market was more bad news. How is the local market in Sussex County, Delaware? It's slow, but winter at the beach is not the prime season. When I looked back at the past 6 years, from 2002 through 2007, and focused on single family home sales, I could see a definite firming in sales prices and a correction in units sold that has already begun.

If you bought a home in 2002, you paid an average of $258,449 for your home. In 2007, the average single family home sold for $406,227, 57% more in just 6 years. So, when you hear that prices are declining, you need to ask another question. Are they talking about homes that were purchased at the peak in 2005 and put back on the market at a premium price in 2007? Or, are they talking about homes that are priced properly for the market today and selling? Profit depends on how and when the home was purchased.

There was a decline in average selling price of about 2% from 2005 to 2007. However, there was an increase in the average selling price of 18% in 2007 compared to 2004; an increase of 36% in 2007 compared to 2003; and an increase of 57% in 2007 compared to 2002. You're feeling pretty good if you bought a home in Sussex County in 2002/03.

Well, we sold about as many single family homes in 2007 as we did in 2002 and 2003, but the selling price was 57% higher! The local market is what matters because the numbers reported by the media are generally national statistics. Even if you look at the regional numbers reported, they show an average sales price of existing homes in the "South" of $225,600 for 2007. Delaware is included in the Southern region, but our average sales price is much higher than the average for our region.