Delaware’s Housing Sector: Factors Affecting Affordability and Availability

 By: Jane Brady, Chair, A Better Delaware

Delaware has a housing shortage. Why, you ask, when it seems like every time you turn around, there is a new development?!

In large part, it is the cost.  According to data from the Federal Reserve, in 1984, the median sale price of a home was 3.5 times median income; now it is 5.8 times.  In order to buy a median priced home today, a buyer would need to earn over $100,000 per year.  According to the US Census Bureau, the median income for Delaware is $82, 855. Housing is simply priced out of the market for many.

There are several reasons for the high cost. The bottom line is that there is very low inventory. There are not enough houses for sale to meet the demand buyers are placing on the market.  In the law of supply and demand, which pushes the price of housing up.

Low interest rates is a big part of the picture. After the housing crash in 2008, there was a prolonged period with low interest rates that made the long-term costs of home ownership less expensive.  Increased demand pushed the price of homes higher. Now, those buyers are facing higher interest rates and, even if they want to move, are staying put because they do not want the added interest burden.

Additionally, Delaware’s transfer tax is the highest in the nation.   That tax, on a home sold for $384, 079, is over $15,000, and is usually split between the buyer and seller.  That is a lot of money.

Further, a new generation, millennials are entering the housing market, pushing demand, and therefore, prices, higher. And, finally, there has been a huge increase in large investors buying properties and turning them into rental units, taking them out of the housing market.

Another aspect of inventory that affects prices is not just how many units are available for sale, but what kind of units they are.  Inventory needs to be diverse, including condo, townhome and single-family units.  And the best and most competitive markets are always moving.  Delaware’s housing market is not robust, but rather stagnant at the moment.

Many people moved to Delaware, particularly, but not exclusively, Sussex County, during the pandemic. New York and New Jersey residents could now work remotely and live in a more tax-friendly state with lower housing costs. That pushed to cost of housing up, significantly in some areas.

What are some of the consequences of an expensive housing market? Well, consumer spending on other items, including essentials, is curtailed.  Fewer families can afford to eat out, take vacation, visit a water park or the beach for a weekend.

Our economic freedom is affected.  People may not move to take a better job because they can’t afford housing in a new location. According to Visual Capitalist, there are severe shortages of workers in many cities because lower wage workers cannot afford to live in those cities, affecting market efficiency and productivity growth.

The costs of construction and the expense that regulations and restrictions add to those costs also factor into the cost of buying a home.  According to the National Association of Home Builders, government regulation overall accounts for about 24 percent of the final price of a new, single-family home, and it is more than 40% for a multi-family development.

And it is not just home sales that have been affected. Rental costs are very high as well.  Only 39% of renters in the U.S. are earning enough to afford a median-priced apartment. That doesn’t mean they’re not still renting—just that their rent consumes more than 30% of their income,

According to the US Department of the Treasury, from 2000 to 2020, median rents rose faster than median household income in 88 percent of U.S. counties. There may be some relief soon, however. According to Sheharyar Bokhari, Redfin Senior Economist, “Rents are growing at a snail’s pace compared to the rapid increases we saw during the pandemic and are unlikely to soar again anytime soon. As a result, wage growth should continue to outpace rent growth in the coming months, as it has been doing since 2022. That will help narrow the affordability gap for renters.”

Recently, there has been discussion in the Delaware General Assembly about introducing rent control legislation to address the increase in rent.  However, research has consistently shown that rent controls are counterproductive. Rather than increase the number of rental units available and keeping costs down, rental inventory typically declines, neighborhoods become static, and ultimately, renting becomes less, rather than more, affordable.

According to economists at the Federal Reserve Bank of St. Louis, “Rent-control policies can have other downsides beyond dampening the growth of rental housing stock. Several economists found negative effects on housing quality; their studies show rent-controlled buildings or areas with large concentrations of rent-controlled units tend to have more dilapidated units, suggesting that rent control reduces landlords’ incentives to maintain their units.”

Delaware should adopt policies that increase the availability of affordable housing. Those policies include reducing regulation and costs of construction, reducing the transfer tax on the sale of homes, and avoiding intrusion into the free market with regard to rent, by declining to adopt any rent control measures.

Jane Brady serves as Chair of A Better Delaware. She previously served as Attorney General of Delaware and as a Judge of the Delaware Superior Court.

Addressing Delaware’s Housing Challenges: A Look at Legislation and Market Dynamics

 By: Jane Brady, Chair, A Better Delaware

Delaware is estimated to have approximately 20,000 fewer housing units than the demand requires.  That often means that there is a shortage of affordable housing, creating a stagnant market and homelessness.

There are a number of issues that have affected the “inventory” of housing in Delaware. One has been the incredibly low mortgage rates for the past few years. Homeowners are reluctant to sell because they will have to pay higher rates for their new purchase. Second, there is not sufficient diversity of the housing units available for purchase. Some people see their dream in a single-family home, others in a condo or townhome, and still others in a rental of any one of the above.   We lack that diversity in sufficient numbers to meet demand.

And the costs are high.  According to Bankrate, which has a calculator to determine how much home you can afford, if you make $80,000 a year and put down $20,000 on a house, the best affordability is a $283,000 home. The maximum that you should attempt to purchase is $353,000. The median price for a single-family home in Delaware, according to Bankrate is $396,000, more than about half the states.   The Joint Center for Housing Studies of Harvard University found that, in 2022 the median price of a single-family home was 5.6 times the median household income. That’s higher than any other point in their records.  Prior to the pandemic. It was 4.1 times median income. The recommended rate, according to the Center, is 2.6. Low interest rates for an extended period and limited inventory produced higher prices, and wages were not keeping pace. Fanny Mae home purchase sentiment index indicates that 77% of consumers surveyed believe now is a bad time to buy a home.

According to marketplace.org from 1984 to 2023 the median cost of a new home rose at double the rate of the overall price inflation.  And, according to Cotality’s Chief Economist Selma Hepp, home price growth is expected to continue, and it is “especially apparent in the Northeast and Midwest, where the severe lack of inventory is helping prop up home prices.”

Housing construction costs are high as well, and the regulations regarding what needs to be included in the construction of building structures are ever increasing, including infrastructure costs, climate accommodation and material requirements.  There is an inherent bias in most buyers against density (apartments multi-story, multi-unit structures, etc.) because of traffic and infrastructure demands, and there is an inherent bias in most laws and regulations toward density.

So, what is the General Assembly doing to address this issue? Well, recent legislation would permit the construction of additional dwelling units (ADUs) to be added to current housing structures or property. Picture an in-law suite, but it does not have to be connected to the existing house.  Little public comment has been made on this issue at this point but look for objections to any entirely independent structures.

Most of the General Assembly’s effort has been directed at rentals.  One bill, SB150, would create a fund to provide loans to very low-, low-, and moderate-incomes, the elderly and individuals with disabilities.   But several other efforts are misguided and will be counterproductive.

HB 455 establishes rent controls, requires the Delaware State Housing Authority (DSHA) to calculate a fair market rent (FMR) and determine consumer price index, urban (CPI-U) for each county, and requiring landlords to report to the DSHA specific data regarding all their rental units.  Rent controls have been repeatedly shown to restrict inventory, the exact opposite of what we need to occur, and the bill is expensive – costs not only for the landlords, but also the DSHA and staff needed to comply, monitor and enforce the regulations.  A related bill would permit tenant who is in default of payment of rent to remain in the unit if the tenant pays all due at any time before the actual execution of the eviction order. There is no provision for recovery of costs to the landlord who has to bring the action.  Both these bills will have a chilling effect on the willingness of the many, smaller landlords who do not have a large number of units and who make a little extra money renting.

Finally, there is a bad idea on the horizon. If you do not like what Venice Beach and San Francisco look like today, you need to oppose HB 135, or you are potentially looking at Delaware tomorrow.  HB 135, and I quote directly from the synopsis, “permits an individual experiencing homelessness to conduct life sustaining activities in public, so long as such activities do not obstruct the normal movement of pedestrian or vehicular traffic in such a manner that creates a hazard to others, unless adequate alternative indoor space is available to the individual in a given jurisdiction and has been offered to the individual, including transportation for the individual and their belongings. 2. Mandates that an individual experiencing homelessness receive the same degree of protection for personal property stored in public places as personal property stored in a private dwelling, which includes protections against unreasonable search and seizure. 3. Prohibits the State or local jurisdiction from requiring an individual experiencing homelessness to move a motor vehicle or a recreational vehicle provided that the vehicle is parked on public property and the vehicle is not parked in a position to obstruct the normal movement of traffic or create a hazard for other traffic upon the highway. 4. Provides that, if a motor vehicle or recreational vehicle must be moved because the vehicle is obstructing normal movement of traffic or creates a hazard to other traffic on the roadway, the individual experiencing homelessness must be permitted to relocate the vehicle before a parking ticket is issued, or the vehicle is towed.”

This is not the best use of resources for those who find themselves homeless – whether due to finances, mental health, substance abuse issues or abandonment. Endorsement of living on the street outside of our homes, stores and doctors’ offices should not be a government function.  And enforcement will be a nightmare. What if an individual is not with the vehicle that is obstructing normal movement when the traffic is piling up behind it? What if it is towed and then the officer discovers it was owned or occupied by a homeless person? What possible protection can property have, stored in public, that would be equivalent to the protection property stored under key or locked in a safe in a home? Whose obligation is it to assure that property is protected?

Delaware has some challenges meeting the demand for housing, there is no question. But reduced regulations can reduce building costs, reasonable rental provisions will encourage expanded supply, and laws providing incentives to diversify our inventory will meet more of the market demand.

Jane Brady serves as Chair of A Better Delaware. She previously served as Attorney General of Delaware and as a Judge of the Delaware Superior Court.

The Vision Coalition is Failing Delaware Students

By Tanya Hettler, Ph.D., Guest Contributor

Delaware is in the middle of a “literacy crisis” as both Delaware’s Governor Meyer and Education Secretary Marten have acknowledged. Despite this, the Vision Coalition–an influential group that has guided education policy for nearly two decades–continues to prioritize “student-centered learning” over proven, evidence-based instruction. As reading and math scores remain low across the state, it’s time to take a closer look at who is shaping Delaware’s education agenda—and what they are prioritizing.

According to the National Institute for Direct Instruction, Direct Instruction (DI) “emphasizes well-developed and carefully planned lessons designed around small learning increments and clearly defined and prescribed teaching tasks. It is based on the theory that clear instruction eliminating misinterpretations can greatly improve and accelerate learning.”

Research shows that DI is the most effective teaching model overall and is especially beneficial for at-risk students.

The Vision Coalition’s Influence

The Vision Coalition is an influential group in Delaware with a leadership team consisting of K-12 school and college leaders, representatives from private companies and nonprofits, school board members, the president of the Delaware teachers union, and government leaders including the Delaware Secretary.

Every 10 years the group produces a 10-year plan. The newly released plan is titled Student Equity and Excellence 2035 and contains a set of policy recommendations spread across six key issue areas–early care and education, student-centered learning, student support, postsecondary success, educators, and student-centered funding.

 A Misplaced Focus on Student-Centered Learning

At the heart of the plan is the Vision Coalition’s core tenet of “student-centered learning” which it defines as follows:

“Every student, beginning at birth, has a right to a comprehensive, equitable education personalized to their unique needs, strengths, and talents. Designed with the capacity to give space for each child’s interests, passions, dreams, skills, and needs, education centers and empowers them as active participants in their learning.”

This sounds ideal–but in practice, it fails the very students it claims to help. As Houston Independent School District’s Superintendent Mike Miles, who is working to turn around one of the nation’s largest underperforming districts, has said the problem with ‘student-centric’ learning is that “students cannot guide their own learning when they cannot read” nor can they “just do what they’re interested in when they’re way behind in math.”

Delaware’s Science of Reading Mandates

In contrast, Delaware law has taken an important step toward evidence-based reform. The state legislature has passed four laws (SB 133, SS 1 for SB 4, HB 304, and SS 1 for SB 252) that require the implementation of the Science of Reading in K-12 schools.

According to the Delaware Department of Education:

“The State of Delaware defines the Science of Reading as a vast, interdisciplinary body of scientifically-based research about reading and issues related to reading and writing. For full definition see The Reading League.” (sic, emphasis in original)

The Reading League’s Science of Reading Defining Guide adds:

“This research has been conducted over the last five decades across the world, and it is derived from thousands of studies conducted in multiple languages. The science of reading has culminated in a preponderance of evidence to inform how proficient reading and writing develop; why some have difficulty; and how we can most effectively assess and teach and, therefore, improve student outcomes through prevention of and intervention for reading difficulties.”

In essence, the “Science of Reading” supports direct and explicit literacy instruction–a model that runs counter to the Vision Coalition’s emphasis on individualized, student-led approaches.

The Vision Coalition’s North Star: Missing the Mark

The Vision Coalition’s plan includes a guiding vision–its “North Star”–which focuses on critical thinking, wellbeing, communication, self-determination and community commitment.

Figure 1: The Vision Coalition’s “North Star”

Notably, the North Star omits core academic knowledge. The plan mentions it only in passing, stating it should “complement the durable, foundational skills that employers need most.”

The framework reverses the proper order. Core academic knowledge is the foundation on which skills like communication and critical thinking must be built.

Research has found that it does not work to teach topics such as critical thinking or communication without first equipping students with factual knowledge to think or communicate about.

Even more concerning, the plan does not prioritize literacy, despite existing state mandates and widespread acknowledgement of Delaware’s reading crisis.

A Literacy Crisis Worsens

When both the governor and education secretary have stated that Delaware is in the middle of a “literacy crisis,” it is troubling that the state’s most influential education coalition is not aligning its goals with improving reading outcomes. Instead, the Vision Coalition continues to promote its student-centered learning model, ignoring the direction set by Delaware law.

According to the coalition’s website, more than 75% of its policy recommendations have been advanced. Given the current academic outcomes, that track record should raise serious concerns.

Put Literacy First

Despite two decades of influence, none of the coalition’s stated goals directly address literacy or mathematics. Today, only 41% of Delaware students can read proficiently and only 31% can do math at grade level. In fact, the number of students able to read or do math at grade level has declined significantly over the 20-year period of the Vision Coalition’s existence.

As the Caesar Rodney Institute has documented, the Science of Reading–direct, explicit instruction based on decades of evidence–is the most effective path to improving literacy outcomes. Delaware’s students deserve an effective education, especially for the neediest students–not one that simply makes equity one of its talking points.

Tanya Hettler, Ph.D. is the Director of the Center for Education Policy at the Ceasar Rodney Institute.

HEALTH CARE COSTS AND PRICE TRANSPARENCY IN DELAWARE

By Stacie Beck, Guest Contributor

Who would start a home renovation project or get car repairs without having at least an idea of the cost? We need to know what to expect. Perhaps we would also like to find alternatives and determine what those would cost. But have you ever tried to find out, in advance, the cost of a medical procedure, such as a hip replacement or a diagnostic test, such as an MRI?

The health care industry makes it almost impossible for patients to shop around for the best value for non-emergency, routine medical care. This lack of price competition is one of the key reasons the cost of health care keeps spiraling upward. Providers who are more efficient can provide more value for the money and/or equal value for less money. Price competition signals and rewards that efficiency, eventually leading the industry to better outcomes and lower costs. But this does not happen when there are barriers to entry into the industry.  Delaware state government’s Certificate of Public Review (CPR) is one such barrier.

Price Transparency in Delaware

 Thanks to the federal government, hospital price transparency is beginning to arrive in Delaware. In 2021 the Center for Medicare & Medicaid Services (CMS) issued regulations that hospitals must post prices in two separate ways. One is a machine-readable (flat) file and the other is a consumer-friendly price estimator tool. The price estimator tool must include 70 specific procedures, common across hospitals. The theory is that, if a patient wants to compare the price of a procedure between hospitals, and it is one of the 70 shoppable services, the patient should be able to do so. That process is so difficult for Delaware hospitals that we won’t even address the multitude of procedures that are not required to be shown.

Recently, CMS has determined that hospital machine-readable files are under-utilized. It is now updating its regulations to improve hospital compliance (currently below 50% according to some surveys), and require use of a common coding language, format and data headings. CMS is also pushing the health care industry to comply with the price reporting requirements in the No Surprises Act (2021), which requires providers to give a good faith estimate (GFE), before a procedure, of the cost of care to an uninsured cash-paying patient and an Advanced Explanation of Benefits (AEOB) to insured patients. Implementation has been slow.

A previous survey reported on the results of a search of Delaware hospital websites. All had the price estimator tool, although it was difficult to find, and the link, often at the bottom of the front page of their website, is sometimes in microscopic font. They include the 70 shoppable services, but it is difficult to compare procedures across hospitals. Most qualify the cost may not include all the costs, but do not specify what costs are not included in specific procedures.  Fonts and programs differ between providers, and one large Delaware hospital uses non-CMS-approved coding.

Market-wide health cost information is useful for patients to get a general estimate of what the final cost of care will be. Medical care providers typically do not disclose prices until after a procedure is completed, which can result in significant price discrepancies between what the patient may expect from market-wide price websites and the final bill. The practice of disclosing costs after the service is provided is almost unique to the medical community and needs to be changed to allow consumers to accurately make decisions regarding their medical care.

Price Competition in Delaware

 Delaware has high hospital costs relative to other states.

The Certificate of Public Review (also known as a Certificate of Need (CON)) requires a new healthcare provider to establish that there is a need for additional capacity or new services before a certificate is granted to build additional health care facilities or make major equipment purchases. The federal government ended the incentive for states to establish CON programs in 1987, and the Federal Trade Commission and the US Department of Justice make a strong case for their elimination, finding instances of anti-competitive behavior by health providers.[1]   A CON is equivalent to denying a grocery store a permit to build because there is already an adequate grocery store in the area. A new, more efficient store may be able to underprice existing stores or provide better quality produce but could be kept from consumers by the less efficient stores. Even the threat of a new store will force existing stores to become more efficient.  However, we have medical providers in Delaware deciding if their competition will be allowed to compete. Studies repeatedly find the CON can reduce the quality of care and raises prices.[2]

Patients need to know the self-pay (cash) prices, insurance plans that are accepted, and billing codes for procedures. Even if providers are unsure of the ultimate cost, at a minimum they should be able to quote a standard initial consultation cash price and the billing code to every patient. Many procedures are routine and predictable, and while providers may not know the specifics of each patient’s insurance coverage, they do know the prices they charge uninsured and out-of-network patients.

Further, hospitals and other providers should be required to give prices for more complex, non-emergency procedures.  It may be difficult, but it is not impossible. The Oklahoma City Surgery Center provides prices for a variety of surgical procedures. These are for self-paying patients are all inclusive for cases without complications. Some states, including California, Illinois and New Hampshire, have taken steps to improve pricing practices in health care, and require hospitals/surgery centers/physician’s practices to post prices for common inpatient or outpatient procedures.  A number of states (FL, MN, MA, CT) require hospitals and/or surgery centers to provide cost estimates upon request. Two states (TX, CT) require hospitals to provide cost estimates to patients who are uninsured or out-of-network, apparently regardless of request. [3] Texas requires that patients must be informed if services are from a provider that is out-of-network for that patient’s insurer.

Price/Cost Availability in Delaware

Currently no Delaware laws require health care providers to post prices, give cost estimates, or provide billing codes. Nor is there a requirement that providers list the plans that they accept. In an informal survey of the websites of major hospitals/hospital chains in Delaware, we discovered one that, with sufficient persistence, yields a phone number to call for cost estimates. One website has a Consumer Guide, but a login name and password are required. Two (with plenty of clicking around) reveal offers to make ‘arrangements but no dedicated phone number. One lists accepted insurance plans but no way to secure a cost estimate. There is one standout: a southern Delaware facility posts both procedure prices and billing codes on its website.

In an admittedly unscientific survey of nine Delaware primary care, walk-in and urgent care clinic websites, none quote an initial consultation fee for self-payers. Only one offers to quote over the phone and is willing to provide cost estimates (only in person however). Several list accepted insurance plans.  With the spread of high-deductible insurance plans, health savings accounts and non-insurance, it is difficult to believe that patients do not need this information.

The solution to these problems is to model Delaware’s law, in part, after existing Delaware laws for other industries. A hired contractor or auto mechanic must provide an itemized list of costs to the customer before doing any work. The customer is entitled to this list by law, and the final price listed on this bill is the agreed upon price the customer will pay for the service provided. A similar approach to healthcare is a much more straightforward method for pricing. It is not unreasonable to expect that a fairly accurate estimate could be made, and, like other services, could be amended when unforeseen problems develop.  This policy, along with a posted initial consultation fee, would go a long way toward removing the fear many self-pay health care consumers have when going to the doctor that they will end up being charged an amount massively greater than expected.

For insured patients, providers should be required to provide billing codes for the initial consultation and any foreseeable procedures to patients who can then contact their insurers directly.  Insurers should be required to provide a hotline or website so that patients can get quotes quickly. As in other states, patients should be informed whether any providers involved in their care are out-of-network. Finally, since insured patients are almost always required to sign a statement accepting ultimate responsibility for bills not paid by insurance, a medical bill should include a specified price or maximum cost, beyond which there is no liability for the patient.

 Conclusions

Two problems have been identified here. One is the need to require providers and insurers to post their self-pay prices and/or the billing codes of standard procedures and consultations. The second is to make patients aware that they have a right to this information and to make it accessible to them. Unlike other states, Delaware should require providers give this information to patients or sign a statement that the patients waive their right to it.

Consumer protection laws already exist in Delaware for other industries, such as construction and auto repairs. Given the evolution of the health care industry toward patient-directed care, high deductibles, health savings accounts, self-payers and narrowing insurer networks, laws are needed in health care to protect patient consumers. Other states have taken steps toward this. Delaware should learn from their experience and act to fill this gap, promote health care price transparency, and adopt and enforce disclosure laws consistent with existing federal law.

Stacie Beck is an Associate Professor of Economics at the University of Delaware.

[1] Joint Statement of the Federal Trade Commission and the Anti-Trust Division of the US Department of Justice to the Virginia Certificate of Public Need Work Group, October 26, 2015.

[2] See National Conference of State Legislatures at www.ncsl.org/research/health/con-certificate-of-need-state-lasws.aspx and Mitchell, Matthew “Do Certificate-of-Need Laws Limit Spending?” Mercatus Working Paper, September 2016.

^[3] National Conference of State Legislatures www.ncsl.org accessed June 21, 2017.

The Importance of School Board Elections

By: Nancy Mercante ,Guest Contributor   

Three years ago, I discovered how bad Delaware K-12 schools had become. I decided to vote that year but couldn’t find information about school board candidates. Many candidates don’t know enough to understand how they can drive positive change as school board members. These are the reasons I formed Citizens for Delaware Schools. I couldn’t just ignore the lost generations of kids facing a bleak future. I felt a moral obligation to help the public demand better and the school boards to do better.

To this day, many Delawareans don’t know how deep a hole our students find themselves in. Minority and low-income students are being hurt the most. The 2024 Nation’s Report Card showed that 70% of fourth graders cannot read at grade level and 80% of eighth graders can’t do math, find the main idea of an essay or name different sides of a debate. This is a tragedy long in the making, not just for education but for the prospects of Delaware’s future workforce.

When only three to five percent of eligible voters turn out to vote in their school board elections, it tells me not enough people know or care. A low turnout means your vote could be the one that elects a school board member who stands for the kids, not entrenched bureaucratic interests. The school district will only change course when voters show up at the polls to demand it and we elect a school board that insists on proven methods for improving student outcomes.

Why do school board elections matter?

School boards have immense power. Strong, well-informed school board members can insist that the superintendents in school districts stay focused on improving student outcomes. Superintendents report to them.

The board must focus on academic achievement. Members can ask probing questions, create the right policies, review and approve high-quality curriculum and, most important, hold the superintendent accountable through measurable goals.

Board members can ensure the proper allocation of millions of public dollars so that the majority of funds support student instruction and not a growing bureaucracy. They can’t be just a rubber stamp, especially as budgets get tighter.

Voters are to blame for the long, steep decline of public schools, and we all have a responsibility to help fix it. This is also why your vote matters.

The 2025 school elections are May 13, 2025

 This year, 19 elections will occur in 11 school districts: Appoquinimink, Brandywine, Caesar Rodney, Cape Henlopen, Capital, Christina, Smyrna, Red Clay, Lake Forest, Indian River District 1, and Woodbridge.

To help voters make informed decisions, Citizens for Delaware Schools has posted information about candidates on its website: www.citizensfordelawareschools.org.

Our survey asks candidates to name specific policies or actions they will take to reform education.

You can also sign up to receive our monthly newsletter, Education on the Hotseat, and follow me on X.com/@BetterEd4all.

School boards are the most local of all elections and the most meaningful to children. This year, make a special effort to vote in your school board election on May 13.

Your vote matters. Make it count. Do it for the kids.

Nancy Mercante is the President and Founder of Citizens for Delaware Schools.