Rental costs good for visitors, tough on local workers

By Rachel Swick
Cape Gazette staff

Delaware is the 12th most expensive state to rent two-bedroom units.

Minimum wage workers make about $6.15 an hour. It would take about two minimum-wage jobs to afford the $12.21 an hour necessary to afford two bedrooms in Sussex County.

To afford a two-bedroom apartment, a minimum wage worker must work 79 hours per week, 52 weeks a year. That means in Delaware, the 28,586 people who make minimum wage or less cannot afford to rent here.

Affordable housing is at the forefront of issues affecting Delawareans, said Ken Smith of the Delaware Housing Coalition. Many low-income residents cannot afford to buy, so they must find rental properties, said Smith.

People who work in eastern Sussex and cannot afford to purchase a home have been forced to move west and look for more affordable rental units.
Numbers distinguishing differences in apartment rents east of Route 1 from rents west of Route 113 are not available.

“People are renting wherever they can find a place,” said Smith. “In coastal Sussex, this is often farther and farther from their work.”

Fair market rent is the amount required to rent a modestly priced apartment in a local area, as estimated by the Department of Housing and Urban Development (HUD) and based on local housing market data.

Fair market rent for a two-bedroom apartment in Sussex County is $635 a month. To afford this, many minimum wage workers would need to work two full-time jobs.

Most of them could afford apartments costing $412 per month, but fewer and fewer of these units are available in eastern Sussex, said Smith.

The National Low Income Housing Coalition (NLIHC) reported that low-income households have a harder time finding rental units they can afford, while higher-income households can afford upscale apartments or take over lower rent units.

“There were 7.7 million extremely low income (ELI) renter households in 2003 and just over 6 million rental units affordable to these households, resulting in an absolute shortage of just fewer than 1.7 million affordable units,” states a report on national trends released by NLIHC in March.

“As households earn more they are more likely to rent down market, spend less than 30 percent of their income on rent. As a result, many affordable rental units are neither occupied by nor available to lower income households.”

With the recent condominium boom in Sussex County, many units have been created, but they are not rented at prices that low-income working families can afford.

Not all renters are low-income. Many renters return year after year for the summer and continue to rent beach houses.

Summer in Sussex
The summer months are indisputably the hottest months for renters in Sussex County. Even by March, many of the units are booked through the summer.

Tina Worsley of New Castle County visits Rehoboth Beach every summer. She has lived in Delaware all of her life and loves the atmosphere, the people and the restaurants in Rehoboth, which is why she returns year after year. This year she decided to rent a house. She found a place in her price range online and contacted the real estate agent.

“It wasn’t hard at all,” said Worsley. “I would do it again.” Worsley rented the house for one week and plans to relax on the beach with some friends. “I tend not to rent on the high side, but I haven’t noticed an increase in rents over the past few years,” said Worsley. “Maybe it increase from $100 to $200 at the most, but I didn’t notice. There are enough choices that I can always find something in my price range.”

She said she would rather rent a house than stay at a hotel because in a hotel she would be charged more and she wouldn’t have the convenience of a kitchen. “The house has everything I need,” said Worsley. “I still go out to eat most nights, but I will probably eat breakfast and lunch in the house or pack something to go.”

Many summer visitors to Sussex County have been here before and while they used to rent, some are buying.

While rental business has increased for real estate firms such as Jack Lingo and Coldwell Banker in Rehoboth Beach, some units that used to be snapped up by April sat empty during parts of the season last year.

Nick Carter of Jack Lingo Realtor said many year-round residents of Sussex County also rent their houses during the summer months to help pay the mortgage on their property, and new units are built every day.

Jo Ann Bacher, rental agent for Jack Lingo in Rehoboth Beach, said the inventory of rentals has increased, not only because of new construction but also because more people are interested in investing in real estate.

“We are constantly busy with people wanting to come to the beach. That has not changed,” said Bacher. “What has changed is the sense of urgency that people used to feel.”

The rents range from monthly to weekly rates and from $1,000 to $3,000 per month and from $150 to $5,000 per week for some properties.

According to the online Jack Lingo rental guide, many two-bedroom apartments also sleep up to six people. For a weekly rental in the Lewes area, consumers are paying from $700 to $1,750 per week. In the Rehoboth area, weekly rentals run from $550 to $2,100, depending on the location and the amenities.

Year-round rentals fit inside the same price ranges, costing from $900 per month to $1,100 per month from Milton to Rehoboth. No prices for year-round rentals were available for Dewey Beach. For a whole season, rentals top out at $12,500 in Rehoboth and Dewey.

Now, Bacher said, it is not uncommon for people to use the internet to rent properties in July for a week in August. “The majority of people either rent weekly for the full season,” said Bacher. “The monthly rentals are not as strong as they used to be.”

While demand for rentals continues to be strong, Bacher said it is important for people interested in renting to work with an experience rental agent.

The large variety of units available can be overwhelming to some clients, but with help from an agent it can be made easier.