The state of Nebraska housing market experienced two stand-out years in 2013 and 2012. Omaha’s metropolitan area fared particularly well in terms of homes sold over the course of that time period. Similarly, the number of new housing permits released in 2013 set a four-year record in Omaha. Of course, this record breaking figure left buyers and real estate market experts wondering if the 2014 Nebraska Housing Market would produce similar results, or if it would turn into a slowdown of the housing construction and sales market. So far, the 2014 Nebraska housing market hasn’t given anyone cause to worry about an economic crisis; however, the pace of growth slowed down to a trickle. While experts have a right to feel reserved about the future and express a cautious optimism, the majority of data and analyses point to a normalization of the 2014 Nebraska housing market.
In late 2013 and early 2014, many real estate industry analysts expressed doubts that the Omaha metropolitan area would continue to sustain the same fast pace of growth. These doubts seemed to have been proven right: the local housing market continues to grow but at a more normal rate. Several factors brought about the slowdown. Tougher lending conditions serve as one of the chief factors for this slowdown. As expected, 2014 brought about higher interest rates and more restrictions on mortgage lending. However, the experts insist that this slowdown is not a downturn. They insist that it represents a steadier pace of growth which is bound to help the market return to normalcy. As one realtor from NP Dodge Real Estate told Omaha.com, the market recovered a bit ‘too quickly’ in 2012 and 2013. So, experts prefer a more moderate rate of development in order to maintain the same pace overall. Too much of a speedy recovery could also spell a head-on collision with a new crisis (or a bursting bubble) down the road.
In 2013, the Omaha metropolitan area experienced the following developments:
- The government received over 2,600 new single-family housing construction permit applications. That number sits 25 percent higher than in 2013. The figure is record breaking for the past four years according to data from the Greater Omaha Chamber of Commerce.
- More than 12,000 home sale contracts were perfected for the first time in the history of the Omaha Area Board of Realtors.
- The average price for existing single-family housing units in Omaha returned to pre-2008 levels.
By and large, the statistics’ overview remains positive. They indicate that, in terms of housing values, Omaha successfully ‘came out’ at the other end of the recession. The median housing values across all of the city’s neighborhoods varied by a large margin (from negative 6 percent to positive 17 percent through 2012 to 2013). The average housing price increased by 4.5 percent and 6.5 points in 2013.
Maintaining a similar level of growth through the 2014 Nebraska housing market would not be healthy or normal for consumers or sellers. That’s why both realtors and builders forecast an increase in home values only around 2 to 3 percent this year. The president of the Metropolitan Omaha Builders Association claims that the local home construction industry is experiencing the strongest levels it has ever seen in the past seven to eight years.
The increase in the number of awarded building permits serves as perhaps the biggest criterion for predicting this year’s positive growth of the Nebraska housing market. Homebuilders experienced six years of downturn following the 2005 peak. During this time, local officials doled out no fewer than 2,500 permits for building single-family housing units in the Omaha metropolitan area alone. Some rather dramatic fluctuations followed through the sharp boom of the past two years. Most voices in the local homebuilding industry attribute this period of prosperous growth to unprecedented levels of regained consumer confidence. They also attribute it to the relatively low stock of pre-existent, single-family homes on the market.
Housing inventory also serves as a good indicator to predicting the outlook of a particular housing market. In the Omaha metropolitan area, as well as in the entire state of Nebraska, housing inventory levels remain relatively low. That has a lot to do with the pace at which new homes are being built and sold. According to one Nebraska-based MarketGraphics representative, housing developers are taking a cautious approach to the entire process to ward off any signs of a potential housing bubble. Most of the homes built in 2013 and 2014 already sold or are in the process of being sold. The area hasn’t experienced too much of an accumulation of housing inventory to speak of. In turn, this brings up the issue of housing lot inventories which consistently decreased over time. For instance, the Douglas and Sarpy Counties of Omaha lost 22 percent through 2013 alone. This decrease isn’t cause for concern. It simply signifies the developers moving on to new areas to accommodate current demand.
As for existing home sales, the market in Nebraska seems to be just as healthy as the new homes construction market. Demand remains high and supply very low. These market conditions even prompted realtors to make cold calls to potential sellers asking homeowners if they would consider selling. Several local real estate agents spoke of a ‘pent-up’ desire to buy which was aided by low mortgage interest rates and permissive lending conditions through 2013. Home loan rates increased prompting a rush to buy in 2013. Many realtors still expect the consistent demand for housing to continue aiding the market this year albeit at a much more moderate pace. And, the most optimistic voices on the market even expect to see first time homebuyers making their long awaited comeback in 2014 encouraged by increased levels of consumer confidence in the economy.