Omaha housing market slowing down, still low on inventory

OMAHA, Neb. (WOWT) - Historically low interest rates in 2020 and 2021 led to a home-buying frenzy.

“Everything sold and it just didn’t really matter what condition it was in,” says broker and realtor Tom Simmons with the Better Homes and Gardens The Good Life Group.

Local experts like Simmons say as interest rates increase, we’re moving away from that trend.

“Now, we’re finding buyers are more discerning as a rule, and they’re looking for specifics, and because of the interest rate environment, they’re taking their time cause were not seeing six, seven, eight, 10, 12 offers like we’d seen in the previous two years for sure.”

“We’re starting to see the average days on the market tick up slightly,” says Blake Uhing, an Adjunct Professor of Real Estate Finance at Creighton University. “It’s still at a level that is quite low historically, but given that the supply has been so constrained over the last several years, the market is starting to show some signs of weakening for the first time in the last couple years.”

Right now, interest rates sit around 6-7%, which Uhing and Simmons both say is still low compared to the 40-year average.

But it’s double what the rates were at the height of the pandemic.

“Those changes to the market have created a little bit more inventory, but we’re still short inventory, and we still have buyers that are on the sidelines,” Simmons says about the Omaha area.

Simmons also says as a result of that low inventory, prices aren’t dipping as much as home buyers would like.

“Until we have literally, probably another 1,000 houses in the Omaha market or more, we don’t see an environment where those prices are going to go down because people need to buy houses.”

Uhing says it’s hard to predict what the rest of the year could bring, too, or if the pendulum will swing to more of a buyer’s market anytime soon.

“It’s really hard to say what that runway looks like and how long we continue to see interest rates rise,” he says. “When you look historically, interest rates still aren’t all that high compared to what we’ve seen in the 80s and 90s, so while an optimist would say we are nearing a period in which interest rates would come down, I don’t know that I would hold that same optimistic view.”

But Simmons argues that right now could actually be the better time to buy, despite the rise in interest rates.

“The fact that you can be surgical, you can be discerning, you can find that house and not necessarily have to make that decision in two hours, you can look at the opportunity from the standpoint of maybe buying it a little better.”

He says he’s even starting to see more buyers warm up to the new market, too.

“Even in the last week, even though there’s seasonality for sure January and February for closings are always the weakest of the year, but we’re seeing a bit more activity, particularly in the new construction category, open houses are starting to gleam more participants, people are looking harder and they seem to be more serious, so we think the interest rate environment, it’s gotten just slightly better and it appears that people are settling into what that reality is.”

Simmons adds that if rates drop, re-financing is always an option too for homeowners.

Uhing also adds that he’s concerned about Omaha’s affordable housing market, too.

He says while it’s good to invest in lower-income areas, Omaha needs to find a balance and incentive for builders so generational community members aren’t forced out of the communities they built and have lived and worked in for decades.

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