Brought to you by – The Zachary-Tennant Team  

The 2023 home buying season is nearly upon us.  Omaha has a track record of weathering the typical housing market storm and avoiding the roller coaster ups and downs that many US markets experience.  A couple key factors will drive the local market in the coming year – interest rates and inventory.  We do anticipate a neutral to slightly positive market in the coming year.  So let’s dive a little deeper.

Interest Rates

Most economists are landing somewhere between mortgage rates trending slightly higher in 2023 to slightly lower, with the current 30 year at 6.5%. We could see 7% again, but also could see a high of 5%. So realistically, the rate environment will depend almost exclusively on two fundamental factors: inflation and recession. While one can happen without the other, we will likely see an intersection between the fed tightening and demand for goods and services waning. Most economists agree that the greatest potential for lower interest rates is into the second half of the year.

Inventory

The greater Omaha metro has seen increased inventory. However, the increases are regarded by some as “dead inventory.” This means that the increase in homes for sale are either overpriced or undesirable for some reason. That said, we do have 1.6 months of inventory currently, which is up from .8 months of inventory at this same time last year.  Three to four months of inventory would be a healthy inventory market. As pending counts continue to fall, we are not seeing increased inventory come on the market at this point in Omaha. There are simply fewer sales to deplete the inventory on hand. Units were down 42% in November compared to 2021. The 1st quarter appears to be stabilizing a bit, but almost all economists are predicting fewer units being sold in 2023 than 2022.

Prices

While some major metropolitan markets seem to have price contraction, we have not seen that yet in Omaha. We will end the year with prices up, on average, across all segments in excess of 12%. This continues the unprecedented three year run which has seen prices increase at a rate of double digits per year. Although interest rates have curbed demand, we still have more buyers than houses available in the Omaha metro. We do expect prices to flatten in the Omaha metro in 2023, but until inventory levels approach equilibrium it is hard to see prices contracting. Many think prices are declining due to all the price reduction misinformation.  The fact is, sellers simply are asking higher prices than the market will hold in certain instances and prices are still up from last year.

Opportunity

This market shift will allow for incredible opportunities. If sellers houses are well appointed and priced fairly, they are better off than ever, as they will continue to bring a premium. It is still a wonderful market to sell in. There are opportunities for buyers to be strategic in their approach. Many homes are sitting on the market because they are priced incorrectly. Given the time of year, etc., many of these sellers will have “seller’s fatigue.”  If they play their cards correctly, a discerning, patient buyer can find an incredible value. There are mortgage products that can bring payments into a more reasonable domain. We are seeing some effective 5/1 ARMS, for example. Buyers must simply adjust their mindset to “date” the interest rate and “marry” the home.  YES, even with interest rates up there is a silver lining for smart buyers.

We Are Here To Help

As always, The Zachary-Tennant Team is here to answer any questions you may have.  We have a tremendous network of local lenders to help you find the right mortgage option.  If you are thinking of making a move or know someone who is, please reach out and let us show you how we can get you in your dream home.

http://zacharytennantteam.com/