As the Omaha area comes off two record-setting years for home sales and a four-year high in new home construction permits, many real estate experts don't see how that same pace could, or should, keep up in 2014.
Positive growth still is expected in the local housing market, the builders and Realtors said, but in a less robust fashion as homebuyers face hurdles such as higher interest rates and new mortgage restrictions.
The steadier outlook is not a bad thing, said Mike Riedmann of NP Dodge Real Estate, who foresees 2014 as a return to “more of a normal market” after fast-paced recovery years of 2012 and 2013.
“You don't want to see it heat up too quick so we're back at where we were before the bust,” he said.
Figures wrapping up 2013 show it as a milestone year in several ways for the Omaha metro-area market:
» Demand for new single-family construction permits was up 25 percent over the prior year, surpassing 2,600, which is more than any year since 2009, according to statistics kept by the Greater Omaha Area Chamber of Commerce.
» The number of home sale closings reached 12,400, crossing the 12,000 threshold for the first time ever, according to Omaha Area Board of Realtors data.
» A just-released report of housing price appreciation shows that, on average, prices for existing single-family houses in the Omaha area now are at about the same level as they were before the 2008 housing market decline.
In other words, said author and researcher Steven Shultz: “Omaha housing values have recovered from the crash.”
Shultz, a Baright professor of real estate and land use economics at the University of Nebraska at Omaha, looked at housing price appreciation for single-family homes back to 2000.
His “mass appraisal” approach — which excluded newly constructed homes, condos and extremely priced properties — put the average metro-wide home price increase in 2013 compared with 2012 at 4.5 percent. That came on the heels of an average 6.5 percent jump the previous year.
That metro-wide average doesn't reflect the wide variance among Omaha neighborhoods, however. According to the UNO study, price appreciation since 2012 ranged from negative 6 percent to positive 17 percent across 36 ZIP codes.
Shultz predicts that the average home value will continue to climb in 2014 but at a lesser rate: somewhere between 2 percent and 3 percent, a growth rate that he described as healthy.
The expectation for a more stable growth pattern this year in Omaha's housing market echoed throughout builder and Realtor circles.
“The homebuilding industry is probably at the strongest point it has been in the last seven or eight years,” said Marc Stodola, who recently assumed the presidency of the Metropolitan Omaha Builders Association. “We probably won't see the jump we had last year, but everybody is pretty comfortable.”
Stodola's own business has done well despite the downturn. He recalled launching Charleston Homes in 2007, during what he said was probably his industry's worst recession in 30 years. “Everybody thought we were idiots.”
Charleston Homes is among the survivors of what proved to be a thinning-out period for the field of local homebuilders. After a 2005 homebuilding peak that yielded about 5,500 single-family construction permits, demand suffered a six-year slide. Permit applications fluctuated some before heading upward the past two years.
Builders attribute the turnaround in part to renewed consumer confidence in the economy. They said that a lower-than-average inventory of existing for-sale houses also prompted more families to turn to building brand new.
Tim Underwood of MarketGraphics of Nebraska, which monitors housing and construction activity, said Omaha is avoiding a return to “the good old days of irrational exuberance” with a more guarded approach to building houses.
“Most of what is being built is being sold,” he said. “We haven't seen a buildup of new home inventory.”
The number of lots available to build upon has dropped about 22 percent in the past year in Douglas and Sarpy Counties, to 7,797 at the end of 2013. Indeed, Underwood said that level is considered an under-supply, but he noted that developers are moving to increase the amount toward a desirable level.
MarketGraphics data show Gretna finishing with the fastest new home growth in 2013; that city's building permits soared by 168 percent.
On the existing home front, demand for houses has been so solid — and the inventory not up to par — that several real estate companies have resorted to knocking on doors and making cold calls to ask homeowners if they'd consider putting their place up for sale.
P.J. Morgan Real Estate recently worked with an out-of-town buyer who wanted a house in the Westside school district. With little to pick from in the buyer's preferred range, agents approached area residents whose homes were not on the market to gauge their interest in selling.
“We're in a healthier place with the confidence level,” said P.J. Morgan's Susan Clark. “We're on track for creating that nice, healthy market.”
Andy Alloway of Deeb Realty said more of his agents also have stepped up calls to stir seller interest. “It helps get the word out. Even though it's a great time to buy, for sellers it's a great time to sell. Properties are going quick.”
Deeb had a record year in 2013, Alloway said, helped by low interest rates and the release of pent-up demand that in earlier years had economy-leery homebuyers holding back.
Even when interest rates started to rise, sales were boosted as some home seekers wanted to hurry and close on their dream home before costs got higher, said Vince Leisey of Berkshire Hathaway HomeServices Ambassador Real Estate.
Leisey said he doesn't foresee the sales volume of existing homes increasing much this year.
“A lot of that pent-up demand already bought,” he said. “We'll probably see a stable market in 2014.”
Deda Myhre, a CBSHome agent who is president of the Omaha Area Board of Realtors, expects the usual spring burst of activity. But challenges loom, she said, with the low inventory of existing homes, expectations for rising interest rates and new mortgage eligibility rules that took effect this January.
If anything is to propel sales beyond 2013's record-setting year, NP Dodge's Riedmann said, it would be the return of the first-time homebuyer who currently is renting, living with parents or relatives, or too skeptical to buy after seeing peers go underwater on their mortgages.
“That's the one part of the market that really hasn't come back,” said Riedmann.
Dave Vogtman, president and co-owner of the Home Company, is among those who think last year's growth pattern can be sustained at least one more year. He's basing that partly on the 10 home sales he had in January, a cold month when business typically is at a near standstill.
Traffic at model homes has been busy, Vogtman said. Interest from second- and third-time homebuyers for newly constructed homes in the upper-$200,000-to-lower-$300,000 range has been “on fire.”
The Home Company hopes to close as many as 100 home sales this year, double its count two years ago when the company formed. “My real wonderment is what 2015 is going to look like,” Vogtman said. “At that point, it will probably have to level out.”
Celebrity Homes, Omaha's busiest builder in 2013 with more than 500 construction permits, has maintained a quick clip also as it opens new models in new neighborhoods such as Canterberry Crossing South in the Millard area.
Shawn McGuire, broker and sales manager, said Celebrity has expanded its offerings to include larger homes with features for the move-up buyer. The production builder also has refreshed designs for its traditional first-time buyer and has added a new villa design aimed at both baby boomers wanting to “resize” and young buyers wanting few maintenance hassles.
With interest rates still low and buying power pretty strong, McGuire said he is looking for a solid year. “If it just stays on pace with 2013, that would be a good year.”