Rising interest rates have slowed the Omaha housing market | Local News
Rising long-term mortgage rates are causing the once hot Omaha housing market to cool.
At the start of the year, buyers had difficulty finding homes for sale. Homes that came on the market were snatched up quickly — and usually for tens of thousands of dollars above the asking price.
But in recent months, as interest rates have steadily risen, local realtors have seen things slow, said Megan Bengtson, chairwoman of the Omaha Area Board of Realtors.
Rising interest rates may have pushed some potential buyers out of the game. The current rate for a 30-year loan is 5.6%, Bengtson said.
On Thursday, mortgage buyer Freddie Mac said the 30-year rate had fallen from 5.51% to 5.54% in a week. At the end of February, the interest rate on a 30-year fixed rate mortgage was 3.89%.
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A year ago, the rate was 2.78%.
The average rate on 15-year fixed-rate mortgages, popular among those refinancing their homes, fell from 4.67% to 4.75% in one week. Last year at the same time, the rate was 2.12%.
The Mortgage Bankers Association said last week mortgage applications were down 19% from a year ago and refinances were down 80% to a 22-year low.
While housing inventory is still low locally, the number of homes listed is higher than it was earlier this year, said Bengtson, who is an agent with PJ Morgan Real Estate. On Friday, 776 homes in all price ranges were for sale in Douglas and Sarpy counties. At the end of February, that number was 325.
Bengtson said she’s seen several things change over the past few months, including homes that have stayed on the market a bit longer. A house could stay for several days instead of selling in a few hours, as happened during the winter.
But the biggest change was that sellers received fewer offers. In January and February, sellers could average five offers on a home. A house can now receive a maximum of three offers.
Bengtson said homes no longer cost much more than list price, either.
The impact of cash buyers has also started to fade. Earlier in the year, cash buyers were buying available homes because paying cash speeds up the process and means fewer hurdles to jump through. Some cash buyers may also have been investors looking to rent or resell the property.
Buyers were also willing to forgo home inspections in order to curry favor with sellers. Home inspections have started to make a comeback.
Home prices aren’t necessarily going down, Bengtson said, but they’re not going up as quickly as before.
While the rates are higher and grew rapidly, Bengtson said the change “is by no means a bad thing.” Some buyers are able to be more selective, without having to jump on every home that comes on the market.
This report includes material from The Associated Press.