Let’s talk Real Estate in Omaha!
O.K. the news has been full of negative stories, “now is not a good time to buy a home, sub-prime mortgage crisis, etc”. Let’s talk about the Omaha real estate market. For one, I don’t think it’s fair to flat-out say, “now is not a good time to buy a home”. Every region of the country is different. If it were the same, we could use sales of two stories homes in California to determine the value of homes in Nebraska. If that was the case, my home would be worth triple what it’s actually worth.
Secondly, what’s realistic depreciation in any market? Meaning, how much down side depreciation is there really? Let’s take a starter home in the Omaha valued at $150,000, 3 bedrooms, 2 baths, 2 car garage, walk-out, and a split entry home. Do you really think that home would decline 20% over the next several years? That would put the value at $120,000. I personally don’t think that’s realistic. How about 10% or $135,000? Slight chance, but doubtful. What if that home in Nebraska originally was built and sold for $125,000 6 or 7 years ago? That’s roughly 2-3% appreciation over 6 years. Let’s take the same type of home in California, worth $450,000. Do you think the same home could decline 20% to $360,000? What if that home was built and sold for 225,000 6 or 7 years ago? That’s roughly 10% appreciation. Not knowing the market in California, but areas that have seen higher appreciation over the past several years, have more deflation risk then low appreciation areas.
Finally, Nebraska is a relatively low appreciation market. So would you rather invest in a home with high appreciation and unsteady values or in a Nebraska home where values have seen a slow and steady appreciation? I think the latter.
Some other things to consider, buying a home is definitely a large investment, but it also provides you a place to live, raise a family, and shelter. Also, remember our monthly payment is building equity/savings for you, not a landlord. Why do real estate investors buy property? To have other people pay off their mortgages, tax reasons and for the appreciation in market value. This dip in the market is a great buying opportunity for buyers. Jim Cramer on CNBC talked about “don’t buy a home”, but on his show he always talks about buying stocks that are on sale or on a dip. Stocks that are on sale are under valued stocks that are fundamentally solid. There are a lot of homes on sale today that are great values, don’t miss this buying opportunity. Thanks for taking a few minutes to read my Blog. If you know anyone that would be interested in buying or selling a home in the Omaha metro area, I would appreciate your referral.
Thanks
Steve