Trading Up Is Tough In Omaha?
According to a May 22nd article on Realtor.com, Omaha may be one of the top cities in the nation where it’s tough to move from a starter home into a bigger home as your family grows and your needs change.
These families that are trading up, going from their first homes into their “white-picket fence” homes are referred to as repeat buyers in the piece by Realtor.com. The article noted that “the number of repeat home buyers fell from 1.8 million in 2001 to 1 million in 2016” (a statistic from the Urban Institute).
Realtor.com theorized that this drop nationwide could be due to:
- New home construction not catching up to demand, exacerbating the lack of homes for sale;
- Strong competition from investors and foreign buyers who can pay in cash in desirable markets;
- And many buyers not recovering enough equity in their homes since the housing crash to finance a more expensive mortgage.
To look at where it might be hardest to trade up for repeat homebuyers, they looked at the largest U.S. metros and judged based on 7 criteria:
- Affordability of trade-up homes
- Price gap between starter homes and trade-up homes
- Price increase of trade-up homes since 2014
- Reduction of supply of trade-up homes since 2014
- Average days on market
- Percentage of households in that market that have lived in the same home for more than 8 years
Omaha ranked #2 in this study for metro areas where trading up is the hardest. They listed the median price of a starter home as $97,000 and the median price of a trade-up home as $314,200.
I’ve worked in this market for years now, and wanted to share my thoughts as to what's going on in the Omaha market currently:
- Truly, in our area, this tight inventory lies in the first-time homebuyer market (think of homes under $250K).
- In fact, in that trade-up market, new construction is really quite robust in our community. More and more repeat homebuyers are preferring to build new instead of buying an existing larger house.
- We have very healthy buyers in our community, who tend to have built more equity. They also tend to live in their homes longer and build up that equity.
- We are seeing more millennials buying their first-time homes, and paying at or above list values, which is giving the trade-up buyers more available cash to invest in their next homes.
- Overall, Omaha’s unemployment rate is very low, so we don’t, as a community, have a problem economically with people who are unemployed.
The key is for buyers to engage an agent and have them do a market analysis to determine the value of their home. Then let that agent know what your next home looks like in your mind, and let the agent do their legwork. We, as agents, often talk to people who say they are not sure they want to put their home on the market, but if we have someone looking, please give them a call. It’s still a word-of-mouth business.
If you’re looking to get into your first home or are transitioning between homes, give us a call. We’d love to work with you!