Shift in home sales: Now it's a seller's market

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Posted: Friday, February 22, 2013 12:00 am

Rachel Timm's personal life was changing and she had to sell her house. That, she said, was the easy part. When she went to buy a less expensive one, she kept getting outbid or beat to the punch by hungry competitors. She even wrote one couple a letter describing how perfect their Dundee home would be for her to raise her little boy in, as it was close to Timm's folks and she had just recently divorced.

The letter resonated with the sellers, although necessary repairs ultimately proved too high for Timm's budget and she had to bow out. A competing bidder snatched up the house.

Multiple offers and hot competition in the existing home market are becoming more the norm, area real estate agents say, as the inventory in the Omaha area has dropped nearly 15 percent since last year.

“The tides have turned,” said Lisa Ritter, owner of Re/Max Results. “I was calling it a buyer's market the last three to five years. Now I would call it a seller's market. It happened real fast.”

Last February, the number of homes for sale was 4,250, compared with the start of this month's 3,663, according to the Great Plains Multiple Listing Service and the Omaha Area Board of Realtors. The number of houses signed to a contract last month remained the same as the previous January.

Realtors are warning clients not to dawdle if they're in love with a house, as properties are turning over quicker, staying on the market an average of 72 days, compared with 83 at this time last year.

The National Association of Realtors also reported this week that a seller's market is developing in much of the country and home prices continue to rise.

The trade group's chief economist, Lawrence Yun, said that “buyer traffic is continuing to pick up, while seller traffic is holding steady. In fact, buyer traffic is 40 percent above a year ago, so there is plenty of demand but insufficient inventory to improve sales more strongly.”

A look at 25 metro areas by ZipRealty showed that the January inventory of for-sale homes was one-third lower than it was a year ago and 45 percent lower than two years ago. A variety of factors contributed, according to CEO Lanny Baker.

“When you combine all of these factors, you have a recipe for a very hot spring season with a hearty increase in the number of interested buyers, an improvement in financing conditions, steady job growth and a sharp decline in the number of homes available to purchase,” he said.

Record low interest rates in different ways are contributing to the shortage of homes for sale, local Realtors say. On one hand, renters, young families, investors and other home-seekers are financially motivated. On the other hand, falling rates led many to refinance mortgages and now equity might not be at a level worthwhile for some to sell, said Joe Valenti, president of CBSHome Real Estate.

Meanwhile, a new University of Nebraska at Omaha analysis shows that after a multiyear plunge in existing home prices, property values in the Omaha area rose last year on average by 3 percent to 6 percent — another sign, the author said, that demand now is outpacing supply.

(The range in price appreciation is due to the use of three different calculation approaches. Each of them accounted for varying housing characteristics and excluded new homes and condos.)

By any measure, said Steven Shultz of UNO's department of finance, banking law and real estate, last year began a “clear turnaround” in Omaha-area price appreciation, with some neighborhoods faring better than others. He said he was shocked at the “dramatic” shift.

The peak in Omaha-area housing prices came in 2006-07, followed by a decline through 2011. One calculation had the prices dropping from 2007 through 2011 on average by 8 percent and as much as 38 percent in certain neighborhoods, Shultz said.

He predicts that more houses will be placed on the market now that values are rising, likely leading to a slowdown but not a halt in appreciation.

“It may dampen price appreciation. It probably still will be positive, but more in the two or three percentage range.”

For now, David Matney, president of the Omaha Area Board of Realtors, said he's encouraging homeowners with expired listing contracts to put their house up for sale again.

He said that many home-seekers today are frustrated because they go to view a property they saw online only to learn upon arrival that someone beat them to a contract. One out-of-town couple, clients of Matney's, drove six hours to Omaha earlier this week with a list of 10 homes to see. Only half were still available, he said.

“You don't have a long time to mull it over,” said Matney. “If it looks like a good deal, it's not going to be around long.”

Heather Starmer, a vice president at P.J. Morgan Real Estate, said she has seen the swiftest sales occurring in the $150,000 range, or in the first-time homebuyer market where buyers don't have a house to sell first.

With the economy steady and interest rates so low, she said, “People are starting to think, this has got to turn around quickly.”

Vince Leisey, owner of Prudential Ambassador Real Estate, said his agents are seeing multiple offers in most price ranges except real high-end homes. That hasn't happened to that degree, he said, in five or six years.

“The good thing, from a buyer's standpoint, is they can go out there with confidence and say, 'I won't have to worry about it being worth less than what I paid.' There's a reasonably good chance it will at least hold its value.”

Leisey said homeowners must still price right and offer a good-conditioned property to make the sale.

Emily and Brett Hill sold their West Bay Springs home northeast of 192nd and F Streets last week, three days after lowering the price to $300,000.

They first tried to sell in early 2012 for $40,000 more. After about three months with plenty of showings but no serious bites, the couple took it off the market. “It was pretty painful,” Emily said.

With their next home under construction and the couple approaching the birth of their third child, they relisted the house at the lower price, based on advice of their agent, Sara Pohlad of Re/Max Results. Multiple offers came in and the Hills are set to close the deal in a few weeks.

Colleague Megan Owens said that in the era of multiple offers, it is a given that buyers should pre-qualify for a loan before starting to shop.

She advises clients to find ways to stand above competing bidders. That's why Rachel Timm wrote the letter to the Dundee sellers.

“It doesn't always work,” Owens said. “But people love their house, there is emotion attached, and sometimes they feel connected to the buyer.”

Timm, who is an accountant at Theatrical Media Services, launched her house hunt in November. She and her ex-husband had just sold their Bennington home in nine days for $130,000, about the asking price.

“Selling was the easy part,” Timm said.

She has since toured more than 30 houses and put in offers on five. Often, she said, she'd find something online and it would be gone before she had time to visit. In one case, sellers rejected her lower-than-list-price offer, and in two other cases, the house went to higher bidders.

The Dundee bid was accepted, despite a competing and higher offer, after Timm “pulled on the heartstrings of the seller” with the real life story of herself and toddler son, Joshua. But then she was unable to afford repairs revealed in an inspection. Timm said it “broke my heart to walk away,”

This month, she submitted an offer on a “short sale” in Millard — a house being sold for less than what is owed on the mortgage — and believes she won the bid. She's awaiting the bank's response.

Given the ease of buying her first house, which was newly constructed by a production builder, Timm said she was surprised at the ups and downs of her most recent search.

“It was a roller coaster of a ride,” she said.

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