Housing is cooling off in Omaha, too. Some ads are labeled “Priced below Market” and “Reduced”.
One of the two major builders in Omaha was so far in debt, he committed suicide in February. He managed to get 2 banks to give him loans on the same houses. Neither bank went through title processes, instead trusting him.
The new home builders are offering incentives: free 1st year insurance, upgrades.
Oversupply of downtown condo units. In January, the supply of homes was 7 months on the low end, 12 months onf the high end. Yikes.
Financing is crazy like here: a mortgage company on almost every corner. 125% financing. 0% down.
Sales are down 2% this year, and that is a big deal in Omaha. But the realtors are putting a happy spin on it in the newspapers, so there is no real concern.
My friend witnessed a transaction with a non-English speaking buyer, with her barely dressed 6 kids in tow. The family didn’t have a car, and was dropped off by the buyer’s mother. The title officer spoke 6 words of spanish, and explained to her in those 6 words all she needed to know to sign the docs. The woman signed the papers for her ARM. My friend was so upset, she reported the mortgage company, and her office is no longer dealing with them.
I saw newspaper ads for 100% financing, so I couldn’t explain a story my friend told me about a borrower who sneaked to 2 banks to get an 80/20 loan. The parties to the deal kept saying that Bank A was not supposed to find out about Bank B and vice versa.
I came across an Omaha blog. He writes “Rumors have begun to swirl that another Omaha homebuilder – East Homes – is on the verge of chapter 11.”
For those who could care less about Omaha, this is why it matters. Omaha represents the conservative, productive, diversified Midwest. It’s home to ConAgra, Berkshire Hathaway, Union Pacific, First Data, headquarters of 30 insurance companies including Mutual of Omaha, TD Ameritrade, Gallup Organization, and many telemarketing companies. It has 30 manufacturing plants of Fortune 500 companies. Offutt Air Force Base is one of the major employers. Median wages are below average, as are housing prices.
Yet, it has something in common with San Diego: in Omaha, 40% of jobs are service based, and construction was a major source of new jobs.
Does anyone want to comment on Omaha, or share the housing stories of their home towns?
Well it just goes to show you how pervasive this lending/RE/speculative trend is. It’s one thing to happen in California, where everything has a bit of a ‘gold rush’ mentality, but I agree, it’s a huge problem if it’s happening in Omaha.
Someone recently posted a link to a real estate forum that advocated investing in real estate, and I was really blown away by how ignorant the some of the posts were. In one of them, the participants were asking one guy how he chose his investments. He had no answer but to mention his broker, who did all his homework for him! And, then the broker chimed in too explaining how to contact her. Unbelievable!
My sense is that these real estate ‘investors’ will just keep chasing the next area for ‘opportunity’ until one of the bubble areas shows massive signs of bursting, and then they’ll pull back. But I really think the hemorrhaging won’t start showing here in So Cal for another few months, and by then I’m sure a few more places across the country will have been subject to investment speculation and the whole cycle will follow.
My Omaha friend looked at a Toll Bros home in Phoenix last December for $800K. In February 06, that same home was $827K. Is the Phoenix market still going up? He also told me to buy oceanfront condos in Florida. The housing bubble investment fever has hit Omaha too.
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