Housing market a work in progress

By Jeffrey Robb, World Herald News Service

Omaha’s housing market may be showing signs of stability, but two panelists at a housing conference Wednesday indicated that the market isn’t in the clear just yet.
An economist from the Federal Reserve Bank in Kansas City issued a caution that the housing market may yet see an influx of foreclosures.
Along with that, a new wave of unconventional mortgages will be resetting to higher interest rates this year and in 2011, said Kelly Edmiston, senior economist with the Fed’s community affairs department.
And Steve Shultz, a professor of real estate and land use economics at the University of Nebraska at Omaha, presented an analysis indicating a drop in housing prices in the metro area this year.
Compared to other cities, Omaha’s housing market has been praised for its quick recovery.
Nationally, housing prices are starting to point up. The latest numbers from the National Association of Realtors showed that the median sales prices for existing homes in December rose 1.5 percent over last December.
But Shultz presented figures showing that median home values in the Omaha metro area dropped 3.6 percent for the year compared to 2008. Shultz said he wants to look closer at home prices, but he called the result surprising.
“This doesn’t indicate to me that we’re coming out quicker,” he said.
Shultz and Edmiston spoke at a conference sponsored by the Nebraska Investment Finance Authority.
Despite the analysts’ cautions, Edmiston said local sales suggest that stability is returning to the
housing market.
“We do see some momentum in the housing market,” he said.
Edmiston said, however, that a “shadow inventory” of homes still could flood the market.
In Nebraska, 6.4 percent of all mortgages are past due at least 30 days, compared to 9.9 percent nationally, Edmiston said. Programs to modify problem mortgages seem to be simply delaying foreclosures more than preventing them, he said.
Although many subprime mortgages have reset their interest rates, Edmiston said another class of mortgages given in 2005 and 2006 is due to shift to higher rates.
The inventory of homes for sale also is high but has been dropping.
Numbers from November showed that Omaha has 8.3 months of homes on the market based on the current pace of sales, Edmiston said. A more balanced market has five to six months of inventory.
“It’s going to take some time to clear that inventory off the market,” he said.