Warren Buffett is sitting on a goldmine as Omaha home prices set to rise in 2023

It was time for Warren Buffett to take a break.

The Oracle of Omaha finds his Farnam Street abode located in the heart of one of the hottest real estate markets in the country, according to new data compiled by VeroForecast.

The residential real estate forecaster expects home prices in the Big O to jump 6.4% over the next year. Veros expects Nebraska’s largest city to be the third-best performing real estate market in the nation during this period.

But the billionaire might have done even better if he had settled an hour southwest of Lincoln. The University of Nebraska home tops Veros’ list with an estimated 7.2% 12-month appreciation.

Together, Lincoln and Omaha occupy the first and third spots on the list. Richmond, Virginia, which is No. 2 in the rankings, is the only non-Midwest metro in the top five. Indianapolis and Wichita, Kansas are the others.

Nebraska’s leading performance comes down to the impact of higher interest rates.

A typical home in Lincoln costs around $265,000, about 25% less than the national average, according to Zillow. This translates into a housing market that is less sensitive to downturns caused by 30-year rates approaching 7%.

“Part of the reason is that if your mortgage is $100,000, an increase of 3% to 6% isn’t that important from a practical standpoint. It’s about $178 a month,” said Eric Fox, chief economist at Veros Real Estate Solutions. “If the mortgage is $500,000, then that’s $890 more per month.”

Local real estate agents agree with Fox.

Joanne McCoy, an agent at Woods Bros Realty in Lincoln, said homes priced around a quarter of a million dollars were still getting multiple offers. However, she noted that more expensive listings were subject to price reductions and sellers offered points to offset the higher rates.

“Lincoln is a very comfortable community,” McCoy said. “It’s an easy place to live. We have many houses at attractive prices. Interest rate adjustments, while never good for business, aren’t something buyers can’t handle.

But Tasha Moss, an agent with Berkshire Hathaway Home Services Ambassador in Omaha, also points to the region’s handling of the pandemic.

“If you’re talking about the Midwest, you’re talking about a lot of areas that haven’t been touched or shut down for so long,” Moss said. “So we don’t have to bounce back as much.”

As for what draws people to Buffett’s hometown, Moss said it’s the small-town atmosphere.

“Anyone who’s lived here for a while refers to Omaha as a great little town,” Moss said. “You have great restaurants, diversity, and pocket-sized neighborhoods, but you still have that small-town feel that draws people in.”

So what does all of this mean for Buffett?

According to Zillow’s estimate for the current value of his home and the VeroForecast, the investment guru can expect to pocket $80,000 in equity over the next year. Or, in other words, enough to pay for his daily McDonald’s breakfast for another 50 years or so.

About Robert Wright

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