MATT OLBERDING/Lincoln Journal Star | Posted: Monday, May 21, 2007 7:00 pm
Home building has dropped off quite a bit in Lincoln over the past couple of years, but according to one real estate consultant, it’s not enough to get the new home market back on track yet.
Edsel Charles, president of MarketGraphics Research Group, told a group of local homebuilders, lenders and others Tuesday that the nine-county Omaha-Lincoln market his company covers could do with about 350 fewer new homes.
“I know we’ve backed off a little bit,” Charles said, “but we’ve not backed off enough.”
He called Douglas, Sarpy and Lancaster counties “overbuilt,” and said there is about a 5- to 6-year supply of developed lots in the nine-county area that also includes Cass, Saunders, Dodge and Washington counties in Nebraska and Mills and Pottawattamie counties in Iowa.
Charles said Lancaster County as a whole is better off than Douglas or Sarpy counties, but data show overbuilding in southeast-central and west-central parts of the city and county as well as downtown Lincoln.
The only way to pare down that supply, Charles said, is to find more buyers or cut down on building.
“It either has to get there by permits falling or more jobs being created,” he said.
Charles said locally the area is creating about 0.6 to 0.8 new jobs per housing start. That number needs to be 1.1 jobs per start, he said.
But the news is not all bad, Charles told his audience.
He said he sees signs that the local market is moving “in the right direction.”
The number of unsold completed homes has dropped significantly this spring, according to MarketGraphics’ data.
Fred Hoppe, president of the Home Builders Association of Lincoln, said he thinks local builders are heeding Charles’ advice and building fewer speculative homes.
“Shrinking inventory is good for everybody,” he said.
He also agreed with Charles that things are starting to look up in the market.
More building permits were filed in April in both Douglas and Lancaster counties than in any month since the fall of 2005, a possible sign that builders are starting to feel more optimistic.
Charles spoke as part of a presentation by Omaha-based MarketGraphics Midwest, a subsidiary of his company. The presentation at the NET building on UNL’s East Campus, was sponsored by Cornhusker Bank.
Cornhusker Bank bought MarketGraphics’ consulting services to help it evaluate the risk of projects for construction lending, said vice president Perry Haralson.
Everyone knew the market had slowed down, but Haralson said he was “surprised in some areas” by what the MarketGraphics report showed.
Fred Hoke, government affairs director for the Home Builders, called the presentation “awesome” and said he was impressed with the accuracy of the data.
He called the information “critical” and said it will “just help everyone make better decisions” on where, and whether, they should be building homes.
Reach Matt Olberding at 473-2647 or molberding@journalstar.com.