Basic economics works like this: low supply coupled with high demand leads to increased prices.
That's exactly what's playing out in Lincoln, where a decades-low inventory of homes for sale is meeting record demand. That's leading prices to skyrocket.
According to the Realtors Association of Lincoln, the median sales price in the first quarter was $166,900. That's up more than 10 percent from the same time last year and the highest local median price ever recorded.
Local real estate officials lay the blame -- or credit, depending on whether you are a buyer or seller -- squarely on the lack of homes for sale.
There were 751 homes listed for sale in the local Multiple Listing Service at the end of March, 121 fewer than last year and 50 percent less than in 2012. It's the lowest number of homes for sale at this point in the year since at least the early 1990s.
The lack of homes for sale is not dampening sales, however.
There were 888 home sales in the first quarter, a 9 percent increase from the first quarter of 2015.
"It is still very much a seller’s market in part due to the limited inventory and current high demand for homes," said Realtors Association of Lincoln Executive Vice President Brice Middleton. "The lack of available homes for sale is one of many factors that will continue driving prices up in the near term."
Ryan Pierce, co-owner and managing broker of SimpliCity Real Estate, put it more bluntly.
"It's tough. It's difficult for buyers," Pierce said.
In the $100,000 to $300,000 price range, "It just seems like they're flying off the shelves," he said.
Pierce said that buyers pretty much have to be ready to put an offer on a house the day it comes on the market, and even then, they still might miss out.
"We're seeing a lot of multiple offers," he said.
Leighun Brabec, an agent with Home Real Estate, agreed.
Brabec said she had one client who put offers on four houses before finally getting a house on the fifth try. On one of the homes they lost out on, there were eight other offers, several of which were over the asking price, she said.
Pierce and Brabec said there are a number of factors keeping the inventory low and demand for homes high.
Some people who already own a home are reluctant to put it on the market because they are worried they might not be able to find another home to buy, Pierce said.
Brabec said she thinks there are more buyers moving into the market, with millennials looking to buy their first homes and people who might have been forced to rent or move in with parents during the last housing downturn coming back into the market.
Another factor is continued low interest rates -- mortgage rates remain near historical lows below 4 percent.
The demand for homes has spilled over into the new construction market, but only slightly.
There were three more new homes sold in the first three months of the year compared with the same period in 2015 and there were 11 more building permits for single-family homes.
Though the lack of inventory hasn't slowed down sales, that could be changing. At the end of March, there were 496 homes under contract. That was down about 8 percent from the same time last year.
Brabec, however, said that is "not at all" due to a decrease in buyer interest.
"You just have buyers who aren't finding anything," she said.
Reach the writer at 402-473-2647 or email@example.com.
On Twitter @LincolnBizBuzz.