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Home building recovery, Progress

Homes rise at the intersection of 77th and 78th streets, in the Amber Hills subdivision in southeast Lincoln, in early February. Despite rising prices and interest rates, home sales have continued to rise this year after a record 2017.

It seems you can throw just about any obstacle in the way of the Lincoln real estate market these days, and it will just get swatted aside.

Soaring prices? No problem. Rising mortgage rates? Not an issue. Lack of homes for sale? Next obstacle, please.

According to data from the Realtors Association of Lincoln, both existing home sales and overall sales hit a record again last year.

There were 4,509 existing homes closed in 2017 through the local Multiple Listing Service, a 3.4 percent increase over 2016. The 691 sales of new homes, while not a record, were up 5.2 percent over 2016 and marked the highest total since 2005.

And the trend does not seem to be slowing down. Though the Realtors Association did not have January or February sales data available last week, Executive Vice President Kyle Fischer said the market is off to "a strong start to 2018."

Anecdotal evidence backs that up.

"This year is starting off as crazy as last year ended up," said Rich Rodenburg, co-owner of Nebraska Home Sales.

Rodenburg said he continues to see homes for sale drawing multiple offers and selling for more than their original asking price.

He said he has started adding escalation clauses in offers, in which buyers bid a certain price but guarantee to match or exceed other written bids up to a maximum price.

"It's just been nuts," he said.

While sales have continued to skyrocket, the number of homes on the market continues to decline.

According to the Realtors Association, there were just over 700 homes on the market at the end of December, nearly 5 percent fewer than at the end of 2016 and less than half the number that were on the market at the end of 2011.

And that number has risen only slightly as the market enters prime buying season. As of March 8, there were 723 homes on the market. The good news is that's up 89 homes over the same time last year.

The nonstop demand and shrinking supply has led to steady price increases. At the end of 2017, the median price of homes sold in the Lincoln area was $173,000, according to the Realtors Association, a 4.2 percent increase over 2016 and a 33 percent increase over 2011.

Rodenburg said there is a definite sweet spot for sales right now, and it's in the lower- to mid-level price range.

"There are $500,000, $600,000, $700,000 houses that are not flying off the shelves," he said. "But anything between about $150,000 and $250,000 is in high demand, and there's low supply."

Fischer said the low number of homes has led to a "very competitive market.

"The long-term solution is growth in the housing market with new home construction," he said.

While home building has picked up, it's been a slow process.

There were 728 building permits issued for single-family homes last year, which was nearly 10 percent higher than in 2016 and was the highest number since 2006. But it's still about 30 percent less than the yearly average in the early 2000s.

And prices for new homes are rising much faster than those for existing homes, thanks to increases in material and labor costs. The median price for a new home in the Lincoln area last year was nearly $285,000, up 8.5 percent over 2016 and a whopping 50 percent since 2011.

Rodenburg, however, said he doesn't see rising prices putting a dent in demand for either existing homes or new ones.

"I just don't see any end to this crush in the near future," he said.

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Reach the writer at 402-473-2647 or molberding@journalstar.com.

On Twitter @LincolnBizBuzz.

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Business editor/reporter

Matt Olberding is a Lincoln native and University of Nebraska-Lincoln graduate who has been covering business for the Journal Star since 2005.

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