House prices on the Nebraska homefront have jumped: The average sale price across the Omaha and Lincoln areas went up more than 11% in the last year and about 25% since 2018.
Looking farther back, over a decade, the Great Plains Regional MLS shows also that the average Omaha-area sale price of new and existing houses rose a whopping 80% — to about $293,000.
Industry leaders say the data reveals an alarming scenario for house-seeking Huskers, one driven largely by high construction costs and fierce competition for a dwindling supply of for-sale houses.
Be they newly constructed or already lived in, the houses that did go on the market in or around Lincoln and Omaha in 2021 were snatched up in less than half the time it took to sell a house two years earlier.
Now multiple efforts are underway to put more housing within the reach of more Nebraskans. Among those is a legislative proposal to create a new Nebraska housing department, which would be dedicated to housing.
Like 20 other states
Legislative Bill 1073 would establish a Housing and Urban Development Department to manage housing programs now scattered among multiple state agencies, including the Department of Economic Development, Department of Human Services and Nebraska Investment Finance Agency.
The bill’s sponsors — Sens. Justin Wayne and Megan Hunt of Omaha, along with Bennington Sen. Wendy DeBoer and Lincoln Sen. Matt Hansen — said Nebraska should follow the lead of at least 20 other states and establish a state housing agency or division.
“Housing has been repeatedly identified as the No. 1 economic development issue facing Nebraska,” said Wayne. “We have nobody that has taken ownership of tackling that issue on a state level. With that, there’s no direct accountability.”
Indeed, he said, homeownership is one of the greatest ways to pass wealth to the next generation. It helps build equity and a sense of financial security and provides families with more of a stake and control in their community.
The group of senators foresees the proposed department focusing on affordability, making both homeownership and rental housing more accessible. That ultimately would help respond to the state’s need to lure more workers.
With the sizable amount of American Rescue Plan Act (ARPA) funds eyed for housing-related programs, the proposed Nebraska HUD department could be the coordinator and clearinghouse.
Gov. Pete Ricketts, for example, has proposed investing $75 million of ARPA funds into state affordable housing programs, most of that for rural areas.
Wayne and Sen. Terrell McKinney want to direct roughly half of a proposed nearly $440 million North Omaha Recovery Plan toward housing.
Hansen, Sen. Tony Vargas and Sen. Matt Williams are among other lawmakers who have proposed funding for housing development.
Justin Brady of Radcliffe & Associates lobbies on behalf of various state real estate entities, including the Nebraska Realtors Association and builders groups in Lincoln and Omaha.
He said his efforts focus on ensuring that ARPA funds are indeed set aside for housing and that they’re divided appropriately to be spent in the four years allowed.
“It’s a tremendous opportunity,” he said. “But when you’re short of labor and short of supplies … is that doable?”
High housing costs have become a growing concern across the state. There’s been a push in some circles for legislation to require private developers to allot a portion of lower-rent dwellings in projects awarded a public subsidy, such as tax-increment financing.
The City of Lincoln has tapped the nonprofit Community Development Resources to coordinate an effort aimed at easing the financial burden of owning a home.
In Omaha, the new Welcome Home coalition of business and real estate professionals is hoping to nudge policymakers into changing zoning and other regulations they contend impede starter-home construction.
Front Porch Investments is another organization devoted to affordable housing, as is the Omaha Missing Middle Campaign.
DeBoer, whose legislative district in the Bennington area has seen a boom of high-priced residential construction, said housing is a statewide issue that warrants a dedicated agency.
She called it “an idea whose time has come.”
Millennials, investors compete
Meanwhile, Andy Alloway of Nebraska Realty, whose agents cover much of the state and parts of Iowa, expects housing costs to continue to rise and sales activity to stay strong in coming months.
“We just have had a lot of people in the market. Real estate is an attractive thing,” said Alloway, past president of the Nebraska Association of Realtors.
Millennials have been competing with out-of-state investors seeking to buy local residential property, he said, all while “continued, unprecedented, ridiculously low interest rates fueled demand.”
Consider conditions reported by the Great Plains MLS for the combined Lincoln and Omaha market:
- The number of home sales was up 2.5% in 2021 compared to the year before and 13% compared to two years ago. Alloway said sales likely would have been higher had there been more homes on the market and available to sell.
- A newly built home in 2021, on average, was on the market 38 days before it sold — compared with 73 days two years earlier. Existing homes stayed on the market 11 days in 2021, compared with 22 days two years earlier.
- In an average month in 2021, there were about half the number of houses to sell than there were two years earlier. “Low inventory is an obvious challenge, a broken record that leads to multiple offer situations on most properties under $250,000 or $300,000,” said Alloway.