Buying a Home
Tight Housing Supply Makes Lincoln a Major Seller’s Market
Rather than being affected by short-term fluctuations in the economy, housing markets are largely shaped by longer-term demographic trends. Over the next decade, two generations will dominate the housing market—the millennials (born 1981–2000) and the baby boomers (born 1946–1964). Statistics show that millennials are renting more than ever before, opting for one monthly payment rather than mortgage interest, property taxes, utilities, maintenance expenses, and any other cost associated with homeownership. Younger people today have greater student loan debt than previous generations. Buying a home may seem like something that is just too far out of the budget for most, but the thing about renting is you don’t get any of your money back when you move. Long-time homeowners build equity that can be useful later in life. A paid-off house is a valuable asset that can be tapped into for college, to start a business, or retirement, to name a few.
As onslaughts of people continue to discover and move to Lincoln and interest rates remain super attractive, the housing market is moving at top speed, with houses selling as quickly as you can say “For Sale.” If you’re looking to buy a home, there are more features to consider than ever before, including smart technologies that make life easier for homeowners. The housing inventory might be a little tight, but new construction is continuing daily, and Lincoln boasts some top-tier REALTORS® who will work hard to help you find a home that works for you. If it doesn’t have all the bells and whistles you want, don’t worry. You can add those to your new property later.
We talked to some reputable REALTORS® and a first-rate technology company in Lincoln to see what the housing market looks like this summer, what people who are looking to buy a home in this market should expect, and what they can do to increase their chances of grabbing that dream find. The bottom line is that the Lincoln housing market remains a seller’s market: There are plenty of buyers out there looking but far fewer sellers interested in putting their homes on the market.
“Home-buying and selling activity in Lincoln remains high, as the number of home buyers continues to increase and home ownership becomes more attractive with interest rates remaining consistently below 3%,” said Lincoln First Realty Owner/Broker Brad Hulse. “The other side of the coin, however, is that the number of homeowners putting their houses on the market has remained stagnant at a time of year when we generally see an increase in people looking to sell. COVID has been a big driver in this because people are nervous about its effect on the economy and nervous about strangers who may or may not be sick coming into their homes.”
Lincoln First Realty is a locally owned and managed company that has not built its success on flash but on hard-working, professional REALTORS® who are constantly adapting to the market and to their clients’ needs. Brad said the housing supply in the Lincoln and Lancaster County area has been low for at least three years, but it has gotten worse as the number of buyers increases steadily but the number of sellers remains stagnant.
“It is a wonderful time to be selling your home,” Brad said, “but that doesn’t mean it will be completely stress-free. You will have a lot of people interested in your home and willing to go great lengths to be able to have a chance to buy it, which can be stressful on the seller, as well. Homebuyers need to understand that this is not a market where you will be able to take your time in deciding on a home to buy. If you find one that fits your needs, act quickly because chances are there are several others like you feeling the same way.”
Buyers generally are not looking for fixer-uppers, but they’re also finding that they can’t be too picky in this tight market.
“Home buyers are really looking for move-in ready homes,” Brad said. “The days of dealing with a paint color they don’t like or an ill-maintained backyard in need of some sprucing up are fading fast. It is very hard to have much of a preference, even on layouts or features because of the supply shortage, so if there is a home available in an area where they are looking and it’s within their budget, your average prospective home buyer will jump on it!”
An Equity Grab
Ben Bleicher with Professional Realty Group (PRG) of Woods Bros Realty said COVID really has had very little effect on their business, because any effect was countered by interest rates being in the high 2% to low 3% range. Some people might have put their search on hold to protect their health, but others are rushing to take advantage of the super-low rates. In fact, PRG is on track to surpass last year’s sales of $37 million. Nonetheless, the housing inventory definitely is a problem.
“It’s very low, way too low,” Ben said. “It was at 480 last week, whereas 10 years ago at this same time, it was over 2,000, so it’s about 20-30% of what we would see in a healthy market of active listings. At the same time, there are triple the number of realtors there were six years ago, so that adds to the competition for listings.”
What all the current factors do is create a seller’s market. Sellers are getting at least full price, and many of them are making more than their house is really worth. It’s an equity grab, for sure.
“It’s a good prospect,” Ben said. “Somebody who bought a $150,000 maybe five years ago at 4+% interest rates might, in some cases, be able to sell now and buy a $200,000-$250,000 house today and apply the equity they earned so quickly to a bigger down payment, and their payments don’t even change. There’s a lot to the equation, but we have seen a few cases like this already.”
PRG prides itself on being a little more aggressive and more thorough than many of their competitors. That has translated to clients getting into houses without being forced into price wars where they have to submit multiple offers on multiple properties and just take what they can.
“It’s reckless to be submitting so many offers,” Ben said. “This is chess, not checkers. There are ways to make your offer stand out. We’re analytical. We look at the value, and if there are 10 offers on the property, don’t just focus on the number. We talk to listing agents to find out what motivates the seller, what motivates them—a quick or extended closing date, for example. Find out what they really want and what makes them happy, then make sure your offer includes those things. That allows us to write good offers with favorable terms that get deals done.”
As tight as the market is, Ben says people buying a home in Lincoln right now don’t have the luxury of waiting for the dream house that has the open concept they want, for example, or the double sinks in the bathroom. Those simply are not part of the equation right now, but there are some things that buyers won’t budge on.
“Honestly, what drives people most in their home searches is looking for the right schools for their kids, and a location that fits their lifestyle,” Ben said. “They base their search on where they want to live and their needs outside of the house. They want to live in an area that is close to things that are their creature comforts, one that has proximity to their social and family activities. Go with a realtor who knows the market and knows how to competitively represent you and your interests. You need someone analytical and proactive in order to compete in the current market, and we are that.”
Needs Versus Wants
HOME Real Estate Associate Broker Pat Ohmberger said anything on the market for less than $200,000 and in good condition will sell quickly, with sellers consistently receiving multiple offers as soon as their home goes on the market. It makes it difficult to find what buyers want sometimes, so the search can sometimes become a search for what they need and can be adjusted to meet their wants later.
“The current housing inventory for Lincoln remains low,” Pat said. “In the last 24 months, supply just has not been able to keep up with the demand. People move for different reasons at different stages in their lives, and for whatever reason, fewer people are looking to give up their homes right now.”
Pat has more than 25 years of real-estate experience and believes in making sure that her clients know what to expect in their search for a new home. Buyers need to be educated because their expectations are based on their consultation with their REALTOR®. That’s why Pat strives to provide exceptional services in all areas of real estate and stays current on the most up-to-date services and applications that are available so that her listings never go stale.
“Home buyers today are looking for flexibility, especially as they work from home,” Pat said. “They want home office space, more privacy, outdoor spaces, and surfaces that require low maintenance, such as wood floors, as well as new windows and as many updates as possible.”
The bottom line remains the same: It’s a seller’s market, which means if you’re in the buying seat, you’re likely to pay more than you would in a more balanced market.
“With all the pent-up demand for homeownership,” Pat said, “home prices have continued to increase, allowing sellers to get top dollar in the Lincoln market. Sellers, this is prime time for you!”
Value of an Inspection
In the state of Nebraska, you are not required to get a home inspection done when you are buying or selling a home—but it can be a big money-saving decision. You invest a couple hundred dollars today for the knowledge of the true condition of the home you want to purchase. Sometimes, it can make you change your mind, and other times, it simply provides peace of mind.
“A home inspection is a snapshot in time, a comprehensive look at the various systems of a house,” said Randy King, Owner and Sole Proprietor of King’s Home Inspections. “That includes the plumbing, electrical, roof, heating and air-conditioning systems, furnace, water heater, foundation, landscaping, and more. We assess where you’re at in the life of these systems and their quality. For example, a good life for a water heater is 10 years, so if the water heater in the house you’re looking at is 12 years old, then it’s living on borrowed time and you have to plan for that expenditure coming up quickly.”
The state of the home is important to know when you’re looking at buying it because you need to know how much you’ll need to budget for upkeep and remodeling and at about what time. The results of the inspection can become a crucial tool that your realtor can use to negotiate a better price for the house. Or it might suggest costly enough deficiencies that you decide to walk away and look for a better house. Another option for getting a home inspection is available to sellers, too.
“An avenue that some people take is to get an inspection when they’re getting ready to sell their home,” Randy said. “It’s called a pre-listing inspection and it allows me to go through and inspect everything and produce a list of things they should repair or update before they list the house because it will come up on a buyer’s inspection and you can avoid it becoming an issue. Plus, the buyer appreciates it when a seller takes care of it on their own and acknowledges and answers to eat deficiency listed.”
When you decide to hire an inspector, Randy warns that you should be sure to get information about their background, read reviews as to the company’s work, and make sure that they are certified by one of three agencies that set standards by which certified inspectors must abide. Those include the International Association of Home Inspectors, which is the certification that Randy holds, as well as the American Society of Home Inspectors, and the National Association of Certified Home Inspectors. The standards—for ethics, business practices, and technical abilities—are similar among the three, so just make sure your inspector is certified with one of them.
Finally, Randy is proud to be a local provider versus a big chain, so all of the money exchanged benefits the local economy.
“I’m the president and the janitor,” he said. “The buck stops with me, and for more than 20 years, I have offered a money-back guarantee on all of the work I do. I’ve been in business for 22 years and do about 400 inspections a year, and maybe get one refund request, at the most.”
Once you find a home you are interested in purchasing, getting an appraisal is recommended to determine the value of the property. In fact, most lenders require an appraisal before finalizing a home loan. Tom Kubert, MAI, CCIM of Kubert Appraisal Group says setting an appraisal on a home before making an offer on it can put you in a better negotiating position, because you know the true market value of the home.
“Kubert brings nearly 30 years of appraisal experience to every assignment,” Tom said. “In addition to general real-estate appraisal services, we also provide specialized appraisal services, including appraisal review services, property tax assessment issues, eminent domain valuations, conservation easements, insurance values, estate planning, real-estate market and feasibility analysis, and more. The appraisals we do for residential properties include subdivisions, single-family homes, multi-family house, and apartments of anywhere from two to more than 200 units.”
In performing the appraisal, Kubert Appraisal Group will complete a written estimate of the property’s market value by considering sales prices of other properties in the area and several factors regarding the specific home, including its overall condition, square footage, location, age, number of bedrooms and bathrooms, and architectural features. Tom says that while the appraisal industry did slow due to the pandemic, he also sees plenty of clients moving forward with projects, and Kubert Appraisal Group continues to work toward the success of their clients in this new and unique work environment.
Given the difficulties in finding everything you want in a home in this market, you can always add the bells and whistles after you find the house that meets your needs. Simply Smart Homes can help you deck things out to make your life easier and your house smarter. Owner Addison Collingsworth said they can equip your home with automated systems, including smart thermostats; sprinkler-system controls; smart outlets, window, door, and flood sensors; and more. Together, they’ll increase the energy efficiency of your home—plus you’ll have a blast carrying out the project with the Simply Smart Homes team!
“We often help people add in functionality that they were originally looking for when they started shopping for a home but weren’t able to find,” Addison said. “Adding products like a robust security system, new speakers and TVs for entertainment areas, improved lighting in specific rooms, and smart thermostats are all great ways to give new homes a modern touch, no matter the age of the home.”
Some of the biggest trends in home technology are self-monitored security systems that make it easier than ever to keep your space safe while keeping costs reasonable by foregoing expensive monthly monitoring and subscription fees. With more smart cameras, sensors, and security devices than ever, Addison said these setups can really help homeowners feel secure and in control of their property. Choosing a reputable company like Simply Smart Homes to achieve your technology projects efficiently is crucial, too.
“We focus on creating easy-to-use complete smart-home systems tailored specifically to each homeowner’s needs, while foregoing long-term contracts, leases, and rental fees,” Addison said. “We want our customers to have complete ownership of the devices within their homes and we design our systems for daily use with practical function in mind.”
So, despite the difficulty in finding a home that’s perfectly in-tune with your desires, Addison suggests scooping up what you need and adding on what you want.
“Don’t let the lack of a few modern features stop you from getting your dream home,” he said. “It’s easier than ever to implement smart features from security to networking/Wi-Fi, entertainment, and utility improvements, but the one thing you can’t add later is a great location and space that fits your needs.”
Insuring Your New Home
So, you’ve found a new home and made probably the biggest investment of your life. Now it’s time to make sure that you get it properly insured with a solid homeowners’ insurance plan. The first step is to find a reputable agent that will explain the important coverages you’ll have to consider when selecting a policy. The cost of homeowners’ insurance has increased dramatically over the last 20 years, which changed the landscape for insuring homes. Many companies have added exclusions that were not a part of former homeowners’ policies, and some crucial endorsements are not always explained well.
“There are many important coverages to consider when looking into buying new homeowners’ insurance,” said Insurance Agent Matt Moorhead of the local Shelter Insurance. “One of the most important things to ask is how the replacement cost for the roof works. This is the most common claim we pay on homeowners’ insurance. Most companies offer replacement cost on the roof, but what they don’t tell you is that sometimes full replacement cost depends on the age of your roof. Some companies will only give you replacement cost on your roof if it is less than 15 years old. Some also will make you prove when you had the last roof put on to get you replacement coverage, which can be a big challenge for people who were not owners of the house when the last roof was replaced.”
Other things to check out are separate deductibles for wind and hail, as well as a drainage-system endorsement for back up of sewer, sump pump, or drains. While Matt said these generally are not part of a standard homeowners’ policy but can almost always be added for an additional premium. Finally, he suggests going with higher deductibles on your policy.
“With the increased cost of homeowners insurance, one way to get your premium down is to go with a higher deductible. Homeowners’ insurance is a policy to protect your home’s value. Smaller claims will just drive up the cost of your insurance. If you carry a deductible of $2,500 or more, it will decrease your cost and you can avoid turning in small claims that can count against your premium for up to five years.”
Matt’s advice to people looking to buy a new home is to ask a lot of questions: “Ask about everything. Is the property in a flood plain? Has there ever been water damage in the basement? How old is the sump pump, how often does it run, and does it have a backup power source? If you see a crack in the floor, water stains on the carpet, a roof that doesn’t all look the same color, know that these can be signs of issues the home has had in the past. Last but definitely not least, be sure the roof is insurable and doesn’t have previous damage. If it isn’t in good condition, you might have to reroof the house yourself before you can qualify for a replacement-cost policy.”
If you’re looking to buy a home in Lincoln, nobody is making promises that you’ll find your dream home, given the seller’s market and the low inventory of available homes. However, that doesn’t mean you can’t piece it all together. Lincoln boasts some talented realtors and home technology companies that you can trust to get you into a home you’ll love.