Low Inventory, High Prices

Lincoln single family inventory and price per square foot 2017-2021

ZERO houses for sale in Lincoln!

December 2021 starts off with never-before-seen zero houses on the market.

As we’ve been writing about since early in the pandemic, demand for single-family housing in Lincoln and the surrounding communities has dramatically reduced inventory levels. Houses are selling much faster than usual. That leaves very little available for buyers, who resort to paying more for less house. Single-family houses in Lincoln are selling for an average of $446 per square foot, that’s up 36% from 2017, and 17% from 2020. 

It’s easy to see in the white graph how the changes in demand preferences triggered by the pandemic erased the seasonality we’d usually see. You can see the pink diamonds on the white graph that show the increase in sale price per square foot, up to $446 in 2021. We considered that data as of November 24, considering all year-to-date sales, so we are comparing 2021 to prior years consistently. That dramatic price growth is because of the surge in demand for single-family housing in Lincoln, leaving so few houses available for sale each week.

Just how low has inventory been? The second graph below shows listings on the market every week year over year, with a pretty recognizable pattern: the year starts with a dozen or so houses on the market, increases through the month of June, and levels off. 2017, 2018, and 2019 are shown in blue, turquoise, and green, with 2020 in yellow and 2021 in red. You can see how in early spring 2020, inventory peaked and has been remarkably low since then. We reached an unprecedented nadir in November 2021: two… then one… Now ZERO.

Year over year inventory 2017-2021 Lincoln

Keeping an Eye on Demand

There are two salient points for sellers considering listing in this climate. One is that we have seen an erosion of the seasonality that would typically influence strategic timing. Whereas we typically suggest listing by early March, we no longer see value in waiting. However, because this market condition is demand-driven — see below — we need to monitor buyer activity closely.

We gauge demand by working with buyers across the market and judging the activity that we experience at our listings. We sensed that as summer 2021 wound on, demand was thinning. Some of that demand will rekindle if we see increased inventory in early 2022. But, quite a few buyers who lost out left the market for good, buying elsewhere or committing to longer rentals. Even though many houses continued to sell for substantially over asking in multiple-offer scenarios, we were seeing fewer buyers and fewer bids by the fourth quarter.

Lastly, it’s worth noting that supply has dropped, but not by enough to explain the dramatically changed market. It was down about 10% in 2021 compared with the average over the prior 4 years. However, had those 6 or so houses been listed, it wouldn’t have increased inventory much if at all. As of this update, on December 5, 2021, there are ZERO houses for sale in Lincoln. That, my friends, is truly unprecedented.

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