The Hot Real Estate Market in Lincoln

I frequently have people ask me, "Is anything at all selling right now?"  My answer so far this year is, "Absolutely!"

A few years ago, we had around 2,500 homes listed in the MLS in Lincoln and the surrounding areas - today, we have fewer than 1,500.  One of the measures of the real estate market in our area is the Absorption Rate.  This measurement is derived from dividing the number of homes in a specific price range by the number sold in the previous 12 months.  In essence, it tells us how long the supply of homes would last, if no new listings appeared.  This doesn't give us an "average time on market", but it does serve as a rough measure of activity.  An absorption rate of more than 6 (as in more than a six month supply in a given price range) means we're in a buyer's market - there are plenty of homes listed, and buyers can take their time and, due to the slow activity, have more leverage in negotiations.

A couple of years ago, the absorption rate was consistently over 6, and sometimes even higher.  Now, in price ranges lower than $350,000, it's below 6, and a number of categories are around 4.  What does this mean in the real world?  It means if you're buying a house, you'd better be prepared to move quickly when you find your dream home.  Recently, I worked with a couple looking for a home in one of the "hot" price ranges - between $175,000 and $200,000.  Five or six times, homes sold before we could get an appointment to view them.  When we found the right home for them, we faced the prospect of facing multiple offers - effectively ending any thoughts of trying to buy for significantly less than the list price.

I'm seeing the same thing play out over and over - last night I was showing homes in another price range, and out of six homes on the list, one had a "Sold" sign when we pulled up in front.  I've also seen some of my listings sell very quickly, including two that sold on the first day on the market!  While prices are still down slightly from their highs of a few years ago, we are now definitely in a Seller's Market.  That's great news if you want to see the real estate market recover - if homes sell quickly (and especially if we start to see multiple offers), sellers will begin to receive prices closer to their asking price, and values will begin to creep up.  This should also help new construction, since new homes will be needed to fill demand.

Our economy is still weak.  As it improves, we'll start to see real estate take off.  What I'm seeing now is an indication that we're working our way out of the hole.