The Omaha new home market remains strong in its absorption of inventory. Overall, Douglas County has a 1.6-month supply of new homes and Sarpy County has a 1.5-month supply. A “normal” market usually has a 2.8- to 3.0-month supply. Douglas County has the largest supply of new homes in the state with more homes in the higher price points than Sarpy County. The largest price point of counted new home inventory is in Douglas County in the $425,000 to $625,000 price point.
Developers continue to increase the supply of new lots for the new home industry. We project that between now and the end of 2022 there will be a need for more than 18,000 new lots. The biggest issue remains the ability to develop lots across a wide price range. The industry is dealing with a variety of price increases from land cost and development costs to labor and material and labor cost increases. It is increasingly difficult to develop lots and homes within the lower price points of the market.
Overall, the industry has seen a fairly flat rate of issued building permits over the last four years. We see increased demand mounting for both new and resale homes. The lack of inventory of resale homes on MLS has caused increased pressure on new home builders to accommodate some of the demand. The issue is still the ability to build for the first-time buyers who are entering the market at an increased rate. The lack of labor to build more homes is a limiting issue that does not seem to be easy to solve.
BY TIM UNDERWOOD
PRESIDENT, MARKETGRAPHICS OF NEBRASKA
This article appeared in our quarterly newsletter from June of 2017. The full newsletter is available at http://files.investorsomaha.com/download/IR_newsletter_June_2017.pdf