Do you live in Lincoln, Nebraska, and want to enter the real estate market game? If so, you will need to learn about the trends in real estate and the possibility of a Lincoln housing market bubble.
Home prices have increased significantly in Lincoln, and houses sell quickly. As such, the greater demand and steep housing prices may have put real estate property into a Lincoln housing market bubble.
Homeowners in Nebraska would benefit from learning more about the growth of the real estate market in Lincoln, NE, and the predictions for a potential housing market crash in a housing bubble.
Lincoln Real Estate Market Growth
Over the last year, the real estate market in Lincoln has increased by 12.6 percent. Currently, the average asking price of a Lincoln home is $270,000, according to RedFin. The market is very competitive now, as each home gets about four offers.
The most expensive home sales in NE are more than $1.5 million or even higher than $2 million, according to Realtor.com.
Homebuyers are very motivated to buy homes in Lincoln, with most homes selling in about seven days on average. The average price for a square foot of property is currently $150, which is 7.9 percent higher than in 2021. And by July 2022, homes sold in an average of eight days. That is slightly slower than the six days of 2021.
In total, 406 homes got sold in July 2022. That is less than the 459 properties sold last year. The number of homes sold dropped 11.5 percent year over year. Essentially, fewer homebuyers showed interest in Lincoln properties in 2022 compared to 2021.
The seller’s market in Lincoln is very competitive, with a RedFin competition score of 81. Furthermore, 58.9 percent of homes got sold above the listed price. The neighborhood of Lincoln is perfect for families and children with good schools and numerous single-family homes.
Nonetheless, the real estate market nationwide is in an unstable position. The average economist or housing expert believes the economy needs consideration before purchasing properties. For instance, the pandemic, steeply rising gas prices, and inflation all impact the U.S. economy and the housing market as a whole.
Despite rising home values, the Lincoln home sales may begin dropping as fewer homebuyers can afford the rising prices.
Lincoln Real Estate Market – Is This a Bubble?
Currently, predictions show that purchasing a home in Lincoln is an acceptable short-term investment. House flippers, in particular, are likely to see a profit from their investment as long as they sell the property within the next year.
However, the future of the market may end up crashing as the constant price increases are unlikely to continue. Fewer buyers can keep up with the rising costs of Lincoln real estate. The need for affordable housing is likely to lead house prices to drop.
What leads to a housing bubble? First, a housing bubble needs artificially inflated prices. Quickly growing demand and a lack of supply often lead to these artificially inflated costs. Also, low mortgage rates and low-interest rates, along with looser credit standards from the typical lender, lead to skyrocketing home prices.
When interest rates drop, more people begin buying up properties. The greater demand leads to price growth. Then, as more buyers pick up properties, supply declines while demand remains. The real estate market may not build up enough inventory to meet demand. That’s how the housing bubble grows.
Many factors can lead the bubble to burst. The U.S. housing market bubble burst during the great recession and financial crisis from 2007 to 2008. The interest rates began growing, and home prices declined during that time, as many homeowners could not afford their mortgages. The economic crisis led to millions of foreclosures around the country.
The 2022 housing market has many of the same features, and experts are wondering whether the nation, including Lincoln, NE is in the midst of a housing bubble. The mortgage interest rates stayed low for much of the year while the market saw many first-time home buyers, similar to the real estate market before the 2007 financial crisis.
However, experts do not believe that the same bubble burst is coming as in 2007. Currently, lending standards are much stricter than before, while demand remains high and inventory is increasing rather slowly.
The Future Forecasts of the Lincoln Real Estate Market
The real estate market in Lincoln and nationwide is not expected to see quite as many foreclosures as in years past. Stricter loan requirements will likely keep most homebuyers from failing to pay back their mortgage loan.
Mortgage interest rates are expected to increase. Affordability is essential for homebuyers, which means rising interest rates can lead to fewer homebuyers. You won’t find as many buyers able to afford housing with expensive mortgage rates.
Yet, home prices are not expected to decline anytime soon. Nationwide, the median home sale price reached $416,000 in June 2022. That is an increase of 13.4 percent from the prior year.
Currently, the average monthly mortgage price is 75 percent higher than it was in June 2019. Home prices nationwide are expected to level off at around $379,000 by the third quarter of 2022. While home prices aren’t expected to drop significantly, some economists predict that housing inventory will grow.
The Realtor.com forecast expects a 15 percent increase in housing inventory. Essentially, home buyers will have more choices in the coming months.
Experts believe that the real estate market may have hit a housing bubble. That is due to home prices growing a whopping 20.4 percent in the last year while wages grew by only 4.8 percent. Essentially, overvalued housing prices may show a housing bubble.
However, the pandemic led people to work remotely and move away from overpriced homes in New York and California to more affordable houses in Las Vegas, Atlanta, and other cities. Therefore, these professionals could afford the growing prices in cities like Lincoln.
Are you looking to purchase a property in Lincoln right now? If so, realtors suggest creating a budget and sticking with it. Lincoln housing market trends show that mortgage interest rates are increasing and expected to continue rising while home sales are still high.
Home buyers should also slow down when entering the real estate market. Making fast decisions may lead to buyer’s remorse, so take your time.
More real estate investors and house flippers have also entered the housing market in past years. Lincoln house flippers have made a profit after repairing and renovating homes for a year. Home prices have increased year-over-year. Renovations also boost the final cost.
Conclusion
The information here should have provided you with an idea of what to expect from a Lincoln housing market bubble. Home prices will likely remain high for the foreseeable future while mortgage rates have begun increasing. Inventory is also expected to grow. House flippers have also begun investing in the Lincoln real estate market.
Do you want to sell a house fast in Lincoln? If so, you may want to sell to cash home buyers in Bellevue and nearby Nebraska regions. Cash home buyers can purchase a property as quickly as a few weeks since they don’t need a mortgage loan approval or even a home inspection.
You can sell your place in its as-is condition for a fair price. We buy houses Nebraska locals love, so call us today!