Statistics released by the Grand Island Chamber of Commerce this week shows the average sold price of a house in Grand Island in June was $220,529, compared to $171,016 in June of 2020, which is an increase of nearly $50,000 in a 12-month period.
The median sold price was $202,200, compared to $157,200 a year ago, which is a difference of $45,000.
Chamber President Cindy Johnson said the housing market is a hot topic in Grand Island, as it is in most parts in the nation.
She said that in June 2020, the number of homes listed was 99, compared to 94 this June. But what really stands out is that the number of days on the market was down to 29 days, compared to 66 days a year ago, along with the increase in the prices being paid.
Johnson said there are several factors that affect housing costs and sales.
The total home sales sold dollar volume in June was $18.524 million, compared to $12.484 million in June 2021.
“Chief among those is low interest rates,” Johnson said. “These record-low mortgage rates make the cost of buying a home much cheaper and are allowing more home buyers to enter the housing market, thus increasing buyer demand.”
She said lower interest rates are allowing first-time home buyers to purchase in a different price point than they may have anticipated.
“It also makes it easier for growing families to ‘upsize’ their home,” Johnson said. “Because the labor market and economy have been strong, the dream of owning a home has become a reality for more people.”
Supply and demand
On June 30, 2020, there were 21,128 housing units in Grand Island (including single family, apartments, duplexes, etc.). At the end of last month, Grand Island had 21,335 housing units, based on permits issued (both for construction of new housing units as well as permits for demolition of existing housing units), according to Chad Nabity, city/county regional planning director. The number of housing units increased only 1% during the course of the year, which brings us to supply and demand.
Johnson said supply and demand are major factors affecting the housing market.
“When fewer houses are available for sale, prospective buyers bid up the price; conversely, if there are fewer people looking to buy, housing prices will drop because buyers have less competition,” she said.
“Ask anyone seeking to buy a home in today’s highly competitive market and they will tell you there are bidding wars taking place. Offers over asking price and waiving contingencies are occurring regularly. It is definitely a good time to sell, unless you are also looking to buy.”
As for new construction, Johnson said, disruptions in the supply chain have significantly affected material costs and the time it takes to complete construction, thus greatly reducing the attractiveness of building.
Why is this happening?
“It has also been suggested that ‘we’ are the reason for the inventory shortage and associated high cost of homes,” she said.
What Johnson refers to as “we” is the “baby boomers,” people born between 1946 and 1964. She said baby boomers are enjoying good health and staying in their homes longer — especially in 2020 as people were more homebound than usual and chose not to list homes for sale, and into 2021 — rather than downsizing.
“At the same time, millennials (people born between 1981 to 1997) are moving into their prime home-buying years and those who may have been on the fence about buying a home are getting into the market,” she said. “As their families grow, moving from an apartment to a house (especially after COVID-19) is appealing.”
From talking with real estate agents, builders and would-be home buyers in Grand Island, Johnson said that the “shortage of housing and elevated housing prices are realities in communities across central Nebraska, including smaller communities where many of our labor force resides.”
She said that from a community development perspective, “sufficient housing — in all price points — is necessary for our workforce.”
“It is critical for business growth and recruitment and can mean the difference between a future employee deciding to take a position in Grand Island or locating elsewhere,” Johnson said.
Economy growing
The increase in housing costs comes at a time when Nebraska’s economy continues to grow as Nebraska’s leading economic indicator rose again in June, according to the most recent report from the University of Nebraska-Lincoln.
The leading indicator rose 1.17%, marking the ninth consecutive monthly increase.
“The increase in the indicator confirms that economic growth will be strong in Nebraska through the end of the year,” said economist Eric Thompson, director of the Bureau of Business Research and K.H. Nelson professor of economics at UNL.
Thompson said the six components of the Leading Economic Indicator for Nebraska are business expectations, building permits for single-family homes, airline passenger counts, initial claims for unemployment insurance, the value of the U.S. dollar and manufacturing hours worked. Three of the six components improved during June.
“Business expectations were especially strong, and there was a continued recovery in the airline sector,” he said. “There also was a drop in initial claims for unemployment insurance, which is a sign of strength for the state’s labor market.”
Local construction
Residential construction activity in June for single-family dwellings was seven at $1.746 million, compared to two in June 2020 for a value of $467,699. There was no multi-family dwelling activity in June. So far this year, there have been 105 single-family and multi-family dwellings built at a value of $16.853 million. That compares to the same January to June period last year, with 86 for a value of $12.642 million.
Thompson said manufacturing hours worked and building permits for single-family homes declined in Nebraska during June.
Johnson said communities like Grand Island that are hungry for additional housing must make it easy for developers to choose to build there.
“Some communities have implemented programs whereby lots are made available at a reduced price; others are providing funding for refurbishing tired houses; while others are addressing infrastructure issues (water, sewer, electrical, streets) that contribute to the cost of new construction,” she said.
Johnson said the approach to the housing challenges across the state requires more than a “one size fits all” solution.
“Fortunately, Grand Island has leadership at the public and private levels with the capacity to mitigate the challenges we are facing,” she said.
Other statistics
In June, the unemployment rate for the Grand Island Metropolitan Statistical Area was 2.8%, with 43,877 people in the labor force, 42,648 listed as employed and 1,229 unemployed.
The number of enplanements in June at the Central Nebraska Regional Airport was 4,624 people compared to 2,044 people in June 2020. The total enplanements from January to June was 25,869 compared to 16,675 people or a 55% increase.
