Priced Out In Lincoln: How The Capital City Became The State’s Hardest Place To Afford A Home

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LINCOLN — $1,200 a month gets Seth Harlan a one-bed, one-bath. Another $200 covers utilities. The 26-year-old spends nearly half his monthly income on his apartment. 

A lead line cook at Firethorn Golf Club, Harlan wanted to live close by. That meant finding an apartment on the eastern edge of Lincoln. 

“It's almost impossible to live on this side of town if you're in my monetary bracket,” he said.

He keeps the mileage low on his 2006 Kia Sportage, which has seen better days; a tree shattered the back windshield. It would take $400 to replace it, money he’s loath to spend. He lives off food he makes at work to avoid paying for groceries. 

“One car repair, one medical bill, could put me back, and I may not be able to make rent that month,” Harlan said. 

Harlan, a Lincoln native, is grappling with a disconcerting reality faced by a growing number of young adults here. The longer he stays in Nebraska’s capital city, and the further he progresses in his career, the more unaffordable Lincoln becomes.

He’d like to buy a home here, settle down and start a family. It doesn’t feel like an achievable goal.

And he’s far from alone. 

A Flatwater Free Press analysis shows:

The sale price of individual homes has, on average, at least doubled in every ZIP code in the Lincoln metro area over the past 20 years, according to the House Price Index, a federal measure tracking price changes of single-family homes.

The county’s median household income, adjusted for 2024 inflation, has slightly declined since 2000. Meanwhile, the median house value rose by about 43%. 

Lancaster’s price-to-income ratio — a common metric to measure affordability — is now the highest in the state. 

When Harlan was 19, working as a line cook at Olive Garden for lower wages and paying $945 split between three roommates, it felt like he had a leg up. Saving money didn’t feel so impossible. 

“It's sad that now I'm 26, I'm looking at how I was living at 19, that was probably the best I've been, most comfortable I've been able to live in my life,” he said. 

Lancaster County is still an affordable place to live compared to the country at large. But for longtime residents, the increase in home prices paired with stagnant wages means it’s getting harder to break into the market as a first-time homebuyer. 

Supply shortages, increasing rents and a drastically altered post-COVID housing market all contribute to the bind would-be homeowners find themselves in.

And while Lincoln is pushing to increase its affordable housing stock, much of that work centers on rentals. New homes sell at prices unattainable for many first-time homebuyers, forcing a rat race for existing homes, which sell cheaper but fast. 

Residents who were able to buy a home when interest rates were lower now find themselves stuck in “mortgage handcuffs,” unwilling or unable to stomach moving into a new home with a doubled or tripled interest rate. 

“If I were able to get what I want, I would just want a living room, a bedroom, a basement and a kitchen,” Harlan said. “I don't need a backyard. I just want a space that's on my own property, and that to me is actually a fantasy.”

More Apartments, Fewer Homes

Harlan’s father, who bought his first house at 21, has a hard time understanding why his son is struggling, Harlan said. 

But Lincoln’s residential development landscape is markedly different now than even 20 years ago. 

In 2005, the city approved 958 detached single-family home permits. But construction, already on the decline, took a hit after the 2008 financial crisis. Last year, the city approved 530 detached single-family home permits, a 44% decrease compared to 2005. 

Meanwhile, apartment permits, after an initial dip, began to climb post-crisis. Last year, the city issued 1,181 multifamily permits, compared to 192 in 2005. Permits for townhomes and duplexes, pitched as a cheaper homeownership option, lagged behind both. 

Some of the pressure on new homebuyers can be traced back to that single-family supply issue, said Kyle Fischer, CEO of the Realtors Association of Lincoln.

Housing is meant to be a continuum, he said, starting with renters who become first-time homebuyers, then homeowners who make a move-up purchase after they have gained equity.

“If you have any sort of barrier or shortage in any one of those (areas), it causes a bottleneck,” he said. “People can't move on and move through.”

In October 2020, Mayor Leirion Gaylor Baird announced a goal to build, subsidize or rehab 5,000 affordable housing units by 2030. Lincoln is 64% of the way there, according to the city’s tracker. 

The majority of those units are rentals. 

Lincoln’s 2021 housing plan also described the need to increase affordable housing for residents earning less than 80% of the area median income. 

The city has made some strides, said Dan Marvin, Lincoln’s urban development director, such as incentivizing affordable housing construction through tax increment financing policy. Marvin pointed to The Promenade at Pioneers project as an example of a mixed-income, owner-occupied development supported by TIF. That development offered five subsidized units and seven at market rate.

But building apartments at scale is significantly easier than building houses. 

“If you’re going to do townhomes … 90 units is just an unheard-of scale,” Marvin said. “So, if the goal is to be able to try to find suitable housing for people … the way to address it with scale is going to be apartments,” Marvin said. 

Nearly half of Lincoln renters spend more than 30% of their income on housing costs, data shows. And the more money that goes toward rent and utilities the less can be saved toward a down payment. 

Many of the new apartments Harlan has seen crop up don’t seem built for lower-wage workers like him. It ends up feeling like a choice between spending more to find a place with amenities or saving your money in a rundown apartment, shoveling quarters into a shared washer and dryer. He would consider moving back in with people he knows to keep costs down, but most of his friends are either living with partners, making enough to live on their own or still living with their parents. 

“I was told that if I work hard, and then if I do something that I love fervently, if I work over my 40 (hours a week), then I'll be able to save and get the things that I want, and Lincoln's making that less and less possible,” Harlan said. 

Lincoln isn’t experiencing a wholesale housing shortage, said Scott Schneider, president-elect of the Home Builders Association of Lincoln. But it is experiencing a shortage of affordable housing. 

“It's going to delay household formation,” Schneider said. “If you're a young person and you want to get married, and you want to have a family, and you want to have kids … You want the white picket fence experience, right? That's what you grow up with, and it delays that.”

Fast Sales, High Prices

Erin Boyle, 36, has lived in her Near South rental for nearly a decade. The older house that has been converted into apartments has charm, but it also has its drawbacks. 

There’s no central air conditioning, and residents share a washer and dryer in the basement. Sometimes, the pipes freeze, and no one can do laundry at all. Other times, it floods. 

But for $535 a month, it’s hard to justify moving out. 

“I do feel kind of trapped in my apartment,” Boyle said. “I know I can’t find anything else in that price range for me.”

Boyle would love to purchase a small home in the neighborhood. But houses in her price range — under $200,000 on her $65,000 salary — tend to get snatched up. She has watched single-family homes get bought up and turned into rentals, going for far more than what she’s currently paying. 

“I have a lot of love for Lincoln, and I really want to be here,” she said. “I love my apartment … I probably wouldn't move unless I could buy, but there's just this feeling of unease I get living in an apartment, just because it's so easy that someone could just be like, ‘I'm selling this, move out.’”

Boyle’s struggles aren’t unique. Existing homes in the Lincoln metro sell much faster than new construction, according to market data from Great Plains Regional MLS. In June, existing homes spent 13 days on the market before sale — compared to 45 days for new construction. 

“If you look at the Lincoln market, we really have a tale of two markets,” said Charlie Wesche, CEO of the nonprofit housing development organization NeighborWorks Lincoln. 

It’s a seller’s market for existing homes — homes sell fast, often above asking. New construction is a buyer’s market — sitting longer and sometimes going below asking. But that new construction often sells over $100,000 more than existing homes. 

Cost inflation and material scarcity, high demand for labor and newer energy codes have all played a role in making it more expensive to build new homes, said Jake Hoppe, CEO of Hoppe Development. Hoppe Development focuses on affordable housing, with multiple projects in Lincoln, including apartments and townhomes. But industry dynamics don’t incentivize creating affordable single-family homes, Hoppe said. 

“The raw cost of the very base-level home, if that's $225,000 to $240,000 a unit, excluding the land cost, then your margin on that house is very small,” Hoppe said. 

But if a developer invests a little more in higher-end finishes and adds a fireplace and tile, it makes the home more appealing — and potentially doubles the developer’s profit margin.

“There's not a lot of value in going after the low-end, entry-level home, because it's already so expensive,” Hoppe said.

Diminished Purchasing Power 

At the heart of everything is a problem without a straightforward solution: The region’s median income isn’t keeping pace with the housing market.

For decades, Lancaster County’s and Lincoln’s price-to-income ratios fell under 3.0 — in other words, the typical home cost less than three times the typical annual income in the area. But around 2020, that began to change. 

Home prices leapt, driven by low interest rates and a sharp increase in demand. Wages, adjusted for inflation, remained stagnant. 

“It all goes back to that — we have people trying to buy more expensive homes with essentially very little improvement in their overall income,” Wesche said.

Jason Ball, president of the Lincoln Chamber of Commerce, said the best way to increase wage growth in the region is to recruit more employers. Economic development leaders are trying to attract industries like agritech, advanced manufacturing, IT and software development, he said.

“If we're able to do that in a sustained way over a long period of time, we will see the type of economic growth that I think everybody wants to see here,” Ball said. 

Eric Thompson, economics professor and director of the UNL Bureau of Business Research, said part of the area’s lower wages can be attributed to its younger population. Younger households tend to have lower household incomes, Thompson said, before gaining job experience and earning raises.  

In addition, the public sector makes up a significant portion of Lincoln’s jobs. 

“If you look at just state government, I think people tend to trade wages for security when they go into public employment,” he said. “So the state wages, given someone's qualifications, tend to run a little lower.”

Thompson added that Lincoln is becoming more of a private-sector town, and attracts employers looking to hire new graduates, further reinforcing a younger workforce. 

As starter home prices stray further away from what many younger residents can afford, local homebuyer assistance programs are trying to fill the gap. 

NeighborWorks provides down-payment assistance for qualifying residents to purchase an existing home while also building new homes itself. Homebuyers can also receive funds for rehabilitation work to help avoid costly maintenance down the line.

Aud Koch, 35, is among the Lincolnites who have benefited from the NeighborWorks program. Koch grew up in Lincoln, then returned after a five-year stint out of state. The groundskeeper knew they wanted to buy a home. 

Koch lived with their parents for several years and worked to save money. By mid-2021, they were ready to start looking — and very aware they would need to be flexible. 

“I was so desperate for a house, and I was so unlikely to get anything that fit my specific parameters, that I just had to go with whatever I had any luck with,” Koch said. 

Koch was surprised by how many houses ended up selling over asking price. One home they fell in love with, listed for $180,000, ended up selling for around $230,000. 

In the end, Koch purchased an older ranch house near East Campus for around $150,000. Koch lucked out, they said, because the seller wanted it to go to someone in the NeighborWorks program.

Koch is happy to own a home, but their ability to keep it feels precarious. They pay around $1,180 in mortgage payments, driven by increasing escrow costs. It’s at the upper end of what they can afford making around $40,000 annually. 

“It does make me nervous, because if it goes up any higher, I’ll probably be in trouble,” Koch said. “But as it is right now, I can manage it. It’s just not ideal.”

This story was originally published by Flatwater Free Press, an independent, nonprofit newsroom focused on investigations and feature stories in Nebraska that matter. Read the article at: https://flatwaterfreepress.org/priced-out-in-lincoln-how-the-capital-city-became-the-states-hardest-place-to-afford-a-home/