Demand for new housing swells Elkhorn’s population
Where fields of crops used to grow, Tom Falcone planted the seeds of Omaha’s most desirable neighborhoods. He looked for perfect sites; places land could be transformed into subdivisions and feed Omaha’s growing population.
Now, after a prolonged downturn, Falcone’s vision is becoming reality. The housing market is on the upswing and interest in Omaha’s western front is surging again. With its rolling hills and reputable school district, the Elkhorn area is fertile ground for a flurry of interest from developers, builders and homebuyers alike. “The market is extraordinarily hot,” Falcone said.
The development signals both a physical and social transformation for Elkhorn. As more people buy homes in the area, a watchful school district must make decisions on how to accommodate more children.
If Falcone’s predictions hold true, the question isn’t if, but how quickly the district will grow. The attraction to Elkhorn is hitting buyers at a deeper level than just a site to make an investment, Falcone said. Families are looking for a place they can spend their lives.
A rebounding market
Falcone and other experts say 2014 is shaping up to be a busy year for new homes after a long lull between 2006-2011.
“All indicators continue to show a steady increase in new construction,” said Cassi Petersen, executive director of the Metro Omaha Builders Association. “Consumer confidence is apparent, as is the need for new housing.”
Last year, the Omaha metro area issued about 2,600 single-family building permits, up from a low of 1,900 in 2011. That’s compared to more than 5,000 metro-area single-family permits issued in the 2005 heyday. Omaha may never return to those levels, but Walt Slobotski, building services manager at NP Dodge, is optimistic that new home starts will continue to increase to a new normal of around 3,200 lots per year.
So far, things are moving in that direction. “Builders are setting higher sales goals than in recent years, and many are reporting that they have exceeded their own forecasts,” Petersen said.
Nationally, new home sales in January climbed to the highest level in more than five years, up 9.6 percent from the previous month, according to the U.S. Commerce Department.
Pent-up demand after years of caution is driving sales, Falcone said. Buyers realize an increase in interest rates may be on the horizon, making their decisions more urgent.
There’s also the looming potential of a lot shortage in the Elkhorn area. In Falcone’s Andresen Meadows, Windgate Ranch and Windgate Ranch II subdivisions, lots “have been going like Hostess cakes when they stopped making them,” Falcone said.
A combination of good schools, ample amenities and easy access to Omaha and Lincoln has put Elkhorn at the top of the list for many homebuyers, Petersen said. Simply put, Elkhorn isn’t as far west as it used to be. Within minutes, residents can access health services, shopping and restaurants. The success of the rejuvenated Nebraska Crossing Outlets is emblematic of interest in the area.
“You’ve got everything lining up — the right location, schools, Dodge Street, grocery stores and the interest rates at historic lows,” Falcone said. “People want to get in now before the interest rates go up — and before there are no more lots.”
Developers are tweaking their approaches to cater to the post-downturn generation of buyers. They’re savvier, Falcone said, and more cognizant of the need to choose the right location and get a return on their investment.
For Falcone, that’s meant working closely with builders to discuss trends on home site sizes and styles. Falcone’s developments offer options – flat lots, walkouts and treed lots, at price points from $325,000 to upwards of $1 million.
Lanoha Development’s approach emphasizes long-term home values with an eye on nature, green space and creativity. “Quality and value are always in demand, no matter the cycle,” said Jason Lanoha, vice president. The company has three subdivisions in the works: West Baywood, The Sanctuary and The Prairies.
Petersen noted builders are recognizing that interest in the area isn’t limited to young, expanding families. Baby boomers are also downsizing, and builders are offering smaller floor plans with more bells and whistles, or features such as a double master suite for aging parents.
Developers are also keen on keeping the supply of lots balanced. To avoid a glut of lots on the market, builders are releasing lots in smaller bundles. That contrasts to back in 2005, when subdivision development peaked and 300 to 400 lots could come on the market at once, Slobotski said.
Keeping supply balanced may be key to sustaining the upswing in new home construction.
“I believe demand is always moving through a cycle,” Lanoha said. “I believe we are at a good place in the cycle, however, it is fragile and could quickly change with an increasing trend in supply.”
Developers also seem to be more careful of the sites they select. Before, “people used to go out and develop anything,” Falcone said. These days, a more successful strategy seems to be “follow the schools,” according to Slobotski, whose company develops the Copperfields and Five Fountains subdivisions with homes from $240,000 to $1 million. Homebuyers are clamoring to purchase in the Elkhorn school district.
Faced with burgeoning residential areas, Elkhorn Public Schools is preparing for a major growth spurt.
“Conservatively, we are looking at 1,000 new students every three years,” said superintendent Steve Baker. As development continues, the district is continually reworking its enrollment projections, he said.
According to the district’s master plan, Elkhorn will one day enroll 18,000 students. Last fall, K-12 enrollment was 6,798 students. About 350 seniors will graduate from Elkhorn’s two high schools this spring; more than 600 kindergartners will start school in August.
As the district grows, its high schools could transition from Class B to Class A. “It’s a common misconception that our goal is to operate only Class B high schools,” Baker said. “The goal has always been to provide smaller schools that offer more opportunities for students, regardless of athletic classification.”
Baker noted that before Elkhorn South High School opened in 2010, Elkhorn High School was a Class A school of about 1,350 students. As enrollment grows, both high schools will hit their intended capacity. “We know that both schools will eventually be Class A schools,” he said.
While the pace of growth has quickened recently, the district boasts years of experience in accommodating enrollment increases. Elkhorn’s student population has grown for 27 consecutive years, Baker said. “With this kind of growth does come growing pains — boundary changes, crowding, hiring new staff, etc. — but we are fortunate to have a community that values education,” he said.
Since 1992, Elkhorn voters have passed nine major bond issues to fund new facilities to accommodate the growing student population. If the two high schools hit 1,500 students, the district will need additional schools. But right now, Elkhorn High School and Elkhorn South High School still have room to grow, and there are no plans for a third high school in the works.
“However, we do know it will be necessary to secure a location for a third high school in the near future,” Baker said.
With such strong interest in the Elkhorn area, developers expect sales to be brisk. “I think the Elkhorn area will continue to be one of the hotspots in the Omaha metro for the next four to six years,” said NP Dodge’s Slobotski.
The market is on the buyer’s side, said Petersen of the builders association. As home values have increased, people are able to use their existing home as a valuable and marketable asset to move forward with new construction. Pocket listings are on the rise, as real estate brokers search for perfect homes that aren’t on the market yet. Houses that sell the same day they are listed are appearing more and more, she said.
“Buyers looking for new construction should be aware of how fast their existing home may sell and be prepared,” she said. “If it’s priced right, be ready to move.”
Petersen noted that competition for lots is on the rise. While Elkhorn may not have a lot shortage just yet, the outlook is pushing the need for new subdivision development in 2015.
For prime locations, sales are hot. Falcone said he has ungraded lots already sold. Unlike prior years, buyers today aren’t hesitating to buy. “People feel better about the economy, the world and the market,” Falcone said. “And they know what’s there won’t be there forever.”