Breaking the Trend: Omaha's Home Values Outpace Lincoln's for First Time in Decades

Over the past decade, a surprising shift has occurred in Nebraska’s housing market. For years, Lincoln's housing prices consistently outpaced those of Omaha, with buyers in Lincoln facing steeper price tags compared to their Omaha counterparts. However, for the first time in decades, Omaha's housing market has begun to surpass Lincoln's, marking a major change in the dynamics of Nebraska's two largest cities.

The Historical Gap Between Lincoln and Omaha

A decade ago, the disparity between Lincoln and Omaha was striking. A $165,000 home in Lincoln was roughly equivalent to a $150,000 home in Omaha—a nearly 10% difference favoring Omaha. While the gap narrowed at higher price points, it remained a consistent feature of the housing landscape. Over time, however, this disparity began to shrink.

In recent years, the two markets have drawn closer together, with values nearly equalizing in March of this year. As we approach the end of the fourth quarter, data confirms that Omaha's average home values have officially surpassed those in Lincoln. This shift highlights a significant change in Nebraska’s housing market dynamics.

Why Has Omaha Surpassed Lincoln?

At first glance, it may seem intuitive that Omaha, as a larger metropolitan area, would naturally have higher home values. However, for decades, Lincoln maintained its pricing edge due to a combination of geographical, historical, and infrastructural factors. Now, those same factors are contributing to Lincoln’s slower growth.

Lincoln’s Geographical Constraints

Lincoln’s growth is limited by several geographical and infrastructural challenges. Salt Creek, which runs west of downtown, paired with the extensive railroad system, constrains the city’s downtown expansion. Surrounded by established neighborhoods to the north, east, and south, Lincoln faces significant barriers to growth. The inability to expand westward limits the city’s residential and business development potential.

This is further compounded by Lincoln’s road infrastructure. Many of the city’s primary streets were originally built with just two lanes, making travel across the city—from north to south—time-consuming and inefficient. While this doesn’t directly impact housing prices, it does contribute to Lincoln’s slower overall expansion.

Together, these factors create a housing market defined by scarcity, where demand for homes in established neighborhoods keeps prices elevated and home appreciation steady.

Omaha’s Advantageous Growth

In contrast, Omaha has experienced explosive growth over the past 50 years. Its expansive east-to-west layout, supported by a robust network of four- and six-lane roads such as Dodge and Center Streets, has enabled the city to accommodate a rapidly growing population. What was once considered West Omaha is now the city’s center, with development stretching well beyond 168th Street into areas like Elkhorn.

For example, Omaha’s historic Happy Hollow Club, located near 114th and Pacific, was once on the city’s outskirts. Decades ago, the club was surrounded by open fields, a striking contrast to the now-thriving neighborhoods and bustling roads nearby. Historic photos from Happy Hollow highlight the city's rapid expansion and transformation.

With significantly more room to grow and the infrastructure to support it, Omaha has nearly filled in from east to west, taking full advantage of development opportunities.

Recent Shifts: Saturation and Demand

As Omaha continues to fill in to the west, it has begun to encounter a challenge Lincoln faced long ago: saturation. Much of Omaha’s westward expansion has reached its limits, with developments now encroaching upon natural barriers like the Elkhorn River. As a result, the city has shifted its focus to expanding north and south, extending its reach to areas like Gretna, Papillion, and Bennington, where hundreds of new homes are added each year.

This shift has increased demand for homes in centrally located neighborhoods, where shopping centers, restaurants, and entertainment options are abundant. Buyers seeking convenience and accessibility are driving up competition in these mature areas, further elevating home values.

Meanwhile, Omaha continues to attract new residents from neighboring states and beyond, bolstered by Nebraska's reputation as one of the best places to live and raise a family. As this demand persists, housing values are likely to climb even higher, solidifying Omaha’s position as a thriving and desirable market.

The Future of Omaha and Lincoln Housing Markets

Omaha's housing market now mirrors the constraints Lincoln has faced for years. As space for new developments becomes scarce, home values in central neighborhoods are likely to continue climbing. While Lincoln’s market remains stable, Omaha is capitalizing on its position as a larger metropolitan area. The city’s expanding array of restaurants, concerts, sporting events, and entertainment options continues to drive demand. Meanwhile, Lincoln’s size constraints make it increasingly difficult to compete in these areas.

As these trends persist, Omaha's market is poised to further outpace Lincoln’s, potentially creating a more pronounced pricing gap over the next decade. For buyers, sellers, and real estate professionals, understanding these shifts will be crucial for navigating Nebraska’s evolving housing markets.