Are you interested in how the Nashville real estate market is doing? There's much less inventory than in years past, and more people are flocking here. Still, prices should continue rising. Overall, the housing market should cool off because home sales in April of 2023 saw a significant decrease from last year.
Greater Nashville Realtors claims that home closings in April of this year were down by 27 percent and sitting at 2,753. Though there was a drop in home sales, the median prices for condominiums and residential properties are still high. Condos sell for about $326,000, and residential properties are selling for $468,300.
Though the real estate market has seen a shortage of inventory, there are just 8,778 properties available for sale, 3,196 houses are under contract, which indicates a strong demand for them. However, buyers might have to act fast because properties sit on the market for 53 days on average.
It's important to understand what the Greater Nashville Realtors is showing. We'll look at this and many other things to help you decide if it's time to buy an investment property in Nashville, Tennessee.
Nashville Housing Market Trends
Nashville sits in Davidson County and houses about 601,201 people. Overall, it's famous for country music, the Parthenon recreation, and the Grand Ole Opry. It's considered the tourist attraction for the Midwest.
Most people live in Murfreesboro and Davison, and Nashville has many renter- and owner-occupied units. If you want to buy a single-family home, one-bedroom and two-bedroom detached houses are more common. However, there are also duplexes, large apartment complexes, and even rowhouses.
Overall, the Nashville housing market is better for sellers because of the rising prices, and it's one of the best in the United States. The boom started 10 years ago, and investors believe those trends will continue into the foreseeable future.
There are many long-term trends for the Nashville market, which make it a great place to invest without the fear of bust like what happened to Arizona in the Great Recession.
Most experts believe that home prices in Nashville will appreciate much slower than the national average, though some expect them to grow similarly. Still, home values shouldn't fall, and they're appreciating faster than the national rate.
The best feature for the real estate market is the median property prices for the city. It's considered to be more affordable than other top markets. Though inventory is limited, Nashville should still be the fastest-moving. Likewise, mortgage rates are still low here, so buying properties to rent out can be lucrative.
Factors Affecting the Nashville Housing Market
It's important to understand the factors that might affect the housing market now and in the future. Here are a few things to consider:
Strong Job Market and Economy
Moving to Music City is a dream for many. Nashville has seen the lowest unemployment rate for many years, and the real estate market demand should stay strong because people are moving here to find work. In other areas, that's impossible, but the economy in Tennessee is thriving because of the manufacturing, health, and education sectors.
Job growth is happening everywhere, and financial enterprises know that it's beneficial to do business here. Therefore, budget analysts, accountants, and bankers are prevalent. Plus, the tourism industry will forever thrive in the country music capital of the world.
The national average of a resident is about 40 years old, but that's lowered to 33 for Nashville. Overall, the real estate market is seeing more than the average number of younger families, and there's a stronger job market. Therefore, adults and kids will surely contribute to the demand for housing in the coming years.
Rental market stability is sure to be strong. Nashville has lower vacancy rates and high employment rates, but that's not enough to push the market into overdrive. Plus, the slow permit process will delay the construction of new units, so home prices will remain stable, as well.
Affordable Real Estate
Typical home prices in Nashville are sitting at $457,360, according to Zillow. It's relatively affordable when you compare it to other metro areas in the nation, but the housing market is now very competitive. For example, you could purchase a single-family home or two for the same price as a condo in California!
Overall, there shouldn't be a building boom that pushes real estate down in value. Likewise, rentals see a vacancy rate of about four percent.
New housing stock should come into the market, but it won't hurt the home values of current houses. The area is seeing a bigger population, and the Southern Suburbs market is the fastest-growing throughout the Nashville metro area. Because Tennessee doesn't tax a person's wages, residents keep more of their money.
Likewise, the state legislature began phasing out its Hall income tax, and full elimination happened in 2021. Overall investment income tax rates were at six percent and were set to drop by one percent for the next few years. In a sense, Tennessee is joining seven other states to become a no-income-tax state.
Large Student Population
Real estate investors could have a prime opportunity if they can cater to students. Though Nashville is the capital of Tennessee, that's not the only reason; it's also the largest city here. Local universities abound, and students can go to Vanderbilt University, Aquinas College, Belmont University, Fisk University, Lipscomb University, and Tennessee State University.
If that weren't enough, there's also Nashville State Community College, Welch College, Meharry College, Trevecca Nazarene University, and American Baptist College.
Those who wish to invest in the suburban area will also cater to students attending Middle Tennessee State University, which is in Murfreesboro.
Tourism and Rentals
There are two tourism-related rental markets in Nashville. One includes renting houses to retired couples and families. However, you could also rent to young adults working in the tourism industry. Roughly 1/3 of the market rents, which is close to the national average. Therefore, a sudden tourism decline wouldn't hurt the housing market.
Even if tourism stopped altogether, you'd still have people working in other sectors and students who don't want to live on campus. Therefore, you'll surely earn a passive income or quickly pay down your mortgage if you invest here.
Will the Housing Market Crash in Nashville?
It's unlikely that the housing market will crash in Nashville. Though more people are waiting to buy, sellers still have their goals in mind. While prices should stay higher than normal, it seems that everyone wants to live here, and they need a place to go.
Nashville Housing Market Statistics
Here are a few statistics to help you:
- The median home price is at about $350,000.
- The median price for residential properties is $468,300.
- The average price per square foot is $270 for Sunnyside, which is down about 23 percent from last year.
- There are many famous neighborhoods in the area, such as Joelton, Nolensville, Urbandale Nations, Inglewood, Green Hills, and West Meade.
- Housing permits saw a huge drop in 2022 for the Nashville area. Though things are picking up, the last three months saw the Nashville market approve 2,497 single-family permits. In the same period as last year, it was almost 4,000.
- Likewise, multifamily permits saw a larger drop. In Nashville, there were 329 multifamily permits in the last three months. If you compare that to the same period as last year, there's a 91 percent decrease.
- Roughly 15 percent of all sales are above the list price, but 62 percent of them are under the list price.
Housing Market Predictions
Buyers should get some leverage because the national housing market is more buyer-friendly now. However, sellers have a strong hand. Interest rates are on the rise, and affordability has lowered, so sellers may have to lower the prices. Regardless, the market should become more balanced by the end of 2023.
Inventory is likely to increase, but house prices will probably decline. It's hard to be sure, though, so it's wise to keep an eye on the fluctuations.
Nashville Housing Market Predictions
Property values in Davidson County and Nashville should expect to rise moderately for the next 12 months. People are now moving to large towns, so Nashville has seen more buyers from California, New York, and Seattle. Likewise, Tennessee doesn't collect tax on a person's earned income, which is quite lucrative.
Because of these things, demand for housing is at an all-time high. However, there's still low inventory, so Nashville home prices are rising significantly. Low-interest rates, changing demographics, and low stock created that trend.
Though it's great for sellers, buyers might have more problems getting the houses they want. Greater Nashville Realtors claims that home values are standing still at $428,541, but that's a 1.6 percent increase from the past year. Recent data indicates the market should grow stronger and is forecasted to be a 5.3 percent increase for the next 12 months.
The market is quite competitive, though, so buyers should beware. At 53 median days on the market, investors must be quick to get their preferred properties.
Though there's an inventory shortage, buyers can find options within their budgets. Still, sellers will expect a more profitable year because the market should increase.
In a sense, the real estate market should see steady growth throughout 2023 and into 2024, which could benefit both sides. Investors must be careful, know their financials, and act quickly.
If you want to buy property in Nashville, Tennessee, it could be the best time to do it. You probably won't see prices go down much in the coming year, indicating that it's a seller's market. However, there are good deals to be found, especially in some of the low-cost neighborhoods.
Will the Nashville Market See Home Prices Drop?
The National Association of Realtors claims that properties were selling at median prices of about $474,000, which is down slightly from the fourth quarter in 2022. Therefore, it's unlikely that home prices will drop.
Is Nashville in a Seller's Market?
Prices are pretty high right now, which indicates that sellers will gain an edge. However, sales volume is lower. Inventory and mortgage rates are keeping buyers waiting to see what will happen.