Nashville, Tennessee has had one of the hottest real estate markets in the United States for nearly five years now. During that time span, home values rose by more than 30%. As it turns out, businesses don’t like being taxed to death and will relocate to cities like Nashville that are friendlier to small businesses. Who knew? What follows business relocations are low unemployment and the need for a skilled workforce. An influx of skilled workers relocating to new cities creates housing shortages which drives up home prices. That’s Nashville’s economic and real estate market in a nutshell. Similar events happened in San Francisco during the “dot-com bubble”.
Biz Journals recently asked many real estate professionals working in the Nashville metro area about what the real estate outlook was going to look like for 2018. Their answers were all very similar. 2018 may not outperform 2017 but is bound to be comparatively strong. Nashville’s population growth is steadily declining, perhaps because of the nationwide tax reform which is creating a better economic outlook across the country. A healthier economy means fewer businesses are looking to relocate elsewhere.
In December 2017, the Tennessean wrote an article suggesting that the Nashville housing market could be showing signs of a bubble. The housing market was already beginning to show signs of slowing following a red hot 2016. Notable housing trends across the Metro area included
- A decrease in home showings for many neighborhoods.
- Homes were on average spending more time on the market.
- The number of homes sold month over month vs. 2016 have decreased.
- Overall sales prices across the city are slowly decreasing.
The areas hit hardest by the real estate slowdown include the more upscale suburbs like Brentwood, Green Hills, Franklin, Belle Meade and Forest Hills. The areas of Nashville that are still showing strong home sales include more affordable areas like Donelson, Nolensville, Lebanon and Murfreesboro. Overall, Nashville has a very strong regional economy and that is the number one factor in keeping home values and home ownership up.
The Tennessean article also suggests that housing demands for homes valued at less than $300,000 were still extremely high and that nearly 25% of Nashville residents pay more than 30% of their income on housing. Yikes! One real estate researcher that was cited in the article predicted when the Nashville housing market would begin to decline. The man, who claims he also predicted the 2008 housing crash, thinks Nashville area home sales will remain steady until the summer of 2020. Afterward, the number of home sales will slowly decline until 2023. However, the odds of a repeat of the 2008 housing market crash are slim. At least we all hope so.
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