Nashville Real Estate: A Resilient Market that Continues to Grow
Nashville, Tennessee has been on the radar for many homebuyers, both local and out-of-state, for its growing job market, quality of life, and vibrant music, art, and culinary scene. However, with the skyrocketing prices of homes in recent years, many have been asking if Nashville real estate is overpriced.
To answer this question, we need to look at the data and consider the different factors that influence the real estate market.
Nashville’s Real Estate Market
Nashville’s real estate market has been booming in recent years. In fact, the city has seen a 256% increase in home appreciation in the last 20 years, which is one of the highest rates in the country. This equates to an average increase of 6% every year. However, it is important to note that the housing market in Nashville did experience negative home appreciation between 2008 and 2011. Nevertheless, it only took 18 months for the market to recover, indicating that the Nashville real estate market is resilient.
Factors Contributing to Nashville’s Resilient Market
There are several factors that contribute to the strength and resilience of Nashville’s real estate market. One of the most significant factors is the number of people who are moving to the greater Nashville area every year. Nashville’s central location, fair housing prices, great jobs, low unemployment, low taxes, and thriving music, art, and culinary scene are also attractive factors that make people want to move to middle Tennessee.
Buyer Demand
The peak of buyer demand in Nashville occurred in 2021 and early 2022, but it has since declined due to several factors, including a surge in interest rates on home mortgage loans. However, that trend is beginning to reverse, with demand picking up again in early 2023. This is in line with the annual seasonal trend that says demand for housing typically always picks up in spring and summer. Families with school-aged children typically want to coordinate their move with the start of the school year.
Home Prices
In 2022, Nashville’s real estate market appreciated by 10.5%, which is higher than the annual average of 6%. However, this does not necessarily mean that the market is overpriced. Instead, it indicates a healthy market that needed to level out due to the insanely fast rate at which prices increased. There is still a strong appetite for housing. Homes that are priced appropriately, in an ideal location, and in good condition are still selling quickly. It’s the overpriced homes in poor locations, and/or with poor quality that will struggle to sell.
Inventory of Homes
The supply of homes in Nashville is very low, with only four months in the last seven years that have had supply levels as low as they are currently. Homeowners are less willing to sell due to higher interest rates on new homes, resulting in a tighter supply and a seller’s market. This keeps prices stable. Therefore buyers should not expect home prices to come down significantly anytime soon.
Here’s your answer…
The Nashville real estate market is not overpriced. The city has a balanced demand for housing, and prices are stable due to a tight supply of homes on the market. Additionally, Nashville’s strong local economy and thriving cultural scene make it a highly desirable place to live, which will continue to drive demand for housing. That’s why I say that Nashville’s real estate market is strong and has a promising future.
P.S. My prediction for the housing market in Nashville in 2023 is between 5-7% appreciation, which happens to be directly in line with the annual average. (This is a healthy market!)