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Should You Invest In The Nashville Real Estate Market?

Nashville Real Estate Market Overview

Nashville is one of the hottest real estate markets in the country today. The Nashville real estate boom began about 10 years ago and the investors expect these trends to continue in 2018 and foreseeable future, making Nashville one of the most desirable real estate markets in the country. Nashville, Tennessee is famous for the Grand Ole Opry, the recreation of the Parthenon, and country music. It is best known as a tourist attraction in middle America. It should be recognized for a number of other reasons. The Nashville real estate market was good for sellers 2017 due to the rising prices, and it was considered one of the hottest housing markets in the US.

In 2018, it is expected that the Nashville real estate market will improve in favor of buyers as the inventory is started to increase slowly. The property appreciation rate in Nashville, which was quite high for the past few years, has now started to slow down to favor buyers. This shift is becoming a good sign for buyers looking to invest in Nashville real estate in 2018 and 2019. We’ll give you an overview of the Nashville real estate market trend in 2018 before we share 10 reasons to invest in the Nashville properties.

Nashville real estate market

Nashville Real Estate Market Forecast 2019

Nashville itself is home to just over six hundred thousand people. That alone makes it the 24th most populous city in the country. If you count semi-independent parts of Davidson County , then the Nashville real estate market is home to about 700,000 people. The Nashville metropolitan area contains more than two million people. Many of those live in Davidson and Murfreesboro. According to a real estate website called Zillow, the median home value in Nashville is $254,800. Nashville home values have gone up 8.2% over the past year and Zillow predicts they will rise 8.0% within the next year. The median list price per square foot in Nashville is $193, which is higher than the Nashville-Davidson–Murfreesboro–Franklin Metro average of $161. The median price of homes currently listed in Nashville is $329,000 while the median price of homes that sold is $256,500. The median rent price in Nashville is $1,695, which is higher than the Nashville-Davidson–Murfreesboro–Franklin Metro median of $1,635.

Nashville Real Estate Market Forecast

Graph Courtesy – Zillow.com

Nashville Real Estate Market Trend 2018

As per Trulia.com, Nashville real estate market trends indicate an increase of $2,500 (1%) in median home sales over the past year. The average price per square foot for this same period rose to $205, up from $192. Trulia has 2,028 resale and new homes in Nashville lined up for you, including open houses, and homes in the pre-foreclosure, auction, or bank-owned stages of the foreclosure process.

  • The median sales price for homes in Nashville for Jun 20 to Sep 19 was $305,000 based on 2,196 home sales.
  • Average price per square foot for Nashville was $205, an increase of 7% compared to the same period last year.
  • The median rent per month for apartments in Nashville for Aug 25 to Sep 25 was $1,750.

As per Movoto.com, the median list price in Nashville is $389,900. The median list price in Nashville went down 1% from September to October. Nashville’s home resale inventories is 1,034, which increased 4 percent since September 2018. The median list price per square foot in Nashville is $239. September 2018 was $236. Distressed properties such as foreclosures and short sales remained the same as a percentage of the total market in October.

Nashville Real Estate Market Trend

Graph Courtesy – Movoto.com

Nashville TN Bank Owned Homes For Sale

Foreclosures will be a factor impacting home values in the next several years. In Nashville 1.4 homes are foreclosed (per 10,000). This is greater than the Nashville-Davidson–Murfreesboro–Franklin Metro value of 0.9 and also lower than the national value of 1.6. The percent of delinquent mortgages in Nashville is 0.9%, which is lower than the national value of 1.6%. With U.S. home values having fallen by more than 20% nationally from their peak in 2007 until their trough in late 2011, many homeowners are now underwater on their mortgages, meaning they owe more than their home is worth. The percent of Nashville homeowners underwater on their mortgage is 7.0%, which is higher than Nashville-Davidson–Murfreesboro–Franklin Metro at 6.1%.

There are currently 145 properties in Nashville, TN that are in some stage of foreclosure (default, auction or bank owned) while the number of homes listed for sale on RealtyTrac is 2,313.

In August, the number of properties that received a foreclosure filing in Nashville, TN was 3% lower than the previous month and 52% higher than the same time last year. Home sales for July 2018 were down 24% compared with the previous month, and up 348% compared with a year ago. The median sales price of a non-distressed home was $295,000. The median sales price of a foreclosure home was $0, or 0% higher than non-distressed home sales.

10 Reasons To Invest In The Nashville Real Estate Market

The Nashville housing market is booming because of high demand, but that isn’t quite reason enough to invest in this real estate market. However, there are a number of long term trends that make the Nashville market a good place to invest in real estate without fear of a boom and bust like what hit Arizona during the Great Recession we’re just now recovering from.

1. A Strong Economy And Job Opportunities

In early 2018, a Quartz article joked that Nashville could give up the nickname Music City and be called Job City. Nashville’s claim to the title was having the lowest unemployment rate of any metropolitan area with more than a million people. Nashville real estate market demand will remain strong as long as people want to move here for work, and unlike some areas, they can actually find it here.

The Nashville area economy includes thriving technology, service, education, health, and manufacturing sectors. Financial enterprises have also discovered the benefits of doing business in Nashville, giving abundant employment prospects to bankers, accountants, and budget analysts. While the tourism industry is thriving, white collar jobs are expanding rapidly, too. Almost anyone with a marketable skill can find a good-paying job in Nashville. This trend is expected to continue for at least the next 10 years, with opportunities especially robust for healthcare, IT, and design/media specialists. Average incomes on the city’s west side are higher than in areas east of downtown.

2. Strong Demographic Trends In Nashville

The average age of Nashville residents is around 33, much younger than the national average of 40. This means the Nashville real estate market contains a larger than average number of young families, and given the strong job market, these adults and their children will contribute to housing demand for years to come.

3. Quality of Life Attracts People of All Ages

Nashville was ranked the fastest growing large metropolitan area in the United States in 2017. This is in no small part due to its high rankings in various quality of life surveys such as U.S. News and World Report. That publication ranked Nashville the eleventh best place to live in the country, giving it high marks on desirability and value. It was also ranked 35th in their list of best places to retire. This means many are choosing to move here because of quality of life whether or not they’re coming for work. Today, Nashville is a hot relocation destination with a thriving economy, continuous population growth, and a diverse, ever-growing services base. Consumers who act aggressively to break into the local real estate market should enjoy both a high quality of life and rising home values for the foreseeable future.

4. Known Redevelopment Opportunities

Redevelopment can be hit and miss, since you can’t be sure a waterfront area or community slated for revitalization actually goes up in value. One benefit of the Nashville housing market is that there is known areas of redevelopment where returns are nearly certain. The area around the future professional sports stadium comes to mind. East Nashville is gentrifying, as well.

5. A Large Student Population

The Nashville housing market presents a prime opportunity for real estate investors who would like to cater to students. This is partially due to the fact it is the capital of the state, and it is partially due to the fact that it is simply the largest city in the state. Local universities include but are not limited to Tennessee State University, Lipscomb University, Belmont University, Aquinas College, Fisk University, and Vanderbilt University.

American Baptist College, Trevecca Nazarene University, Meharry College, Welch College and Nashville State Community College are also located here. If you want to invest in the suburban Nashville housing market, Middle Tennessee State University is located in Murfreesboro. The presence of several colleges and universities, along with both private and public secondary schools, presents rich possibilities to academic professionals.

6. The Tourism Related Rental Market

The Nashville housing market provides two different tourism-related rental markets. One is, of course, renting homes to tourists who are more likely to be families and retired couples than swinging singles. Another possibility is renting to young adults who work in the tourism industry themselves. Just over a third of the market rents, a figure similar to the national average. This means that a sudden decline in tourism isn’t going to hurt the Nashville housing market much. The city is currently arguing over limits for AirBnB rentals for non-residents, but no restriction on this are in place yet or the foreseeable future.

7. Affordability

The median home price in Nashville is around $240,000. You can buy two moderately large single family homes here for the price of a cheap condo in California, and you can buy half a dozen rental properties in the Nashville real estate market for the price of one good house in New York City. Nor will the area see a building boom that causes real estate to go down dramatically in value, since rentals had a vacancy rate of around 4% in 2016. Some new housing stock may come onto the market, but not enough to hurt the value of existing homes.

8. Stability

We’ve touched on the subject of rental market stability. Nashville has high employment rates and low vacancy rates, but none of those numbers are enough to throw the market into overdrive, whether it leads to a glut of supply to meet high demand or a boom-bust cycle. The Nashville Business Journal ranked Nashville the most stable housing market in the state in 2018. The city’s relatively slow permitting process actually slows down construction of new units, keeping home prices stable and high.

9. It Is Landlord Friendly

Tennessee like much of the south is landlord friendly. Landlords in the Nashville real estate market don’t have to have a written lease unless the rental agreement is longer than three years, though that’s always recommended. There is a limited payment grace period. Receipts aren’t required for rent and deposit payments, though again, that would be wise. Interest isn’t due on deposits. You can charge late fees but have to specify them in the lease. The only minor issue is that you have to have a rental license before you can be a landlord.

10. The Good Return on the Investment

Interestingly, the average annual salary is about $46,000, leading many here to rent instead of buy. However, the rental market isn’t so hot that it is guaranteed to collapse. That is why median rent hovers around $900-$1000 a month, providing decent returns to landlords who don’t over leverage but without worrying about a condo boom to cash in on rental demand diminishing profits over the long-term. The fact that rents in the Nashville real estate market are almost $200 per month greater than the Tennessee average is a strong reason to buy real estate here than elsewhere in the state. And know that rental rates for large apartments and condos are even higher – commanding rents in the $1500-2000 range.

Investing In The Nashville Real Estate Market: The Conclusion

If you are a beginner in real estate investment business, it very important to read good books on real estate. You must also learn from successful real estate investors who have retired early on in their lives by investing in some of the best real estate markets like Nashville, TN. Don’t let the country-western touristy image dissuade you from investing in Nashville, TN. There are a number of points in favor of the Nashville real estate market if you are looking for a solid opportunity. One of the best features of the Nashville real estate market is the median property price in the city, which is considered more affordable than most of the other top markets for investing in real estate in the U.S. Although the Nashville real estate market is expected to move a little more slowly in 2018, which would make things better for buyers, the inventory will remain limited, which means that Nashville will remain among the fastest-moving housing markets in the U.S. Also, as the mortgage rates in Nashville remain at record lows, it makes buying a property more affordable now than it was in the previous years.

Another housing market in Texas to go for diversifying your investments is the Austin real estate market. The Austin housing market may be one of the more expensive ones in the state of Texas, but it stands out for its large rental market and high rental rates. It is an excellent place to invest in real estate in the Lone Star State. Homes in Austin are 23% cheaper than the national average. It may be the second most expensive housing market in the state with a median home price of around $350,000, but it is still far cheaper than California or New York. Buy up condos or townhomes, and you’ll be able to see a sizable return on the investment.

Similarly, the Salt Lake City is another great market for investing in real estate for your retirement. The Salt Lake City real estate market is booming because of an ideal combination of business growth triggering in-migration and strong native population growth. Downtown Salt Lake City properties near the Mormon Temple command a premium, but that isn’t the only upscale market in the area. Park City and the northern side of Oakley, too, have properties that cost on average well over a million dollars. As you move up Highway 80 toward Hoytsville and Wanship, properties routinely cost more than a million dollars despite the hour commute to Salt Lake City.


References

Stadium / redevelopment
https://www.tennessean.com/story/sports/2018/09/05/nashville-mls-stadium-pro-soccer-team/1200230002/
https://www.theringer.com/features/2017/11/21/16678002/airbnb-nashville

Employment
https://qz.com/1251382/nashville-tennessee-has-the-uss-lowest-unemployment/

Demographics
https://suburbanstats.org/population/tennessee/how-many-people-live-in-nashville
https://en.wikipedia.org/wiki/Nashville,_Tennessee

Landlord friendly                                                                                            https://www.avail.co/education/laws/tennessee-landlord-tenant-laws
Quality of life
https://www.nashvillechamber.com/
https://realestate.usnews.com/places/tennessee/nashville

Home Prices / Rental Prices
https://realestate.usnews.com/places/tennessee/nashville
https://www.deptofnumbers.com/rent/tennessee/nashville/
https://www.trulia.com/real_estate/Nashville-Tennessee/

Stability
https://www.bizjournals.com/nashville/news/2018/05/23/report-card-tennessee-best-places-to-buy-a-house.html
https://thinkrealty.com/nashville-housing-market-room-grow/

Market Trends And Forecast                                                                        https://www.trulia.com/real_estate/Nashville-Tennessee                https://www.realtytrac.com/statsandtrends/tn/davidson-county/nashville                      https://www.zillow.com/nashville-tn/home-values


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