The current data paints a picture of a robust housing market in Nashville, with a significant number of closings across various property types. The median prices reveal a diverse range, catering to different buyer preferences. The pending properties and low days on market underscore the demand for real estate in the area, emphasizing a competitive and active market.
As we move into the next quarter, it will be intriguing to observe how these trends evolve and whether the Nashville housing market continues on its current trajectory. Factors such as economic conditions, interest rates, and regional developments can influence the dynamics of the real estate landscape.
How is the Nashville housing market doing currently?
The Greater Nashville REALTORS® has released the housing market data for the Nashville Metropolitan Area. The Nashville housing market in December 2023 reflects a thriving and competitive environment. Let's delve into the statistics to get a comprehensive understanding of the trends.
Closings and Inventory:
In December 2023, there were 2,463 total closings, indicating a dynamic real estate activity. The residential sector accounted for 2,011 of these closings, with a median price of $470,000. Condominiums contributed 302 closings, featuring a median price of $340,000.
The multi-family and farm/land/lots segments had 18 and 132 closings, respectively. The overall inventory stood at 8,727, with 5,921 residential units, 1,106 condominiums, and 1,622 in the farm/land/lots category.
Pendings and Days on Market:
1,704 properties were pending in December 2023, indicating a promising outlook for future real estate transactions. The average days on market for listed properties was 50, suggesting a relatively quick turnaround from listing to pending status.
Nashville Housing Market Forecast for 2024
What are the Nashville real estate market predictions for 2024? Property values across Nashville and Davidson County are expected to rise over the next twelve months. We have seen people move from big towns to suburbs throughout the country. Nashville too has seen an influx of buyers coming from larger markets like Seattle, New York, and California.
Another factor in the increase in out-of-state homebuyers is that Tennessee is one of only seven states that does not impose an income tax and one of two that doesn’t collect tax on earned income. This has multiplied the demand for housing. High demand and low inventory are causing home prices in Nashville to rise rapidly.
In this analysis, we delve into the current state of the Nashville housing market, providing valuable insights and forecasts based on data available through December 31, 2023. Our primary source for this information is Zillow, a leading authority in real estate data and analytics.
Key Metrics and Trends
Let's begin by examining essential metrics that shape the Nashville housing market:
- Average Home Value: The average home value in the Nashville-Davidson–Murfreesboro–Franklin area stands at $426,065, reflecting a modest 0.4% decrease over the past year.
- Days on Market: Homes in this region go pending in approximately 27 days, highlighting the brisk pace of real estate transactions.
The forecast for the Nashville housing market reveals a positive outlook:
- 1-Year Market Forecast: A promising +3.4% growth is anticipated by December 31, 2023.
Inventory and Listings
- For Sale Inventory: As of December 31, 2023, there are 6,433 homes available for sale in the Nashville area.
- New Listings: 1,613 new listings entered the market by the same date, showcasing ongoing activity and demand.
- Median Sale Price (November 30, 2023): The median sale price is $413,333.
- Median List Price (December 31, 2023): Homes are listed at a median price of $521,600.
- Sale to List Ratio (November 30, 2023): The ratio stands at 0.986, reflecting a balanced market.
Market Dynamics: Buyer's or Seller's Market?
The current state of the Nashville housing market suggests a balanced scenario. With a median sale to list ratio of 0.986, neither buyers nor sellers hold a significant advantage, fostering a fair and competitive environment.
Assessing Price Trends
While the average home value has experienced a slight decrease, the positive +3.4% 1-year market forecast indicates potential growth on the horizon. This suggests that while prices may have adjusted, the overall market is resilient and poised for improvement.
Predicting a Housing Market Crash
Considering the steady performance and the optimistic forecast, there is currently no indication of an impending housing market crash in Nashville. The market appears stable, with growth expectations in the coming year.
Is Now a Good Time to Buy a House?
Given the balanced market conditions, now could be a favorable time for both buyers and sellers. The 15.9% percent of sales over list price and 61.4% percent of sales under list price indicate opportunities for negotiation, making it a relatively advantageous time to enter the Nashville real estate market.
Here are the ten neighborhoods in Nashville having the highest real estate appreciation rates since 2000—List by Neigborhoodscout.com.
- Maxwell Heights
- Rolling Acres / Lockeland Springs
- East Nashville
- Greenwood / Lincoln College of Technology Nashville
- Shelby Hills
- East Hill
- North Nashville
- Edgehill / Historic Waverly
- Fisk Meharry / Fisk University
Nashville Real Estate Investment Outlook
Is Nashville a Good Place For Real Estate Investment? Many real estate investors have asked themselves if buying a property in Nashville is a good investment. You need to drill deeper into local trends if you want to know what the market holds for real estate investors and buyers. Nashville is a minimally walkable city in Davidson County with a population of approximately 601,201 people.
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. 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. Nashville has a mixture of owner-occupied and renter-occupied housing units. According to Neighborhoodscout.com, a real estate data provider, one and two-bedroom single-family detached homes are the most common housing units in Nashville. Other types of housing that are prevalent in Nashville include large apartment complexes, duplexes, rowhouses, and homes converted to apartments.
The Nashville housing market has been good for sellers in the past years due to the rising prices, and it is considered one of the hottest housing markets in the U.S. The Nashville real estate boom began about 10 years ago and investors expect these trends to continue in 2021 and the foreseeable future, making Nashville one of the most desirable housing markets in the country.
Several long-term trends make the Nashville market a good place to invest in real estate without any fear of boom and bust like what hit Arizona during the Great Recession. In 2020, Nashville came in at No. 4 in the country for expected activity and price appreciation, in comparison to 25 large markets around the country, according to a survey published by Zillow.
Nashville was the only market analyzed in which no panelists said they expected home values to fall in 2020. The home values (nationally) were expected to grow by 2.8% in 2020. 59% of panelists expected Nashville home values to appreciate faster than their expected national rate of 2.8%. 31% of panelists expected Nashville home prices to appreciate slower than they do nationally while 10% of panelists expected them to grow about the same as they do nationally.
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. As the inventory remains limited, it means that Nashville will remain among the fastest-moving housing markets in the U.S. Also, as the mortgage rates remain at record lows, it makes buying a property more affordable now than it was in previous years.
Let’s take a look at the number of positive things going on in the Nashville real estate market which can help investors who are keen to buy an investment property in this city.
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 find it here. The Nashville area economy includes thriving technology, service, education, health, and manufacturing sectors.
Notable job growth has occurred in the professional and business services, leisure and hospitality, manufacturing, and mining, logging, and construction 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 in Nashville 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 17th best place to live in America in 2020-2021 — giving it high marks on desirability and value.
It was also ranked 12th in its list of best places to retire and 23rd in the fastest-growing places. This means many are choosing to move here because of the quality of life whether or not they’re coming for work. Nashville is also known as the Country Music Capital of the World and it has unique museums and architecture.
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.
Demographics of the Nashville:
- College-educated: 40%
- Homeowners: 65.6%
- Married: 43%
4. Known Redevelopment Opportunities
Redevelopment can be hit and miss since you can’t be sure a waterfront area or community slated for revitalization goes up in value. One benefit of the Nashville housing market is that there are 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 because 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 restrictions on this are in place yet or in the foreseeable future.
7. Affordable Nashville Real Estate
The typical home price in Nashville is around $457,360 (Zillow). Nashville is relatively affordable compared to other major U.S. metro areas, though the housing market has become increasingly competitive. 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. The area has seen an increase in its population, as well as a rise in home values. The Southern Suburbs submarket, which includes the cities of Murfreesboro and Franklin, is the fastest-growing submarket in Nashville Metro Area. Since Tennessee is one of the few states that doesn't tax wages, residents can keep more of their income, though there is a 6% hall tax on investment interest and dividends.
The state Legislature agreed in 2016 to start phasing out the Hall income tax, with its total elimination beginning on Jan 1, 2021. This is considered among the most important tax reforms in the history of Tennessee. From a 6 percent tax rate on investment income, the levy was to be reduced by 1 percent each year through 2020. For the year that started Jan. 1, the rate is 2 percent. Hence, Tennessee is on its way to becoming a truly no-income-tax state, to join seven other states — Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming.
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 as the most stable housing market in the state in 2018. The city’s relatively slow permitting process slows down the 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 $62,000 (source: Payscale.com), leading many here to rent instead of buy. According to RENTCafe, 46% of the households in Nashville, TN are renter-occupied while 53% are owner-occupied. However, the rental market isn’t so hot that it is guaranteed to collapse anytime soon. Renter household growth has outpaced the construction of rental units and the conversion of single-family homes to rental units since 2010.
That is why average rent hovers around $1,400 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. Also, 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. About 25% of the apartments fall in this price range whereas 47% fall in the range of $1,001-$1,500.
As of January 2024, the median rent for all bedroom counts and property types in Nashville, TN is $1,995. This is +3% higher than the national average. Rent prices for all bedroom counts and property types in Nashville, TN have remained the same in the last month and have decreased by 2% in the last year.
Housing Market Data, Trends & Statistics
Quality of life
Stadium / redevelopment