How to Navigate the Nashville Real Estate Market for Single-Family Homes

24 Aug How to Navigate the Nashville Real Estate Market for Single-Family Homes

Buying real estate is a complicated process. Buyers must consider property values, competition, and location.

Nashville’s thriving culture and burgeoning industries make it a great place to invest in single-family homes. However, investors should carefully evaluate their investment properties to maximize returns. The following are some things to keep in mind.

Inventory is Low

As one of the fastest-growing cities in the United States, Nashville attracts many homebuyers. However, the city’s growth has drawbacks, including a tight market with low inventory and rising prices. The population of the Nashville-Davidson-Murfreesboro-Franklin metropolitan area grew faster than any other in the country in 2020, and it continues to grow at an impressive pace in 2023. This growth is due to many factors, including the growing popularity of the region’s music scene, a strong economy, and various outdoor activities.

The available supply of housing is currently unable to meet the high demand. The city now has a two-week supply of single-family homes, which is well below the normal average of eight weeks.

There are a few reasons why inventory is so low. First, the COVID-19 pandemic forced people to stay home and work from home. Additionally, mortgage interest rates were record low in the past year, encouraging many existing homeowners to repurchase or take out a second home. Regardless of the reason, the low inventory will likely continue to plague the Nashville real estate market.

Mortgage Rates are High

Purchasing a residence is undeniably one of the most weighty monetary choices you will ever encounter. Ensuring your finances and credit are in good standing before committing would be best. You should also factor in your desired neighborhood and other lifestyle preferences.

Mortgage rates are high, preventing many homeowners from selling their homes. In January 2022, the average 30-year mortgage rate topped 7%. These high rates destroy a buyer’s purchasing power. For every percentage point the mortgage rate increases, a buyer’s buying power decreases by eleven percent.

The economy is strong, and there is still a lot of demand for single family homes for sale in Nashville, TN. People that work from home or who want to escape higher costing regions like California and the Northeast are discovering they can afford a home in a music city. It is excellent for the local housing market, as it means people will continue to move here. However, it does mean there may be a need for more available homes.

Competition is High

Nashville is one of the fastest-growing cities in the country, and its economy is booming. High demand and low home prices have made it a hot real estate market for the past ten years.

However, with rising mortgage rates and low inventory levels, buyers have more leverage when negotiating with sellers. The result is that homes are spending longer on the market, and prices are beginning to drop.

It is not a sign of a housing crash, but it is a reminder that higher interest rates and lower demand make buying a home in the city more challenging. If you want to purchase a home in Nashville, get pre-approved for a mortgage and know your budget. You can use an affordability calculator to get a good idea of how much you can spend on a home.

Speaking with an experienced realtor to get the latest information about the local real estate market is also a good idea.

Home Prices Are High

While the city home prices are high, they remain below the national average. And the city continues to attract positive net migration, meaning the demand for homes should remain strong.

In fact, despite the low inventory and higher borrowing costs, homes are selling quickly. In June alone, more than 2,700 pending sales for single-family properties in the area.

Despite these trends, home buyers should prepare to spend more time in the market. Buyers with a flexible timeline should consider bidding on multiple properties to increase their chances of landing the one they want.

The new construction housing market remains strong, with most builders focusing on single-family neighborhoods. Consumers have shown a clear preference for these types of communities, which offer privacy and space to grow. The city region’s population is also younger than the national average, which will help sustain the demand for housing for years. The city is attracting work-from-home employees and families that can’t afford to buy in more expensive markets like San Francisco or Los Angeles.

The Economy is Strong

Despite high mortgage rates and rising interest, the real estate market is still strong. It is mainly because the economy is thriving. Many industries are doing well, including healthcare and tourism. Additionally, there is a lot of positive net migration in the area. Many people are moving to the city to find jobs in these industries. It has helped to keep the demand for single-family homes strong.

However, higher interest rates and low supply are beginning to take a toll on the market. Prices have started to fall, but they are still relatively high compared to last year.

Nevertheless, it is essential to note that the housing market is not in a bubble. It is simply experiencing a usual slowdown in the market after multiplying for two years. The city is expected to grow economically, so this trend should help home prices remain stable. In addition, the lower interest rates are making it more affordable for investors to buy and rent properties.