There is no doubt that the Nashville real estate market has slowed, but it is not for the same reasons as many other major American markets. Nashville is one of the few markets still experiencing growth in the big three housing affordability factors: Job growth, wage growth, and population growth. So what is holding the Nashville market back? There is literal a standoff between home buyers and home sellers. And what has caused this standoff? It is lethal combination of the economy, tightening lending criteria, and the national media’s unrelenting over reporting and sensationalizing of bad real estate news. It is not a result of buyers vacating the market, buyers’ inability to afford the market, or buyers’ inability to obtain financing.
According to the Downtown Partnership, Nashville residents still need over 7,000 homes, townhomes, and condos in downtown to meet the current demand and that number is calculated after the Encore, Icon, and Rhythm deliver their 850 units in 2008. Reading and writing these statistics makes me feel very strange…especially since there is such a tangible standoff between buyers and sellers until I begin to rationalize from a buyer’s prospective. Buyers have been convinced by national publications that now is the time to low ball poor sellers in order to get the deal of a lifetime, but what many vultures fail to take into account is that in most cases they are sellers too. And as a seller, they are not willing to accept the same low ball offers that they themselves are making or are hoping to make.
The truth is that some sellers are willing to accept low ball offers, but those are the same sellers that are in true financial trouble and would have been regardless of the economy, lending guidelines, or media. These are the same 4% of Americans who are foreclosed on every year and the same people who live beyond their means no matter their income or circumstance. What about the rest of the sellers? They are just like you and I. They are not in financial trouble, they don’t have to sell, and they are probably not going to accept a low ball offer, but they are willing to take less for their homes than they were just one year ago. So what is the answer? The answer is that our market will return to normal much faster than the rest of the country whose markets are negative growth. When will that happen? As soon as people realize and accept that buying and selling at a discount in Nashville is better than continuing this standoff. Nashville is not Las Vegas or Phoenix. Our market never increased more than 15% in a year. Buyers never offered $50,000 more than asking price just to winning a bidding war. Nashville is a stable, growth oriented market whose fundamentals are strong, whose mortgage rates are low, and whose future is bright.
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