Where is the Nashville Real Estate Market?

What is going on with the Nashville real estate market?

This question is truly the question of the hour. If you look at the entire metropolitan Nashville housing market as a whole, a 21% drop in homes sales over last year appears to be a bleak sign, but prices have remained steady over that same period. Any rational person could conclude that while prices are steady, they are sure to drop…and they would be correct. But, one really needs to look at the separate market segments within the entire metropolitan area to find the real story.

There appears to be two market segments that are getting hurt the most: The first-time home/condo buyer market and the somewhat upwardly mobile middle class market. That’s right, the upper middle class, the same group who drove prices ever higher in Brentwood and Franklin, is the same group who is now hurting the most. To understand why this group can be so volatile, you have to look at their typical fear and greed driven spending habits. During growing economic times, the upper middle class tends to be the market leader in both discretionary and non-discretionary spending. They invest in stocks, real estate, and their own happiness, but during down times, they hide in the shade and weather the storm. This ‘wait and see’ attitude will always drive prices lower, there is simply no way around it as it creates an artificial inventory of homes. As this inventory builds, prices drop, fear grows, more middle class buyers become ‘wait and seers’, more inventory builds, and so on. It can become a vicious cycle that can kill an entire market segment.

So what is the up side? The up side is that the Nashville area is adding 5,000 – 6,000 new residents a month, salaries are still on the rise, rental rates are spiking upward, and most importantly, new construction starts are at a 20 year low. It is easy to discount the fact that new construction starts are way down, but keep in mind that burning off current inventory may be the most crucial part of turning a market around.

So where is the Nashville real estate market? The answer is: in flux. We are in a market where luxury real estate is rising in price, affordable real estate is still hot, but where first time buyers and the middle class are losing money and demand is drying up. If you are a real estate investor, you should be actively looking for pre-foreclosures in desirable neighborhoods…rents are good and the market turnaround time appears to be in the 12-18 month range compared to more than 48 months in places like Florida and California.

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The Media Vs. The Real Estate Market

With all of the doom and gloom on the nightly news, this question has to be asked: Is the news media creating an artificially bad real estate market? Is the news media at least responsible for making a bad situation worse? I believe that the answer has to be a resounding yes. Let me start by clarifying, the real estate market in Nashville is still appreciating and homes are not languishing on the market for years at a time. The story in Nashville is quite the opposite of most of the stories you hear across the United States, but our market has slowed more than what the conditions warrant. For example, our unemployment rate is less than 5% and has not risen in more than 28 months whereas the national unemployment rate is beginning to climb. Our average household income index has also risen faster than area homes prices.

It would be rather unrealistic to gloat that all of Nashville’s indicators are making a positive move, there have been a few traditionally bad signs for the market. The foreclosure rates and numbers are up over last year, but I could make the argument that the people who are losing their homes were overextended to begin with and would have eventually defaulted. It may actually be healthy to trim the uncredited “fat” from the Nashville market and allow currently qualified buyers acquire those properties. Obviously, the media simply talking about a bad national real estate market will not cause foreclosure rates to rise, but the doom and gloom will affect qualified buyers and their willingness to jump into an ownership position.

Perhaps the best economic indicator for Nashville is that rental rates have risen across the board. Single family home rentals, downtown condo rentals, suburban apartment rentals, Germantown townhouses, you name it, they are up on average 8% over last year. What does this mean? It means that there are plenty of people in Nashville who can afford and want to live in Nashville and that housing demand is still high. It also probably means that many people who are qualified and can afford to buy a home are simply choosing not to do so. I would make the argument that the national media has a lot to do with that decision.

Another great indicator for the Nashville market is that the commercial real estate market is one of the strongest in the United States. At the writing of this post most national publications rank Nashville in the top 5. In fact, the Hendersonville commercial real estate and Cool Springs commercial real estate markets are two of the strongest sub-markets in the history of middle Tennessee.

cool springs area of Tennessee

Of course there are many, many other factors that contribute to the overall market’s health, but consider these following accolades: Franklin was the 2006 “Best small town in America”, Smyrna is “one of the best places to retire in America in 2007”, Nashville is “the second best major city to relocate your business in 2007”, and the list goes on and on. You can also count on the Nashville Remarkable Homes Team to bring you the most up to date information.

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Mortgage Rates Rise After 3 Weeks of Decline

Freddie Mac reported an increase in the 30-year fixed mortgage rate to 6.73% on Friday from 6.63% a week earlier, with chief economist Frank Nothaft expecting the benchmark to remain at or near this level for the remainder of the year.

The 15-year Nashville mortgage rate edged up to 6.39% from 6.3% over the same time span, and the five-year adjustable mortgage rate climbed to 6.35% from 6.29%. Meanwhile, interest on one-year ARMs held steady at 5.71%. Nothaft attributes the jump in borrowing costs to a positive June jobs report and a jump in consumer credit in May.

Remember, when buying or selling Middle Tennessee or Nashville Real Estate , trust The Remarkable Homes Team! We specialize in Belle Meade Real Estate , Brentwood Real Estate , Cool Springs Real Estate , Franklin Real Estate , Green Hills Real Estate , and of course Nashville . We have been assisting clients buy property in Middle Tennessee for over 12 years. With well over $120,000,000 in closed sales, it is a testament to our integrity, professionalism, and dedication to our clients.

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Nashville Real Estate Resources

We have been very busy over the past month adding more Middle Tennessee and Nashville real estate resources to our website! If you are considering buying or selling a property in the Brentwood or Franklin areas you will be excited to find our new Fieldstone Farms web page and Governors Club web page. These pages will feature up to the minute listings in both neighborhoods arranged by list price. If you have any questions about any of the homes listed, I am more than happy to help. Call me direct at 300-4695.

We are also excited to feature Nashville’s excellence in real estate on our brand new page dedicated to Million dollar estate homes and equestrian properties in Middle Tennessee. This page will also feature an up to the minute listing of all the Nashville estate homes available within a 45 mile radius of our capitol city!

As always you can find tons of helpful information on our website. We feature a list of all the schools in Nashville, home buying steps, home inspection information, home staging tips, dual agency explanation, home selling tips, and coming soon, homeowners insurance information!

If you are looking for the best Realtors in Nashville, you have found them. We are available to help you purchase or sell property in any price range in any suburb in Nashville. We have Middle Tennessee Real Estate covered!

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Nashville Market Update

With summer drawing to a close and school having just begun, we are starting to see the annual lull in the Nashville real estate market. Typically, homes will sit on the market for 2-4 weeks longer during this time of the year due to the fact that the new school year simply “drains your energy like nothing else” according to one mother of three boys. So do not panic, this period on inactivity happens every year around this time and things will be back to normal in less than a month.

There are some really encouraging signs as well this year. As a whole, the Nashville and especially, Williamson County real estate market has appreciated at a record pace for the third consecutive year. Parts of Brentwood, Franklin, and even Spring Hill have seen 2-5% overall increases in the price per square foot during the past 3 months alone! It appears that if you buy into a new subdivision early, you will be rewarded with an immediate gain and if you hold on to the home until the new subdivision is built out, you might even see an additional 5% jump! This is exactly what happened to Fieldstone Farms a year or so ago.

It also appears that mortgage rates will remain stable and may see a slight increase unless Greenspan decides to not slowly raise the prime rate, but I only see that happening if there is a major event in or including the Unites States. In other words, don’t count on it. It is always best to shop for mortgage rates and we encourage you to visit our Nashville loan and mortgage page for more info.

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Choosing a School and School System

Are you relocating to Middle Tennessee, have high school aged children, and don’t know where to start? Here is a quick overview of the some schools in Nashville and the surrounding area. If you are considering the public school system, Williamson county schools are widely considered the best, especially the Brentwood city schools. Brentwood also boasts one of the most well funded and supported athletic programs (especially soccer, baseball, and football) in the entire United States.

When considering the available private schools you must first decide if you would prefer co-ed schools or an all girls or all boys institution. If you are leaning towards a highly academic and athletic co-ed school there are actually several great choices: Brentwood Academy, Battle Ground Academy, Franklin Road Academy, Father Ryan (Catholic affiliation), Christ Presbyterian Academy (Presbyterian affiliation), and The University School just to name a few highly respected institutions.

If you are leaning towards a highly academic and athletic all girls school, Harpeth Hall is for you. If you are considering a catholic all girls school Saint Cecilia may be right for you.

If you are leaning towards a highly academic and athletic all boys school, Montgomery Bell Academy is the clear cut choice. MBA annually produces a number of Rhodes Scholars and Ivy League graduates and it’s graduates include Senate majority leader Bill Frist.

This is obviously not a complete list of the available schools; it is simply a highlight sheet to get you started. For a complete list of schools in Nashville and more information please feel free to contact us!

Remember, if you are considering buying or selling Middle Tennessee or Nashville real estate, trust the Remarkable Homes Team and our 17 years of real estate excellence!

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