Is there a slow down in the Nashville Real Estate Market?

As a Realtor in the Nashville real estate market and as the exclusive Realtor for www.Nashville.com I deal every day with out of state buyers who are moving to the Nashville Metropolitan area.

Housing Demand in Nashville

From my point of view it would seem that the demand for Nashville hasn't really changed. The number of inquiries I receive at my site hasn't been reduced. We still average about 35 leads a day and 90% of all the leads are out of state clients.

The clients that I have been working with recently have all had the same desire to move to Nashville, for various reasons, but the ability to move has been hindered by their home town real estate market. If they can't buy in Nashville until they sell in their home town this then impacts the Nashville market by a perceived lack of demand.

As the sellers in Nashville see the extended days on the market the instinctive reaction is to feel that to increase the demand to view the home the best way is to reduce the list price. As the list price is reduced it starts a perception that the demand is down. This leads to other reductions and a grass roots feeling then spreads that the real estate market is in a slump!

The days on the market is seen as an indicator of the state of the real estate market. In Williamson county to the south of Nashville, the days on the market has increased but the sales price of the homes has continued to rise. This may be partly explained by the number of corporate relocations to the Brentwood and Franklin areas which have for a long time attracted buyers in the middle and upper management that have the luxury of assisted moves and guaranteed buyouts of the homes they have to sell to move to Nashville.

The abundance of condo's coming on the market seems to have skewed the inventory a little. For example units st the high rise condominium called the Viridian sold out very quickly in the pre sale and pre construction period. After the sales were all closed some investors tried to flip the units. It would seem that a lot of the buyers of these condos were thinking along the same lines and now there are over 50 units on the market. These are priced from $219,000 to $1.M. In fact in May of this year a unit originally listed at $1.4 M end up selling for just over $1M after 59 days on the market. This could be seen as a desire to move the product by the developer in an attempt to close out the development.

Overall, the demand for Nashville real estate will probably continue to buck the national trend due to the number of corporate relocations that are bringing new residents to the area. This influx of new home buyers has the trickle down effect of smaller peripheral support industries moving here to continue their relationships with their major source of business. Also as relatives and friends visit the new Nashville residents and the see the quality of life they are experiencing and the real estate values this leads to even more relocations so that friends and family can live close to each other again.

Mortgage Rates

"Mortgage rates eased this week due to market concerns that the housing market will be a longer drag on the economy," said Frank Nothaft, Freddie Mac vice president and chief economist. "May's housing starts fell for the first time in four months, while home builder optimism in June fell to a sixteen-year low."

If the rates continue to rise this will continue to impact the Nashville market. Now that the barriers to "entry level" mortgages have been tightened, the ability for the first time home buyer to buy an entry level home is  effectively reducing the available pool of new home buyers. This then means that the seller can't sell his entry level home and move to the next price tier. The seller of the next price tier can't move because he can't find a buyer and so on all the way through the housing market right to the very top of the multi million dollar homes.  

Things aren't all bad in Nashville The median price of a single-family home rose 3 percent in May to a record $185,405.

The potential for interest rates to rise will ultimately be the most significant impact on the Nashville Real Estate market. As has been seen with other cities like Atlanta and Orlando the boom can come to a sudden halt. Luckily Nashville never really experienced a boom quite like other cities. The growth has always been steady and moderate and has been sustained by "real" demand rather than preceived demand and a buyers feeding frenzy.

The growth of Nashville will continue, even though it may experience a slight slow down, the long term picture is one of steady growth and a healthy econonmy which will continue to attract corporate relocations from the rest of the US.

Nashville is still booming except that boom is a little more muted for now.

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