Nashville Housing Market Update
Nashville Tennessee is gaining notoriety with a larger number of Americans in 2022. Two of our prized ManageCasa staff live in the region and can attest to the quality of life that is attracting newcomers.
As buyers across the US consider and wait for the sale of their own property, the state of Tennessee and the city of Nashville is on their list of most desirable places to move to.
The conditions are positive for higher rent yields from a growing, highly employed population and moderate home prices. And property management firms will likely be doing a brisk business as the demand for rentals in Nashville rises.
People Drawn to Tennessee
Tennessee is forecasted to grow by another 1 million residents by 2040, bolstering the demand for single family houses and multifamily units. The city of Nashville will be front and center as this migration trend to the US southeast states continues.
Rising property inventories for sale in Nashville along with moderating home prices should give buyers a rich source of homes or rental units to consider.
Desirable Nashville Tennessee
The US capitol of country music is rated as one of the friendliest cities, has nice weather, no state income tax, and now enjoys a growing volume of homes for sale.
Anyone looking for less stress, more affordability, and a change of lifestyle will certainly appreciate this beautiful location to live and raise a family. And not far away are the great Smoky Mountains with its beautiful vistas and 800 miles of hiking trails for more recreation.
A good number of out of state buyers are eager to move to Tennessee after a receiving a king’s ransom for their current homes (e.g., California, New York).
Migration to the state has soared and these newcomer residents have plenty of money to spend when they move here. Inflation and cost of living are lower and a paycheck and savings goes much further here than most other US cities.
That’s drawing businesses to relocate to the state. And while Memphis, Chattanooga, Gatlinburg, Clarksville, Columbia, Knoxville, Franklin other Tennessee towns have their charms, most out of state migrants might find the lifestyle and economy in Nashville more to their liking.
Positives and Some Things They’re Working On
Nashville is home to a number of large health care companies and one large automobile manufacturer.
GDP estimates show Nashville growing faster, now above northeastern cities, while Memphis is seeing its decline.
The downside is that the full city is generally not walkable, road traffic is congested, schools have low ratings, roads are rated worst for potholes, and public transit isn’t up to expectations.
The average car insurance cost in the city of Nashville is 1% lower than the national average at $1,550 per year, or $130 per month.
However, given the largest social trend right now is to find lower home prices, lower rent prices, low taxes, low stress lifestyles, and a positive job market, Nashville has to be one of the most desirable places to move to.
Home Prices in Nashville Decline only Slightly
Home prices declined only slightly in October vs September 2022, showing demand is still firm within greater Metro Nashville (population of 1,294,000 is up 1.73% from 2021)
Zillow’s stats show home prices falling slightly to about $455,000 in October while the Greater Nashville Realtors report a slight rise of $3000 on average to $478,500.
Greater Nashville Realtors Sales/Prices for October 2022
|Nashville Tennessee||October 2021||October 2022|
|Total||Total||Year over Year Change|
|Days on Market||30||39||23.08%|
Nashville home inventory rose by 220 units while sales of home types dropped by 554 units during the month. Year over year, sales dropped 36.5% from 4047 units to 2824 units. Total property inventory rose by 373 units statewide.
Redfin reports home prices in Nashville were up 16.3% year over year in October while sales fell 34.9%. This compares to the national growth rate in prices of 4.9% year over and a 29.6% decline in sales.
Moody’s Analytics is forecasting home prices to fall 20% in the Nashville housing market yet these reports are nothing new. Nashville is not among the top 40 list of housing markets (bankrate.com) which could crash if the disaster scenario in the US economy should play out.
A drop of this kind might only happen with a US economic collapse.
The trend of Americans selling houses and moving to cities such as Nashville is notable and might not recede if ever.
High taxes, low margins, regulations, and high maintenance in most US cities and that presents serious financial challenges for landlords, particularly those who haven’t adopted better property management practices.
Why is the Nashville Market Faring Better?
Nashville and Tennessee had to fight to recover from the devastation of the Covid pandemic. Tourism was hurt significantly. Yet Covid funding and migration may have given the city the boost it needed to forge a much more prosperous future.
The Brookings Institute in their metro report, shows Nashville is faring better than most US cities now. Job numbers climbed 3.2%, unemployment has fallen .2%, job postings are up 58%, listing price is up 20%, and multifamily rent prices rose 19.6%.
November’s report has rent prices dropped by 1.5%, but still up 7.7% year over year.
“The apartments are filling up,” said Apartment Insiders Founder Joel Sanders. “What is slowing down is how quickly they are filling up.”
Only Austin, Dallas, Raleigh and Jacksonville have fared better than the Nashville-Davidson–Murfreesboro–Franklin region.
Nashville still has a low home price growth rate which is making this area attractive to work from home employees along with migrating buyers looking to move to a more affordable region and quieter, less crime ridden neighborhoods. Those unable to buy at all in California and the Northeast due to prices and mortgage rates are learning they could afford a home here.
Salary.com reports the cost of living in Nashville is 4.8% lower than the nations average. Contrast that with New York City where it is 80% higher than the national average, and in Los Angeles where it is 41% higher than the national average.
The fact Nashville has no state income taxes must be drawing a lot of attention as taxes are the most significant personal and business cost for Americans. It has a flat tax on earned interest and dividends of about 2% (according to HRBlock). See more on landlord tax strategy. Minimizing tax burden and optimizing accounting has to be the number objective of smart landlords in 2022.
Top Metros For Growth
Over the last 7 years, Nashville has been a top metro for population growth (up 20% in one decade). The city gained about 13,000 new residents in 2021. Of the 27,000 that arrived in Nashville in 2019, 12,000 were from California.
And arriving home buyers had a lot of money to spend on homes which has caused home prices to rise accordingly. Buyers arrived here with an average $736,900 which was the highest gap vs local home prices. That will bode well for economic activity in the area going forward.
Businesses too are moving to Nashville to enjoy the benefits of a wonderful city, great for raising kids, and enjoying a new southern culture. These businesses are expanding operations in the Nashville area.
The Nashville Rental Market Outlook
The Nashville Rental market is an active and unsettled one as renters here are looking to move out of the metro area to the suburbs. According to the renter migration report, 46% of renters want to leave the city.
Nashville also ranked 4th for the highest number of searches from other metros with 49.4%. Only San Jose, CA, Raleigh, NC, and New Orleans, LA had higher inbound search rates.
Zumper’s rental stats show an average rent of $1,700 a month in Nashville which has grown 9% year over year — a common increase for most major US cities. 1 bedroom units have risen $650 per month over the last 18 months, while 2 bedroom rent prices are up $350 during that period.
RentCafe has listed the most affordable and pricey neighborhoods to rent. Coming in at the most affordable rent price are: Poplar Glen, Maplewood Heights, Kenmont, Inglewood, Gar-Mar Acres, and Cobblestone Corners, all at $1366 per month.
Nashville neighborhoods with the highest rent prices are 8th Avenue South, Demonbreun Hill, Elliston Place, Marathon Village, The Gulch, Watkins Park and Wedgewood Houston at $2454 per month. While that may seem pricey for Nashville, this is a city with a better economic outlook.
Neighboring Memphis is touted as one of the best cities to buy rental properties, yet Nashville is a more desirable place to live with lower crime, better tourism revenue, is close to the I75 to Florida, and has many professional sports teams. Demand for short term rentals is said to be highest in Nashville.
Rent growth in Nashville is forecasted to be 11.1% by year end 2022. Cost of properties will likely fall faster than rents in the city, so the opportunity to be a landlord here doesn’t lose its luster.
Is Nashville Tennessee a city with one of the brightest outlooks for landlords and investors in the US? If you consider that it will be very tough to bring real estate prices, rent prices, and cost of living down in New York, Massachusetts and California, we should see the migratory trend continue.
Lacking a state income tax and offering a great lifestyle, American home buyers and renters may continue to arrive in droves to capitalize on a unique opportunity. For landlords, it offers a good business opportunity too, if you should decide to relocate near to Tennessee yourself.
Making the most of your rental property investments and profitability is still important. Check out ManageCasa’s outstanding rental property management platform. Do you all you need to win in rental real estate.
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