Highlights from this housing report:
- Home prices in Nashville rose faster than average for the past few years.
- But they now appear to be slowing down, partly due to affordability issues.
- One research group issued a modest housing market forecast for Nashville.
- It also seems that 2020 could be a good year for local home buyers.
Over the past few years, Nashville was one of the hottest housing markets in the U.S. That was largely due to a combination of rapid population growth and limited inventory within the real estate market.
But now, as we approach the end of 2019, the Nashville housing scene appears to be cooling and slowing a bit. At least in terms of home-price growth.
Nashville Housing Market Slows, Going into 2020
In November, the housing research team at Zillow issued a modest home-price forecast for the Nashville real estate market. They predicted that prices in the area would climb by less than 1% over the next year or so.
According to their website: “Nashville home values have gone up 2.0% over the past year and Zillow predicts they will rise 0.7% within the next year.”
That’s the first thing home buyers should know about this market. House prices are rising more slowly today than in the past, and that trend is expected to continue into 2020 as well.
To be clear: Home values in the Nashville area are still rising, but at a much slower pace than in previous years. Additionally, this housing market appears to be cooling down and shifting to favor buyers over sellers.
Mostly Good News for Local Home Buyers
These latest real estate trends could benefit those who are planning to buy a home in Nashville in 2020.
While housing inventory in the area remains below historical norms, it’s not as tight as some other major cities in the U.S. As a result, buyers seeking to purchase a property in 2020 should have plenty to choose from.
As of mid-November 2019, Zillow showed more 3,000 single-family homes, condos and townhomes listed for sale in Nashville, Tennessee. Considering the size of the area, that’s a fairly high listing count.
Those planning to buy a home in Nashville in 2020 could benefit from the following trends:
- This housing market currently has more inventory than a lot of other big cities across the U.S. That gives buyers a better chance of finding a suitable property within their budget.
- The Nashville real estate market is also experiencing slower home-price growth today than in years past. That could reduce the sense of “urgency” among home buyers in 2020, and ease competition as well.
- Thirty-year mortgage rates are still hovering below 4%, on average. They’ve dropped quite a bit since the beginning of 2019 and are expected to remain low as we move into 2020.
- The long-term outlook for Nashville’s housing market is mostly positive. Steady population growth will continue to put upward pressure on home prices (see below). And the unemployment rate for this metro area is below the national average, thanks to a strong local economy.
Earlier this year, Realtor.com published a list of the top ten “buyer friendly” housing markets in the U.S. The zeroed in on metro areas with slower-than-average home sales and sufficient inventory levels (conditions that tend to favor buyers over sellers).
The Nashville-Davidson-Murfreesboro-Franklin metropolitan area was ranked #9 on their list of buyer-friendly real estate markets.
Population Growth Putting Upward Pressure on Prices
Affordable housing and a strong job market are bringing new residents into the area. The Nashville metro area’s population rose by nearly 11% from 2010 to 2018. That was well above the national growth rate of 6% for that same eight-year period.
Nashville’s population has been growing at an above-average pace for the past few years. The local economy has a lot to do with that. The jobless rate for this metro area is currently lower than the national average.
In September 2019, the unemployment rate for the Nashville-Davidson-Murfreesboro-Franklin was down to 2.4%. That was quite a bit lower than the national average of 3.6% during that same month.
The state of Tennessee, as a whole, is also doing better than average. The chart below, published earlier this year by the Tennessee Department of Labor and Workforce Development, shows how the state’s unemployment rate has dropped over the years. You’ll also notice that is has been lower than the nation’s jobless rate for the past few years.
These trends support the Nashville housing market in several ways. They help attract new residents into the area, thus increasing the demand for homes. A strong job market also gives local buyers the confidence and financial capacity needed to purchase a home in the first place.
Looking Beyond the Horizon
The Nashville real estate market is clearly slowing down, and that trend will likely carry over to 2020 as well. The same thing is happening in many cities across the U.S. Additionally, some economists are predicting that the U.S. economy will slow even more in 2020.
For the long term, however, the Nashville housing market seems to be on stable ground. The area’s population is expected to continue growing at a steady clip. That would mean more people searching for homes and apartments.
And with a strong local economy — driven in large part by the music industry and tourism — the Nashville area should fare well through whatever economic slowdown we might see in the near future.
Disclaimer: This article contains home-price and housing market forecasts for the Nashville area through 2020. Those outlooks were issued by third parties not associated with the Home Buying Institute. Such predictions are the equivalent of an educated guess and should be treated as such.