Nashville, Tennessee: One of the Hottest Housing Markets in 2022?

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Strong demand from home buyers combined with dwindling supply could make Nashville, Tennessee one of the hottest housing markets in 2022.

This metro area has seen tremendous growth over the past few years. Meanwhile, housing market supply has declined considerably and continues to do so. These and other factors will make Nashville a highly competitive real estate scene for many months to come.

Strong Forecast for Nashville Housing Market in 2022

A recent forecast for the Nashville, Tennessee metro area housing market predicted that home prices could continue to rise steadily into 2022. This forecast was issued by the real estate data company Zillow and follows of year of steady price growth.

According to Zillow, the median home value for the Nashville-Murfreesboro-Franklin metro area rose by around 16% over the past 12 months. This was reported in August 2021.

Looking forward, the company’s forecast for the Nashville real estate market predicts a continuation of this trend. In August, they predicted that home values in the area would “rise 14.9% in the next year.”

To understand the reasons for this forecast, you don’t have to look any further than the current supply-and-demand situation. The local housing market has accelerated over the past year or so, due to strong demand from buyers. On the supply side, the number of homes for sale declined considerably during 2020 and 2021.

These trends have increased competition among home buyers while boosting prices across the metro area.

A Serious Imbalance Between Supply and Demand

The strong forecast for the Nashville-area real estate market is largely the result of an imbalanced supply-and-demand situation. This metro area has seen one of the biggest declines in property listings over the past year, when compared to other major U.S. cities. This comes at a time when demand from home buyers has increased.

According to a recent report from Realtor.com, active real estate listings within the Nashville metro area declined by -61% from July 2020 to July 2021. That was the biggest inventory decline of the 50 metro-area housing markets included within their report.

Recently added listings have also declined across the Nashville area. According to Realtor.com, new listings in the area dropped by -26.5% during the 12-month period mentioned above. Again, that was the biggest decline of the 50 metro areas contained in the report.

In fact, most of the metro areas in this report experienced an increase in new listings over the past year. The Nashville real estate market was one of only a handful that experienced a year-over-year decline in new listings, and it led the way by posting the biggest drop.

Major Population Growth In and Around Nashville

Meanwhile, demand from home buyers remains strong across the Nashville housing market. This is largely the result of significant population growth that has occurred over the past decade or so.

According to the U.S. Census Bureau, the population of Nashville, Tennessee grew by 10.8% from 2010 to 2019. Other cities in the metro area experienced even greater population growth during that same period of time.

Murfreesboro, Tennessee saw a 34% increase in population from 2010 to 2019. The population of nearby Franklin, Tennessee grew by 32.8%. These numbers are much bigger than the national growth rate during that same period.

You don’t have to be a housing market analyst to see what’s happening here. Strong population growth, combined with limited home construction, has led to a steady decline in housing supply.

Today, home buyers in the Nashville real estate market have to compete fiercely with one another for limited inventory. In addition to making things more challenging for buyers, these conditions put upward pressure on house prices.

A Fast-Moving Real Estate Scene

Given the trends outlined above, it should come as no surprise that the Nashville real estate market is highly competitive and fast-paced in 2021. And that will likely carry over into 2022 as well.

The Realtor.com report cited above showed that Nashville was tied with three other metro areas for having the “fastest time on market” in July of this year. Along with Columbus, Denver and Rochester, the Nashville real estate market is currently one of the fastest in the nation in terms of home sales.

So what’s in store for next year? What’s the long-range outlook and forecast for the Nashville, Tennessee real estate market in 2022?

In a word, competitive.

The Nashville metro area is unique in that it is currently experiencing a decline in both total active real estate listings and new listings. As mentioned earlier, most metro areas across the country have seen an increase in new listings over the past year or so. But that’s not the case with Music City.

With plenty of culture and personality, along with relatively affordable home prices, Nashville has attracted a lot of new residents from all across the U.S. This has increased demand for housing on both the purchase and rental side. Ongoing population growth has brought more and more home buyers into the housing scene, at a time when supply levels are dropping.

For all of these reasons, the Nashville-Murfreesboro-Franklin real estate market could be one of the hottest and most competitive in 2022. In other words, more of the same.