As the Nashville real estate market continues to reach new heights, home buyers are facing numerous challenges such as low inventory, rising prices, and tough competition from out-of-towners and Wall Street investors.
According to the "Emerging Trends in Real Estate 2022" report, Nashville is ranked as the top real estate market in the US, with the average home price exceeding $400,000. However, this surge in prices has left many feeling left behind, despite their best efforts.
"It's a catch-22, a hard situation," says Robbie Drimmer, a realtor at Compass Real Estate. "It's sad to say, but I'm really not surprised."
Data from Redfin reveals that the average cost of a home in Nashville increased by 22.7% from the previous year, reaching a staggering $411,000. While the median household income in the greater Nashville metropolitan area is approximately $70,000, a shocking 56% of all listed homes are only affordable to households earning more than $100,000, according to the National Association of Realtors.
This reality is particularly burdensome for minority households, with just 26% of white households and a mere 13% of Black households earning incomes greater than $100,000. Consequently, many people feel that owning a home in Nashville is simply out of reach.
The housing affordability crisis extends beyond homeownership. According to Apartment List, onsite workers in Nashville are 52% more likely to struggle with housing costs compared to their remote-working counterparts. For instance, in the Nashville region, 13% of workers in remote-friendly occupations live in cost-burdened households, compared to 20% of those whose jobs require them to be onsite.
"It's really unfortunate because it's forcing a lot of workforce employees out of the city," laments Drimmer. "Commutes are longer, and all their costs, including childcare and commuting expenses, have skyrocketed. Something needs to be done."
Stephanie Coleman, Chief Talent Development Officer with the Nashville Chamber, acknowledges the growing concern among employers about their employees' housing difficulties. To address this issue, the chamber is focusing on equipping the local population with the skills and resources necessary to secure high-paying jobs.
The rapid rise in Nashville home prices can be attributed to an influx of buyers from the northeast and the west coast. A recent analysis by Zillow indicates that there are now 481 US cities where the typical home value exceeds $1 million, an increase of 146 cities in just one year. This surge in prices has even pushed one Tennessee city into the million-dollar range for the first time ever.
"The unfortunate part is that many people moving here are still accustomed to much higher prices," explains Drimmer. "They're willing to engage in bidding wars and drive prices up, which adversely affects those with lower incomes."
Drimmer emphasizes the urgent need for more affordable housing in Nashville and suggests that the government should incentivize developers by offering them tax benefits and land to build workforce housing. This would alleviate the pressure on lower-income households and ensure that a portion of new developments are accessible to those earning below the median household threshold in Nashville.
The problem of housing affordability in Nashville has been exacerbated in recent years, with nearly one-third of households experiencing housing cost burden in 2019. This trend shows no signs of abating, and many believe the situation will only worsen if action is not taken.
In conclusion, the housing affordability crisis in Nashville demands immediate attention. The city needs to implement policies that encourage the development of affordable housing options and provide support for lower-income households. By taking decisive action, Nashville can ensure that its residents, regardless of their income level, have the opportunity to find a place to call home.