06/06/2022
New article from the WSJ was shared in the Tennessee Realtors Weekly Digest this morning. This is why you might not see a ‘price correction’ or drop in the Nashville market.
“Housing, Childcare, Utilities–Nashville Faces Exceptional Inflation Hit From All Sides
Housing prices in Nashville have more than doubled over the past 10 years, partly because of a population boom that has brought nearly 400,000 new residents to the metropolitan area. That has pushed some locals farther away from the city center, adding hours to their weekly commutes. Meager public-transit options mean soaring fuel prices are hitting them especially hard.
Median home-sale prices in Nashville reached a record of $423,105 at the end of March, according to Zillow Group Inc., compared with a nationwide median of $337,560. Average rent reached $1,802 a month in April, up 19% from a year earlier.
The main culprit, according to economists and city leaders, is the population surge. Nashville is one of several midsize American cities that have seen an influx of new residents, coming either from surrounding areas in search of jobs or larger cities in search of a more affordable location.
There is no government-reported inflation rate for Nashville. The inflation rate for the South stood at 8.8% as of April, above the national rate of 8.3%.
……
In many ways, the cost of living in Nashville is catching up to what it is elsewhere in the nation, said Dr. Achintya Ray, an economics professor at Tennessee State University. “The South, as an area, used to be a little cheaper than the rest of the country,” he said. “That difference is kind of shrinking right now.”
The influx of new residents is expected to continue driving up housing costs. The Boyd Center for Business and Economic Research, based at the University of Tennessee, Knoxville, projects about 150,000 people moving to the area over the next five years. Census data shows many recent transplants have come from cities like Chicago, New York and Los Angeles. Earlier this year, real-estate brokerage firm Redfin estimated that the average new resident had $736,900 to spend on a home, compared with local buyers’ average budget of $573,400.”
An influx of new residents has caused housing prices to soar in Tennessee’s capital, pushing out some longtime inhabitants. Many are cutting back on spending or taking on more work. “It’s just too expensive,” said one lifelong resident.
