Note: Our market forecast includes Nashville data and data from its surroundings, including Davidson, Murfreesboro, and Franklin, Tennessee.
Why consider Nashville, Tennessee, for real estate investing?
As the most populous city in Tennessee and the state’s capital, Nashville is an obvious choice for investors who are looking to invest south of the Mason-Dixon line. Nicknamed "Music City," this metropolitan area has made a name for itself as a major center of the music industry.
Yet, beyond the ability to catch up-and-coming acts before they make it big, Nashville is also home to a number of prestigious colleges and universities, including Tennessee State University and Vanderbilt University. Additionally, many prominent corporations have chosen the area for their headquarters, including Nissan, the Hospital Corp. of America, and Ryman Hospitality Properties.
The state of the market
One of the most interesting things about the state of the real estate market in Nashville is just how closely it follows along with the trends we're seeing across the nation as a whole. In many respects, the data was close, if not almost identical, to national averages. To that end, here’s a closer look at what you can expect to encounter if you’re interested in investing in Music City:
Sale prices are up
Sale prices are up an incredible 19% year over year. It currently sits at $375,000 compared to a national average of $377,000 as of May 2021. By all accounts, this jump is likely due, at least in part, to the inventory shortage the nation is experiencing. As of May, the city only reports having 1.1 months’ worth of inventory.
Construction activity is up, but so are costs
While construction activity came to a halt during the pandemic, recent data shows that the industry is getting back to normal. In May 2021, the south’s architectural billings index measured at 59, compared to a national average of 58.5, indicating that the region is experiencing slightly more construction activity than the rest of the nation.
Still, while more construction activity should help ease inventory woes, it’s not going to come cheap. Construction costs have also risen sharply over the past year, owing to material shortages.
Financial health indicators are slightly better than average
As of April 2021, the delinquency rate in Nashville had fallen from its pandemic high of 7.5% in May 2020 to a respectable 4.6%. This number is slightly better than the national average of 4.66%. At the same time, Nashville’s foreclosure rate of 0.1% was noticeably lower than the national average of 0.29%.
Nashville, Tennessee, housing demand indicators
All data and charts supplied by Housing Tides by EnergyLogic.
For the most part, Nashville’s housing demand indicators look to be on par with the rest of the country. Unemployment is down from its pandemic highs, and both sale prices and rents have increased.
Where unemployment is concerned, Nashville is doing better than average. While the unemployment rate spiked to 16% in April of 2020 as a result of the pandemic, it has since recovered nicely. As of April 2021, the unemployment rate in Nashville currently sits below the national average at only 4.2%, which is also an 11.8% improvement on a year-over-year basis.