According to the recently released annual PwC/ULI Emerging Trends in Real Estate report (which is based on interviews and surveys with nearly 2,000 real estate experts in 78 cities), Nashville will stay in the top 10 real estate markets in the United States for 2018, although they’ll fall three spots from 6th to 9th. The falling is less significant than the fact that this is the third straight year that Nashville has been in the top ten, indicating its overall strength. But will it stay there for the next three years?
If you’ve tried to buy a house in Nashville over the past couple of years, you know the market is hot, hot, HOT right now! But many in real estate are predicting that the Nashville market will begin to cool off over the next few years. Below we’ll examine the factors playing into the market’s movement and discuss what could happen by 2020.
Why A Cool Off Could Be In Order
– Nashville, like much of the nation, is experiencing a shortage of entry-level, single-family homes. First-time homebuyers are having a hard time breaking into the market, a trend that will eventually slow down the market and its astronomical growth.
– The historically low mortgage rates of 2016 have already begun to rise in 2017, albeit a little slower than some initially thought. Rates may be as high as 4.5% by the end of 2018 and though the market can sustain some increased rates, if they continue to rise gradually, we should start to see a slow-down in sales by 2020 due to affordability.
– Homes are flying off the shelf right now in record numbers. Real estate history over the past hundred years tells us that this just isn’t sustainable long-term, even in an “it” city.
Why It Could Stay Hot
– According to the U.S. Census Bureau, Millennials are now the nation’s largest living generation with more than 75 million in population, having recently passed the Baby Boomers. Because of its large number of colleges and universities, Nashville has a healthy population of Millennials who are choosing to stay in the area after graduation. If Nashville can continue to offer affordable single-family housing, the city will certainly have plenty of people to buy them.
– Some estimate that 20,000 people move to Nashville annually. Although prices seem high to those who have been here for years, housing in Nashville is still at an affordable range. The median single-family home price of $250,000 is $5,000 less than the nation’s median.
– Lets Move Nashville recently announced a 5.2 million dollar transit makeover including 26 miles of rail across four new lines, four rapid bus lines and expanded bus service for existing routes. Of course the new lines wouldn’t be finished by 2020, but the promise of accessibility and the ability of the city to move outward could keep the real estate market hot in 2020 and beyond.
What do you think? Will Nashville real estate continue to be hot over the next few years or do you anticipate a cool down?