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What's Going On With The Nashville Real Estate Market?

Tyler Forte

Apr 22nd 2021

The Nashville real estate market is constantly changing which is why we felt the need to create a 'living' blog post that monitors and interprets the Davidson County real estate market on a monthly basis. As a real estate brokerage and member of the MLS, we have access to exclusive market data. The goal of this post is to democratize and interpret this data so that potential home buyers and sellers can educate themselves on the current market conditions.

Of course, the best way to get a pulse on the market is to talk with an experienced local real estate agent. If you have any questions about the state of the market or the home buying/selling process, please feel free to contact us at contact@felixhomes.com or 615-354-5731.

April 2021

Single Family Homes

Graph depicting the Nashville real estate market in April 2021 for Single Family Homes For those who thought the supply crunch in Davidson County couldn't get much worse, guess again. According to Realtracs MLS, just 66 new single-family home listings were added to the market in April 2021. This represents a historic 94.9% decrease from the number of new listings added in April 2020 (1,282). Unsurprisingly, the number of total listings on the market continues to dwindle as fewer new listings replenish the homes that sell every month. There are just 1,412 active listings as of April 2021 compared to 1,544 in March 2021 and 3,245 one year ago.

How are prices responding? The average price of a home in Davidson County was $472,759 which is 11.2% higher than this time last year. Bidding wars have become the norm and buyers are waiving contingencies left and right. Hot listings are receiving offers for 5%-10% above their list price. In fact, we recently listed a home for $430,000 which sold just 8 months ago for $399,900. In a matter of 4 days, we received multiple offers and the winning offer was willing to pay $465,000. The average percent of list price received broke 100% in April to 101.2%. This means that on average, a home listed for $400,000 will sell for $404,800. Keep in mind desirable listings will typically command a significant amount over their list price.

Apprisers are having a difficult time in this market. Prices have appreciated so much so quickly that they are finding it hard to select comps that justify a given sales price. This is an issue as most buyers choose to finance the purchase of a home using a mortgage. As a listings agent, it's important to determine the likelihood a deal will close. For example, in a scenario where you receive five offers two of which are waiving the appraisal contingency, it may be worth potentially taking a lower sales price if the buyer is willing to waive the appraisal contingency as opposed to rolling the dice on an offer that is contingent on the appraised value equaling or exceeding the sales price.

It's hard to envision a catalyst that will return some sort of normalcy to this market. Our hypothesis is that the lack of inventory is due to the fact that nobody wants to be a buyer in today's competitive market. Yes, you can sell your home for a record price but unless you are planning to leave the country or rent, you will have to enter the brutal battle of being a buyer in what is turning out to be one of the most competitive housing markets in recent history. One thing is clear, if you are an investor or have an opportunity to sell your home, you likely won't find a better time to capitalize on the market.

30-year mortgage rates hit 3.18% during the first week of April according to Freddie Mac but have since relaxed to below 3% in the subsequent weeks.

Townhomes and Condos

Graph depicting the Nashville real estate market in April 2021 for Townhomes and Condos

The market for townhomes and condos is catching up to the single-family home market in terms of competitiveness. For a while, townhomes/condos didn't experience the same supply crunch as single-family homes but that is quickly changing. 18 new listings were added in April 2021 compared to 311 in April 2020 and 394 in March 2021. The number of active listings on the market in April was 645 which represents a 33.5% decrease from April 2020 (970).

Whenever there is a supply crunch, prices are likely to be pushed higher and the real estate market is no different. The average townhome in Davidson County closed for $286,731 in April which is up 9.8% compared to this time last year. We listed a condo in West End in April for $360,000–a record for the neighborhood. After two days on the market, we received three offers with the winner offering $380,000. An offer so high above the list price can seem suspicious. In this scenario examining the contingencies closely is crucial to ensure your client is protected. Just because a buyer is willing to offer a certain price in the purchase agreement doesn't mean they will necessarily close the deal for that price. Now more than ever, it's necessary to weigh offers that will waive the appraisal contingency or those that are willing to pay a guaranteed dollar amount above the appraised value. In the example of our listing in West End, we negotiated for the buyer to waive their contingency. This means that if the appraisal comes in at $350,000, the buyer will need to contribute an additional $30,000 in cash at closing.

March 2021

Single Family Homes

Graph depicting the Nashville real estate market in January 2021 for Single Family Homes

The supply-side crunch continues in March for single-family homes in Davidson County with just 1,053 new listings added to the market. While this may sound like a lot, it's a 21.8% decrease from March the previous year. Not only are fewer new listings being added to the market but the number of homes that are currently listed are being purchased at a record pace.

In March 2021, there were only 1,544 homes available for sale in Davidson County compared to 3,121 homes in March 2020. A historic 50% decrease that's likely to continue if the number of new listings being added to the market continues to decrease.

Bidding wars are becoming more common and it is not unusual for listing agents to utlize an "offer deadline" which is a date and time that all offers must be turned in by. In March 2021, the average percent of list price received was 99.9% compared to 98.9% in March 2021. This may not seem like a big jump, it means that the average home is selling for its list price. Since this number is an average, it means that a large portion of homes are selling above their list price. In our experience, it is common for some homes to fetch 5%-10% above what they are currently listed at and for there to be 10 or more offers on competitive listings.

What impact is this having on prices? The median sales price in Davidson County in March 2021 was $376,000 compared to $341,000 in March 2020, more than a 10% increase. The median home price in March 2021 was also quite a bit more than February 2021 which was $368,000.

In our experience, appraisers are having a difficult time in this market since home prices have risen so quickly. This is important because if a home doesn't appraise at the sales price, it risks killing the deal unless the buyer and seller are willing to renegotiate the sales price or the buyer is willing to make up the difference in cash.

The 30-year mortgage rate in March breached the 3% threshold. While rates are predicted to continue rise from their January lows, it's likely they will remain historically low. We predict rates to stay within the 3%-3.5% range throughout 2021.

Townhomes and Condos

Graph depicting the Nashville real estate market in March 2021 for Townhomes and Condos The market for townhomes and condos continues to be stable. In fact, the number of new listings added to the market in March 2021 increased by 4.2% to 394 compared to March 2020 (378 new listings).

While new condo/townhome listings are being added to the market at a healthy rate, they are being purchased quickly. The number of condos and townhomes on the market decreased by 25% to just 700 listings in March 2021 compared to March 2020. This is a continuation of the trend we noticed in February.

The number of condos and townhomes on the market is decreasing which is causing prices to increase. In March 2021, the median sales price was $280,608 which represents a 7.8% increase compared to the prior year. While prices haven't increased as much as the single-family home market, it is definitely something to keep an eye on. If the inventory of condos/townhomes continues to decrease, it is likely that prices will rise even faster.

We don't see as many bidding wars when it comes to condos/townhomes compared to the single-family home market. This could be because condos and townhomes are desirable to a smaller demographic whereas there are more potential buyers for single-family homes. The average percent of list price received for a condo/townhome in March 2021 was 99.3%, a healthy number that is just slightly above the March 2020 figure (98.8%).

February 2021

Single Family Homes

Graph depicting the Nashville real estate market in February 2021 for Single Family Homes

The single-family home market for Davidson County extended its shortage of supply in February with only 799 new listings compared to 1,095 new listings in February 2020 and 1,136 new listings in January 2021. Seasonality is definitely playing a role as February isn't a particularly popular time to list a house although the 27% decrease from 2021 compared to 2020 may hint at something else going on.

The inventory of homes for sale has also decreased compared to the prior month with just 1,642 homes available for sale in Davidson County in February 2021 compared to 1,773 in January 2021.

Prices are up compared to February 2020, however, not as much as in January 2021. The median price for a single-family home in Davidson County in February 2021 was $368,000, an 8.3% increase compared to February 2020.

The market is getting more competitive though. Another stat we like to look at is the percent of list price received. This tells us how close the final sales price is to the initial list price. If the percent of list price received is less than 100%, then the final sales price was lower than the initial list price. In February 2021, the average percent of sales price received was 99.6% compared to just 98.4% in February 2020.

The demand side of the equation continues to be strong. 30-year mortgage rates during the first week of February hit 2.73%, up slightly from January (2.65%). There continues to be strong demand for Nashville real estate as out-of-state buyers flock to the city.

Townhomes and Condos

Graph depicting the Nashville real estate market in February 2021 for Condos and Townhomes

The market in Davidson County for townhomes and condos continues to be stable. In February 2021, there were 319 new listings added to the market, a slight decrease from the 322 new listings added to the market in February 2020.

Prices have also remained stable with a median sales price in February 2021 of $275,000, just 6.1% more than the median in February 2020.

The number of condos and townhomes listed for sale dropped by 17% in February 2021 to 733 compared to 883 condos/townhomes available for sale in February 2020. If this trend continues, it will be interesting to see if the median sales price for condos increases at a faster pace.

January 2021

Single Family Homes

Graph depicting the Nashville real estate market in January 2021 for Single Family Homes

2020 was a crazy year for Nashville real estate. As Covid-19 started to shut down parts of the economy in March, 2020, the real estate market was met with a lot of uncertainty. The real estate market got a boost from low interest rates which were allowing buyers to finance the purchases of homes extremely cheaply.

This trend has continued into the new year. The 30-year mortgage rate was 2.65% during the first week of January according to freddiemac.com. Coupled with the ongoing trend that Nashville continues to be a popular choice among homebuyers fleeing California, New York, and Illinois means that prices will inevitably move higher.

Buyer demand is only one side of the coin. The Nashville real estate market is also being impacted by a shortage of homes available for sale. Comparing the number of new listings in January 2021 to January 2020 shows that there was 8.8% fewer new listings added to the market. Even more alarming is the inventory of homes for sale which has decreased by nearly 40% from 2020 to 2021.

Increasing demand and decreasing supply for Nashville homes is creating the perfect storm for rising prices. In January 2020 the median sales price for a home in Davidson County was just under $320,000 whereas the median sales price in 2021 was over 15% higher ($369,450).

Townhomes and Condos

Graph depicting the Nashville real estate market in January 2021 for Townhomes and Condos

The real estate market in Davidson County for Townhomes and Condos hasn't been impacted by the same supply-demand imbalance that we've seen in the single-family home market. Looking at the data, there was close to a 50% increase in the number of new listings in January 2021 compared to January 2020. The total inventory of condos and townhomes for sale was only lower by 4.4% in January 2021. Overall, the median sales price was up by 8.4% to $265,165 which is only slightly higher than we would expect in a growing market such as Nashville.

So why isn't the market for townhomes and condos as crazy as the market for single-family homes? Part of the reason may be due to who is moving to Nashville. Generally speaking, condos are less expensive, smaller, and have fewer bedrooms compared to single-family homes. If families are primarily moving to Nashville, then it makes sense why there is increased demand for single-family homes compared to condos. Keep in mind that condos and townhomes also haven't experienced such a large decrease in new listings which means that the supply side of the condo market is healthy.

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