Market sees higher prices, more inventory, fewer sales

Friday, April 19, 2019, Vol. 43, No. 16

The law of supply and demand is taking a beating in the Nashville real estate market. Inventory is on the rise, with 11,276 properties on the market compared with 8,521 at this time last year. Yet the price of a single-family home has increased from $297,915 to $305,000 during that same period. Condos have followed the trend, rising from $218,600 to $223,000.

And sales are slowing, down 6% from last March.

This phenomenon is driving buyers crazy.

Greater Nashville Realtors President Andrew Terrell reported the numbers, compiled by Realtracs, the Middle Tennessee Regional Multiple Listing Service, and adds his own brand of optimistic analysis.

“The rising inventory allows homebuyers more options, and the rising home prices offer a benefit to sellers, as well, thus providing a flourishing and vibrant market as we head into the spring months,” he says

Buyers have been craving inventory since 2013 when the market erupted and now, finally, there is inventory. Along with the thirst for inventory, there has been a growing anticipation that the so-called bubble will burst.

The problem for these fence-sitters is that Nashville in now in a normal real estate market.

Historically, unit sales go up 6% or 7% and then down 6% or 7%. But along with these dips and spikes, prices consistently rise. For example, prices in 12South increased during the entire Recession.

International and nationally, speculators are investing long on Nashville. One developer who is building dozens of townhouses that fall within the current Airbnb regulations sold 14 units last week to investors who had never been to Nashville and who have seen neither the site nor the product. The townhouses sold for almost $500,000 each.

Some investors could care less about quality of the product or location when the Airbnb rental income numbers work. The three most important aspects of the Airbnb investment are “return, return, return.” Nothing else matters.

One local, seasoned real estate developer questions that philosophy, reminding us that Airbnb regulations are at the whim of the Metro Council. One catastrophe, he says, could spark legislation that would change all of the rules. Until then, developers continue to make hay while the sun is shining on Music City.

Look for sales to drop next month, as there were only 3,158 pending sales at the end of March compared with 4,076 last March. With hundreds of millions of dollars in building permits floating through the city, the inventory should continue to rise.

More inventory and even slower sales can only point to one thing: Prices will increase.

Sale of the Week

Last week a renovated home at 6705 Darden Place in West Meade sold for $1,075,000. Listed by Mary Carolyn Roberts of the real estate firm now known as Village, the property includes a pool house, catering area and a garage with 1,140 square feet. The main house has 4,263 square feet.

And, yes, this Mary Carolyn Roberts is the same Mary Carolyn Roberts who sits in the Metro Council.

The home has four bedrooms, four full bathrooms and a half bathroom. All of the bedrooms have walk-in closets, and there is a recreation room and an office.

The centerpiece of the complex is the swimming pool, still a rarity in Nashville. Many of the transplants relocating to the area, especially those from the West Coast, are surprised to find so few pools in the Nashville area.

A quick drive through I-440 – with its towering limestone walls – explains why they are in short supply.

As many arriving from either coast are overcome with claustrophobia moving into this landlocked locale, the presence of a few thousand gallons of water grants them the serenity to accept one thing they cannot change.

Mary Carolyn noted the home includes a steam room and fireplaces in the master bathroom, the living room and outdoors. The lot is .89 acres, which is relatively standard for West Meade and is only a slap shot away from the home of Pekka Rinne, the winner of last year’s Vezina Trophy.

The listing agent was Josh Anderson of the Anderson Group Real Estate Services, a perennial leader in sales across the Nashville real estate landscape.

It is worthy of note that the home was once owned by the late Elsa Morris, a real estate legend who went to the great open house in the sky in 2015. Morris was 85 years old when she died and practiced real estate most of those years. She won every award possible and was always positive and fair.

Richard Courtney is a licensed real estate broker with Fridrich and Clark Realty and can be reached at richard@richardcourtney.com.