What’s Behind Nashville’s Real Estate Boom?
It’s not just music that’s making noise in Nashville,Tennessee. Music City real estate is hot with plenty of upside for investors. This trend is poised to continue throughout 2022.
When you think of hot real estate markets, Nashville is always a topic of conversation. This financial and leisure activity hub in the heart of the sun belt boasts many redeeming qualities. It’s no surprise that many employers, homebuyers, and investors alike are flocking to the capital of the Volunteer State for better opportunities.
Although Nashville is currently booming, there’s great reason for optimism looking forward as well. Here are some key indicators of growth that help explain why Nashville is such an exciting real estate market.
A diverse economy
Nashville’s superpower is the diversity of its economy. There are corporate jobs abounding as companies continue to expand here. On the flip side, you’ll find that blue collar workers can find plenty to do as the city and surrounding areas continue to expand. The cherry on top is a year-round tourist attraction for the music scene and beyond.
The Nashville metro area has drawn attention from major companies around the country. Tennessee is the second most popular destination for companies fleeing California, just behind Texas. Two major reasons are the educated workforce and tax advantages as the second lowest overall tax rate in the country. This, naturally, attracts workers as well.
There are a variety of industries thriving in Nashville. Companies in the healthcare space, manufacturing, and beyond make up components of this expansive economy. Even major businesses such as Oracle and Amazon are setting up shop here. Other major employers include:
- Vanderbilt University and Medical Center
- Nissan North America
- HCA Holdings, Inc.
- Saint Thomas Health Services
- Community Health Systems
- The Kroger Company
- National Healthcare Corporation
Given the fact that a wide range of workers and skillsets call Nashville home, it provides a strong degree of insulation from an economic downturn caused by any one industry. Certain locales are known for having one-dimensional economies. Think of a vacation town or a city with only one major employer. If that source of jobs evaporates, people lose their jobs or move. That then trickles down to all areas of the housing market.
Nashville is in a very unique, but powerful position because it isn’t reliant on any one employer or industry.
Employment growth in Nashville has exploded between 2010 and 2019.With 26 percent job growth, this area is the second fastest growing metro in the country. As a result, it has attracted potential employees relocating for career opportunities.
While the economy was taking off, people began moving in. The same period which saw massive job growth increased Nashville’s population by 21 percent according to a 2020 census. Population explosion on this level drove up the demand for housing. Walking around the city, this becomes apparent by the mass of construction crews working on high-rise condos, apartments, and the like.
Collectively, economic opportunity coupled with a skyrocketing population make housing lucrative in Nashville. The onset of COVID-19 drove the demand for housing even higher with a limited inventory and supply chain issues.
Quality of life
People are attracted to Tennessee for the high quality of life it provides. The state has no tax on wages and very low taxes in general. Money can go further here than the West Coast or the Northeast. A study by Roofstock rated Nashville ninth in terms of large affordable metros with the most population growth. Keep in mind that this is relative, but those in perennially expensive markets find this appealing.
Overall quality of life extends beyond prices. As previously mentioned, Nashville is a tourist destination with a wide-array of activities for visitors and locals alike. There’s plenty of entertainment on Nashville’s Broadway Street for those who love bars, restaurants, and country music. Not to mention, two major sports teams (the Titans and Predators) are within the city limits. Amenities and entertainment make this city an exciting place to be.
Real estate is on fire in Nashville
By this point it should be clear that there’s plenty of reason to be excited about Nashville. What about real estate in the city and metros?
In Middle Tennessee, the median home price increased by about 22 percent in 2021. The prices of condominiums have hit an all-time high of $298,000. Compass’ Greater Nashville report revealed that there is expected upside beyond 2021. 70 percent of the real estate agents surveyed think that residential prices will go up between 5 and 10 percent. A contributing factor is the demand for housing with limited inventory. From an appreciation perspective, this bodes well for buy-and-hold investors.
Nashville also lends itself to landlords with almost half (47 percent) of the population renting. First and foremost, Vanderbilt University students provide a host of potential tenants. Add an ever-expanding workforce with diversified employment options to the list of reasons as well. With varying tenant groups, landlords don’t have to put their eggs into one employer’s basket. To put this into perspective, Zumper indicated a 30 percent increase in rent year-over-year for one bedroom apartments and 20 percent for 2 bedrooms.
Will the hot-streak continue?
Nashville’s real estate market is exploding with no signs of slowing down in 2022. It offers job growth and a diverse economy that continues to attract new residents. Right now, this city and surrounding metros are on a hot streak. With additional upside based on the factors mentioned above, Nashville offers plenty of opportunities for future investment.