Nashville’s housing market is booming. Rents are rising dramatically. We are hearing stories that give us pause to consider the sustainability of the boom. Several articles have caught our attention.
Nashville’s housing market hits high notes thanks to young buyers. The Financial Times featured Nashville’s booming housing market a few weeks ago. Nashville rent increases have residents singing the blues. Nashville renters are spending more of their income on rent than they have at any point in the past 30 years—29% as of December 31, 2014, according to Zillow. The national average is 30%. By contrast, Nashville renters spent an average of 25% in the period from 1985-2000. Nashville rents rose 9.6% year over year as of April; the national average is 4%. To check out rent affordability in Nashville, an interactive chart is available here: A detailed market overview of rentals is found here: Nashville’s housing recovery is strongest in the nation in the aftermath of the recession, according to a new study. Nashville’s median home price today is 11 percent higher than the peak values before the recession, according to a study published in the Nashville Business Journal and featured on CBS Moneywatch. Click here to read Nashville Business Journal Click here to read CBS Moneywatch Priced out of Nashville? Jobs are plentiful, but housing is expensive. One measure of affordability is the home price to income ratio. As of December 31, 2014 Zillow reports the index is nearing the peak levels of June, 2007. However, mortgage interest rates are lower than in June, 2007, supporting affordability. For an interactive chart on housing affordability compared to various cities, click below: Nashville’s affordability ratio is 3.11: To check out a measure of affordability in Nashville (price to income ratio), an interactive chart is available here: With rental rates soaring opportunities exist to invest in rental real estate if properties can be acquired or developed at attractive prices. Developers of new residential housing should bear in mind that affordability is being stretched in Nashville; the frenzied pace of appreciation cannot be sustained indefinitely. Homebuyers and investors should be selective at this stage of the housing cycle. We hope you enjoy reading these articles along with us and that you find them informative. Please forward this to your friends and family. J. Mark Nickell & Co. Disclosure – The articles mentioned in This Week with J. Mark Nickell & Co. are for information and educational purposes only. They represent a sample of the numerous articles that the firm reads each week to stay current on financial and economic topics. The articles are linked to websites separate from the J. Mark Nickell & Co. website. The opinions expressed in these articles are the opinions of the author and not J. Mark Nickell & Co. This is not an offer to buy or sell any security. J. Mark Nickell & Co. is under no obligation to update any of the information in these articles. We cannot attest to the accuracy of the data in the articles.