The state of Nashville housing market in 2022: More price increase, by Marqueze Williams.

The State of Nashville Housing Market in 2022: More Price Increase

By Marqueze Williams

After a year of crazy home price increases, one would think that the market is finally ready for a breather… not the Nashville Market! In fact, It is predicted that the home prices will keep on rising in the year as buyer continue to compete for the limited supply of homes in the market.

According to Zillow, the typical home values of homes in Nashville is $428,857 up from $414,900 in 2021 and $339,000 in 2020.

The primary driver of this hectic price rise is the limited supply plus a higher demand of homes in 2021. Looking at the market superficially, you might not see the underlying problems, but the scale goes much deeper. The market needs affordable housing.

On the other hand, construction has stalled. In fact for the last two decades, Nashville has fallen short of 5.5 million units of the long term historical levels. A new report from the National Association of Realtors shows that builders in the country added 1.23 million new housing units on average each year from 2001 to 2020.

Of the 5.5 million deficit;

• 2 million are needed for the single family market. • 1.1 million Units in building with two-tofour units. • 2.4 million Units are needed in building of at least five units.

Going with the current market rates, it could take more than a decade for the supply and demand to balance out. It is not a surprise that this could take even longer due to the influx of the new residents from other states coming in search of greener pastures.

For instance, over the past two and a half years, the Tennessee Department of Economic and Community Development has brought in 25 California based companies to either relocate to the state or expand their business there. With an investment of $1.2 billion in the state, we are looking at 3,400 jobs which attracts thousands of people from other places. That creates more problem for the market.

Something we must however watch closely are the rising interest rates which are likely to put more pressure on the local housing market. More so, it threatens the first time buyers who will be boxed out of the market. If the interest rates rose by just 1 percent, this reduces the buying power by 11 percent.

Going forward, the market condition favors the sellers more simply because of the supply demand imbalance. For many looking to buy into this lucrative market, the quality of life and the relative affordability compared to the rest of the country makes Nashville a great place to live and invest.