NASHVILLE, Tenn. (WKRN) — Interest rates haven’t been around 8% since 2000, but that’s the reality right now. News 2 asked experts why sales are down in Middle Tennessee, but prices are holding steady.
The city’s State of Affordable Housing dashboard shows that in just one year: 2021-2022, typical monthly mortgage costs increased by more than 80%.
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“Because of the pace at which rates increased, it’s a shock to people,” said Jeff Checko, a relocation director with The Ashton Real Estate Group of RE/MAX Advantage.
Checko said that many experienced homebuyers are caught off-guard when they see first-hand how much less home they can afford. In mid-2022, you would need a $70,000 income for a $450,000 mortgage; today, you would need a $120,000 income.
“They’re going and talking to the loan officer and getting a shock. ‘Oh my gosh, I knew the rates were higher, but I didn’t realize it was going to be that much of an impact on my payment,'” said Checko.
The RE/MAX National Housing Report shows Nashville sales down 18.8% over last year, yet prices are holding steady, down just 1.2%. One reason, Checko said, is builders are doing what they can to keep the price the same, while helping sellers with rate buydowns and closing costs.
But between those incentives and construction loans getting more expensive, Checko said that small builders could find themselves in some financial trouble soon.
“The builder financially has sort of been stabbed and they are bleeding out slowly,” said Checko. “In the old times of ’08 and ’09, we had a saying that we saw a lot of bad things happen to good people; I think that’s about to happen again.”
Checko’s advice for sellers right now—be the best value. And if you can’t, wait until the market improves, hopefully in spring.