NASHVILLE, Tenn. (WKRN) — The Nashville housing market is seeing some impacts from rising mortgage rates, but it’s nothing compared to the rest of the country.
Jeff Checko, relocation director at RE/MAX Advantage, said that’s because Nashville is unique and has some compensating factors that, experts believe, will help the area to avoid a downturn.
The latest RE/MAX National Housing Report for the month of May shows Greater Nashville Area home prices continue to grow and are now up nearly 25% over last year. The median home sale price in Greater Nashville is now $467,450, according to RE/MAX. That’s about $16,000 more expensive than the year prior.
Surely with rising rates, we’re nearing the end of this upward and fast-moving trajectory, right?
Checko weighed in.
“Given that the majority of these rate increases took place in the last 60 days and primarily the last few weeks, we won’t see that until next month’s data or perhaps the next month after,” Checko said, adding that when that happens, it’s likely we’ll see fewer in-market moves, but values should hold.
“I really think our values, while we’ll see kind of a screeching halt but a stop to this rampant appreciation, I don’t think we’re going to be looking at people that are upside-down so to speak and having a lot of non-performing assets with bank-owned properties or anything because people in our market will still have opportunities and options.”
Transactions are up 1.3% over last year, whereas, nationally, home sales are down 8.5%, RE/MAX says.
Those out-of-town cash buyers and California companies continue to anchor the Nashville market.
However, with rising mortgage rates, we are seeing some changes. Active housing inventory is up 45% over last year.
“We are seeing sellers getting more anxious and realistic about losing the window of opportunity to sell,” Checko said.
Many hopeful buyers feel they’ve lost their opportunity to buy their dream home. Some are calling new builders and canceling contracts because payments are out of range.
“When you talk about the cost of ownership going up 30% when it comes to what debt service costs. So, a $500,000 home in December would literally cost $600 a month less to serve it than it does right now,” Checko said. “You’re going to see buyers go from this bracket down to the bracket below, but does that mean those buyers aren’t going to buy at all? I don’t think so.”