As I am out and about involved in the community, people often say to me that I picked a good time to get into real estate, referring to our hot market. And I wholeheartedly agree. And they often ask “when will it end?” Wondering if our market can sustain this growth. There are a lot of reasons why this market will continue growing as it is and it’s simply supply and demand.
Supply is Low
Inventory is at an all-time low. A recent analysis by the Tennessean and the Associated Press shows that over the past five years the inventory of available homes declined at the fourth highest rate among the nation’s largest markets. When I do a search for a client now I may only get a dozen or so houses that match their criteria when I used to get 30. So if you’re thinking about selling a home, now is a good time.
Baby Boomers are Having an Impact
Because people are living longer and working longer, boomers are impacting the market in two ways. As boomers push their retirement to a later age than previous generations, they are staying in their houses longer. As a baby boomer (at the tail end), when I ask or look at my peers, most are planning to work until they’re 70 or longer. Where previous generations might move to Florida or Arizona or even their vacation home, they’re staying put. This reduces the inventory that is available. Those that are moving, are often downsizing which increases the competition for those smaller homes.
Millennials are a Big Hit
As the next largest population group after the baby boomers, many millennials are hitting the market for the first time and having a big impact on demand. And like the Gen x-ers, they’re not waiting until they’re married to buy a house. Single people are continuing to buy houses, increasing the number of people in the market from previous generations. This increase in demand is expected to continue for some time. Though many, saddled with school and other debt are still living with their parents. This is hindering the parents ability to sell their home and/or downsize, again reducing inventory.
The ‘It’ City
As Nashville continues to produce jobs and it’s cultural and culinary scenes continue to improve, more people are drawn here. I’ve heard statistics as low as 71 people a day to 100 people a day as the net population growth we’ve been experiencing for the last several years. And the growth is expected to continue for several years, possibly until 2040. Although Nashville housing prices continue to grow, they are still under the national average, which attracts folks from more expensive markets. I have one young couple that just bought their second investment home here as they cannot afford anything in California where they live.
Low Unemployment and Growing Paychecks
As our unemployment rate continues to decline, more people are able to enter the housing market. And Nashville’s rate of 3.7% is much lower than the national rate of 4.5%. For many years, some people were putting off home buying, either because of unemployment or underemployment as that changes demand grows. And although wage growth may not be in the double digits it is growing, allowing many buyers the ability to enter the market or to buy a larger home. Experts also say that low gas prices have an impact as well, providing a positive impact to many people’s bottom line.
Low Interest Rates
Although rates are increasing, they are still very low. The first house I bought back in the mid-70’s was financed with an 18% interest rate. I do not miss those days. Low interest rates, of course, increase everyone’s home buying budget. Rates are still hovering around 4% so it’s a great time to buy.
Sell or Buy
If you’re thinking about selling your home or buying one or both, it’s a good time. There will be some challenges, especially for buyers given the low inventory, but there is an upside by being in the market today. Contact me to find out why. Or send anyone you know who is thinking of selling or buying a home and I will fill their brains with great info so they can make an informed choice.