Experts: Low supply continues to push up home prices in Middle Tennessee
ANTIOCH, Tenn. — Area real estate experts are drumming the same beat they have been beating for the past year: Lack of supply plus high demand equals an increase in price.
As a whole, closed home sales in Davidson County increased 1 percent in May over the same month in 2016. At the same time the average price of a sold home increased 9 percent over 2016 to $370,937, according to the Red Report, which tracks home sales in Davidson, Rutherford, Williamson and Wilson counties.
“We feel the prices would be even higher if appraisals weren’t part of the equation and prices were set only based on the supply/demand,” said Steven Dotson, president of Red Realty and issuer of the Red Report.
According to the Greater Nashville Realtors monthly report, the median residential price for a single-family home during May was $279,142 and for a condominium it was $205,000. This compares with last year’s median residential and condominium prices of $258,900 and $194,000, respectively. GNR covers Davidson, Cheatham, Dickson, Maury, Robertson, Rutherford, Sumner, Williamson and Wilson counties.
According to the Red Report, 2017 average closed prices are a staggering 59 percent higher at $372,587 than 2006 and 13 percent higher than 2016 in its four-county region.
Dotson said he thinks even more homes could be sold if there was more quality inventory on the market and that prices would be even higher if appraisals weren’t hold them down.
“There are numerous multiple offers that sell for above list price, but the appraisers are not appraising all the sales at full contract price,” Dotson said.
This impacts how much lenders are willing to give buyers, meaning buyers either have to back out of the sale or come up with more cash on the front end.
“Or the seller has to make decisions on lowering the price or going to market again hoping for a cash buyer who doesn’t need an appraisal,” Dotson said.
But rising prices still aren’t cooling the red-hot real estate market in Middle Tennessee.
“Greater Nashville made May a record-setting month by continuing year-over-year sales gains,” Greater Nashville Realtors President Scott Troxel said. “In spite of the low supply levels, Middle Tennessee joins the majority of the country in experiencing healthy market trends.”
In GNR’s region, there were 3,943 closings reported for the month of May in its nine-county region. This represents an increase of 6.6 percent over the 3,698 closings reported for May 2016. GNR includes single-family, condominiums, multi-family and lots in its figures.
Year-to-date closings total 15,606. That is a 7 percent increase compared to the 14,583 closings reported through May 2016.
At the same time sales are up, inventories are down for the area, according GNR’s data. In May 2016, the region had 9,623 available units. That had fallen to 8,557 in May 2017.
Troxel said he expects the trend to continue with the announcement of IKEA coming to Antioch in 2019 and the national media coverage of the Nashville Predator’s Stanley Cup run.
“The desire for homeownership is not going away,” Troxel said.
Pending home sales, which are an indicator of next month’s closed sales, were down slightly in May to 3,540 properties under contract at the end of the month, compared to the 3,730 properties under contract at this time last year.
Compared to the national average, Middle Tennessee’s housing market is far outpacing the rest of the country.
According to data from the National Association of Realtors, home sales were 1.6 percent higher in April than a year ago, prices were 6 percent more than same period last year with a median home price of $244,800 and inventories were 9 percent less than April 2016.
Michelle Willard can be contacted at [email protected].