2018 Projections For East Nashville Real Estate
According to the U.S Census Bureau, the Nashville metro statistical area gained more than 36,000 people in 2016. This means that 100 people move to the region every day and that number has now gone up to 200. With such high population growth, the real estate sector is bound to reap the benefits as the demand continues to supersede the supply. Despite the entry of other small cities, Nashville continues to be in the top 10 list of the hottest real estate markets in America.
The growing interest for people to move to Nashville is influenced by many factors such as affordability, high economic and employment growth, plenty of colleges and universities and of course the chance to grow your music careers. Over the last few years, Nashville has grown tremendously in the real estate sector. This means housing prices have continued to go up with over 34% increase over 4 years only. In East Nashville, the region’s most coveted zip code, prices rose to $521,650 for a 2500 square foot house last year and that is just a start. The question however is, is Nashville in a real estate bubble or is the current housing prices sustainable over a long period?
Well, a bubble by definition usually means that something will burst sooner than later. With the strong regional economy, low unemployment rate and increase in wages especially among millenials, it is safe to say that the prices are sustainable. People are also moving to Nashville by truck loads and they find Nashville housing prices to be very affordable as compared to other big cities in the country. Here is the prediction of East Nashville real estate in 2018.
Move to first-time buyer market
Though the 10% appreciation rate has remained steady over a couple of years, 2018 should see that slowing down as investors move from luxury apartments in the upmarket to first-time buyer’s market. End of 2017 saw a lot of town homes and condos coming up to serve the growing number of millenials moving to this region. Unlike other states where renting is cheaper than buying due to the increasing tax rates, Nashville is not affected by that at all and so people will continue to buy homes instead of renting. With the cost of renting an apartment going up by the day to 35% of your income, it is definitely more feasible to buy a house instead. There will be a slight cooling in the rate at which a house is sold but prices are not expected to go down anytime soon. You can expect to see developers moving their businesses to sub-urban locations to build affordable housing for first-time buyers because the cost of land and labor is much cheaper. However, anyone who has a nice house ready to sell will probably sell it at a good markup because of the high demand.
Increased number of homes
Another likely factor that will slow down the pace in Nashville is the increase of homes built this year. 2017 was characterized by major natural disasters and poor political climate which meant that resources had to be directed to other more desperate needs. However, this should change in 2018 as many developers are rushing to catch up with the demand and that will make the prices go steady and stop spiking so fast. Developers from China and Japan are always on the lookout for places they can build new houses and East Nashville hasn’t been left behind. Unfortunately, this increase will affect houses selling for more than $350,000 first so it might take a while for affordable houses to catch up.
Though there is some promise of tax-cuts with the Trump administration, mortgage interest rates seem to be hiking up by the day. There is no telling how far this will go in the foreseeable future especially since the tax reforms are not guaranteed. With that in mind, many people are rushing to buy houses while they can still afford them and before Nashville housing prices reach the level of other cities. 2018 will experience crazy demand for housing as bankruptcy survivors, baby boomers, foreign investors, immigrants and millenials scramble to get a piece of East Nashville.
Millenials anticipated to gain a huge market share
Between paying off their student loans, keeping up with the upbeat lifestyle, starting families and buying the latest cars, millenials have for a long time been out of the game when it came to buying houses. However, mortgage lenders are now being more accommodating to this group as they make up the largest percentage of spenders in America. This group of people who were born after 1980 have also grown up now and their priorities are fast changing as they start having children and looking for security. In 2018, millenials could reach more than 43 percent of home buyers even in higher priced homes originally left to the older generation. Millenials are now earning more money and can afford to buy their dream houses.
Increase in interest rates
Finally the prediction that interest rates will increase is coming true in 2018. The federal reserve has made three slight increases and this is likely to continue. The Mortgage Bankers Association is expecting the interest rate on a 30-year fixed loan to go up to 5% by the end of 2018. This is the highest level of interest rates that we will get since 2011 so people are bound to feel the pinch especially if the tax reforms don’t make the cut.
Despite the many tragic things that hit the U.S in 2017, the economy has witnessed tremendous growth. Since most people are finding themselves in long-term employment, their confidence to invest in a home will rise and this of course will increase the demand for housing. More and more people can now afford to buy houses even in expensive areas, which means the foreseen bubble is not bursting anytime soon.
The boom being experience in East Nashville right now is not going down in the foreseeable future unless developers start building double the amount of house being built right now. You can expect the rise of prices to settle down slightly by the end of the year but no much change will be seen in this sector.