Prices are high in the Nashville real estate market but sales have slowed in 2023

In 2023, the Nashville real estate market presents a paradox that leaves buyers and sellers perplexed. As home prices continue to soar, reflecting robust demand and a city brimming with potential, the rate at which properties change hands has slowed noticeably. This juxtaposition raises a host of questions about the factors underlying market dynamics and what they portend for the future of Music City’s real estate landscape.

Read on to find out what’s happening in the Nashville real estate market and whether it could be facing a crash.

Nashville Housing Market 2023: Overview

We analyzed 19 major cities as well as the Nashville metro area real estate market as a whole. While many other major U.S. real estate markets, such as the Austin real estate market, have seen a marked decline in housing prices Year over year, prices in the Nashville real estate market have increased in most cases. In 12 of the 19 cities in the Greater Nashville real estate market we analyzed, the median sales price increased year-over-year from August 2022 to August 2023.

As you can see, home prices in the city of Nashville proper and prices in the Nashville metro area as a whole have moved closely together over the past five years. The median sales price in Metro Nashville increased by 2.3%, from $444,820 in August 2022 to $455,000 in August 2023, while in Nashville itself it increased by 3.3%. , going from $445,000 to $459,900 over the same period. Tennessee’s statewide median sales price increased further, by 5.8%, from $361,000 in August 2022 to $381,900 in August 2023. Additionally, the three-year change housing prices are almost identical in all three regions: the median sales price in Nashville increased 37.3% from August 2020 to August 2023; in the Nashville metro area, it increased 37.9%; and for Tennessee as a whole, it increased by 37.8%.

The median sales price in Nashville reached a high of $470,000 in May 2022, and despite rate hikes instituted since then, the city’s median sales price reached a new high in July 2023, when it s was $460,000. The table below shows median sales prices in all Metro Nashville cities we analyzed, from August 2018 to August 2023. The table is listed in order of areas that saw the largest increase in sales. ‘year-over-year of their median sales. price:

Hendersonville saw the largest year-over-year decline, falling 9.1%, from a median sales price of $549,950 in August 2022 to $500,000 in August 2023. However, this must be tempered by the fact that, before the pandemic, home prices in Hendersonville were much lower: in August 2018, the median sales price in Hendersonville was $298,500. As a result, Hendersonville experienced one of the largest pandemic-induced housing price increases in the Nashville real estate market. On the other end of the spectrum, Goodlettsville saw the largest year-over-year increase, up 24.1%, from $352,500 in August 2022 to $437,500 in August 2023. Goodlettsville , however, has also been one of the cities hardest hit by the crisis. the impact of the pandemic – no doubt hurt by the fact that Tyson Foods
TSN
The factory located there was at the heart of a Covid-19 cluster in spring 2020. While in August 2018 the median sales price in Goodlettsville was $318,700, by August 2020 it had fallen to $267 $443.

Inventory in the Nashville real estate market presents a mixed picture

Most of the cities we analyzed in the Greater Nashville real estate market have seen a decrease in available inventory since last year. However, both in the city of Nashville proper and the Nashville metro area as a whole, inventories increased year-over-year, 11.6% and 0.8% from August 2022 to August 2023, respectively. That being said, the growth in inventory available for sale in Nashville is minor compared to other U.S. cities, such as the Denver real estate market, where inventory has increased by over 80%. The table below details the evolution of inventory available for sale in the Greater Nashville real estate market:

Hendersonville, which saw its median sales price decline 9.1% year over year, also saw the largest increase in inventory for sale: from 213 homes for sale in August 2022, available inventory of Hendersonville increased by 21.6%, reaching 259 homes. for sale in August 2023. In total, four of the 18 Nashville-area real estate markets analyzed here experienced year-over-year inventory increases. Otherwise, the majority of cities in the greater Nashville area experienced declines.

Nashville’s surrounding suburbs generally saw available inventory decline from August 2022 to August 2023. In six cities, the year-over-year inventory decline was 10% or more, with the city of Springfield experiencing the biggest drop: from 108 homes for sale in August 2022, inventory fell 38.9%, reaching just 66 homes for sale in August 2023.

Homes for sale in the Nashville real estate market are staying on the market longer than before

A very useful additional metric for analyzing real estate market activity is the amount of time a home for sale spends on the market before being purchased. red fin
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refers to this metric as days on market, which represents the monthly median number of days on the market that a home for sale is before being taken off the market. In the Nashville metro area, the median number of days on the market for a home for sale increased 36.4%, from 33 days in August 2022 to 45 days in August 2023. Indeed, in the 18 major cities in the Greater Nashville real estate market, days on market increased year over year:

What’s surprising is that in several Nashville-area cities, median days on market have reached higher levels than pre-pandemic levels. In Lebanon, for example, the median number of marketing days increased the most, by 114.3%, from 28 days in August 2022 to 60 days in August 2023. The latter figure is higher than the median number of days on market from August 2018, when it was 48 days. It’s the same for:

• Murfreesboro Real Estate Market: 40 days in August 2023 compared to 36 days in August 2018
• La Vergne Real Estate Market: 50 days in August 2023 compared to 41 days in August 2018
• Gallatin Real Estate Market: 55 days in August 2023 compared to 50 days in August 2018
• Dickson Real Estate Market: 66 days in August 2023 compared to 49 days in August 2018
• Hendersonville Real Estate Market: 49 days in August 2023 compared to 48 days in August 2018

This suggests a substantial normalization of real estate activity in these markets. And that’s reflected in sales-to-list ratio data — the average ratio of each home’s sales price divided by the list price covering all homes — in these markets. Typically, in hot real estate markets, the sales-to-list ratio tends to be above 100% because homes sell for more than their original list price. In the five cities listed above, the sales-to-listing ratio hasn’t changed much since last year or even over the last five years. In the City of Nashville real estate market, the sales-to-listing ratio was 98.6% in August 2018 and 98.5% in August 2023.

The result of a real estate market crash in Nashville

The idea of ​​a collapse in Nashville’s housing market seems unlikely, largely because of the notable slowdown in home buying activity. Unlike many other U.S. housing markets, prices in the greater Nashville area have increased year over year, and the gains have been quite modest. The number of monthly home sales has declined year over year in most of the cities we analyzed, but this trend has been fairly consistent over the past three years, as opposed to a sharp, more immediate slowdown . And the percentage of active listings with declining prices – which typically increases year over year in bubble real estate markets – decreased 5.4% in the Nashville real estate market from August 2022 to August 2023. Indeed, only two cities in the greater Nashville area — La Vergne and Smyrna — saw an increase in the percentage of active listings with year-over-year price decreases.