Market Update- August 2019
When considering buying or selling a home, what is your first step? On a micro scale, it’s probably one of the following: calling your trusty real estate agent, cleaning your house, hopping on Zillow to see what has been on the market (and not updated for a month). On the macro scale, you’re probably somewhat aware of what is going on in the market that you live in. However, it’s surprisingly difficult to just hop on Google and see what is going on for a month-by-month basis and to try and really stay on top of what is happening in your neighborhood. Thankfully, though, you have me, who is going to begin posting monthly recaps of the goings on of what Nashville is doing in the housing and real estate world. How convenient!
In the big real estate news this month, Metro council just passed some stifling regulations on a major mover in the Nashville housing market. Metro voted to no longer allow for investors to obtain permits for multi-family residential properties starting January 1, 2022. A big part of the huge boom that has been Nashville real estate for the last five years has been the STR (short term rentals) properties that allow for huge profits. Properties that are zoned for allowance of non-owner occupied STRs usually have a 30% markup on the home’s value. This does a few things: first, it’s going to level out the huge spike in property values that unnaturally inflate the market. That’s a good thing, and won’t affect most people searching for a home or selling one. Two, it’s going stabilize neighborhoods and allow for them to organically grow. Three, it should stop the flight of families out of Davidson county. I think that the biggest win of this is that it’s going to allow people to establish roots in the Metro area because they’re not going to be consistently priced out of the homes they want.
A big topic of discussion for the last three years in the housing market have been interest rates. Pre-2016 election, rates were very steady and it fueled a lot of new home purchases and refinances. With the election- and most elections, for that matter- came higher rates due to more uncertainty pertaining to new policies, laws etc. Once the market stabilized, the stock market took off at an unprecedented clip. With this, investors took more and more money out of the bond market (which fuels the ebbs and flows of housing interest rates) to put money into the stock market. This kept rates in a holding pattern for a while. Now, interest rates have been seeing a steady decline for most of 2019. At the beginning of the summer, rates were around 4.25% nationally. As of last week, they were about 3.75-3.8%, which is actually a full percentage point lower than August 2018 per Freddie Mac. Pretty big fluctuation in the market over the span of a few months, and we will probably stabilize here for a bit. Not really a reason for rates to get lower than what they are right now. What does that mean dollars and cents wise? A $40 mortgage bill decrease over the span of the summer, and $100 over the span of a year. Huge difference.
As for home value increases, we are definitely still in a buyer’s market. Inventory is still relatively high (as it has been for a long time), giving buyers flexibility to have higher demands of their sellers. As far as home prices go, they have remained relatively flat throughout the summer. The median price for sold homes in Davidson county is about $325,000. In January, the median price was $300,000. What this means, is that contrary to popular opinion, you should be buying a home during the fall and winter. While it is a time of the year that most people don’t want to take on such a major transition as buying a new home, it can save you a lot of money and help you start off with extra equity. With less people looking to buy homes during the winter, sellers are forced to start at a more reasonable price point due to less people willing to reach for an inflated sales price.
If you’re looking to sell right now, you are getting to the time of the year that you have to make some prideful sacrifices when it comes to what your home might sell for. Unless you have a cash buyer, you need to be worried about the appraisal that your buyer will be getting living up to the sales price. Every seller wants to list for the highest dollar in the neighborhood, but if you live in a condo community where the exact same floorplan as yours is consistently selling for $10,000 less than what you list at, be prepared to either 1. Not get a full priced offer if the agent does their homework or 2. Have to lower the sales price based on a low appraisal. There are still a couple of months left for prices to still float a bit above what the market really deems as value. Once we get in to October and November, unless you’re forced to sell due to unforeseen circumstances, you’re better off to wait for late spring to roll around.
Be sure to check back in on the last Thursday of September (September 27th) for another update on how the market in the midstate is doing. I’m interested to see the trends that start to change as we transition in to the fall, and to see how Trump’s tiff with the Fed has an affect on rates, or if it won’t have an affect at all like it has over the last few months.