Market Update- September 2019
Tuesday morning was the first time that I felt the chill in the air. For the past few months, when I step out of my house to head to the gym at 5:45, I could already feel the stifling humidity creeping awake to start another day of oppression on the people of Nashville. However, we’re getting there, slowly but surely. The morning “lows” are getting lower, the afternoons that are usually covered in perspiration upon walking out the door will get more pleasant, and the mosquitoes will eventually begin to leave us all alone for once. (I don’t know why, but I am a mosquito magnet, while Hillary could lay outside in a pool of liquified sugar and I would still be consumed by the blood-suckers.) Along with the cooling temperatures, comes a slight cooling of the housing market. It’s a natural cycle that follows the calendar pretty religiously. Let’s see where everything lies right now.
In August, there was a 4.5% increase in sales compared to August of 2018. This falls right in line with the trends of the entire year. We are currently in a market that has stayed pretty consistent. However, inventory is down a bit compared to last year. At the end of August, home inventory was at 11,460 compared to last August at 12,150. These factors have a lot of variables, but one thing it points out to me- Zillow is not your friend in the home searching process. When I begin to help new clients through the search process, they usually send me a few properties that they’ve had their eye on. By the time I am able to search for it in Realtracs, it’s probably off the market. The average lifespan of a home going live to being under contract in the greater Nashville area right now is 32 days. And that’s an inflated number, if I’m being honest. There are tons of properties listed by bad realtors that don’t have professional photography or are way overpriced that will sit on the market for months. Most “hot” properties or hot neighborhoods aren’t lasting more than a couple weeks. What this means is that it’s imperative that you use a realtor no matter what side you’re on. If you’re buying, you don’t want to find exactly what you’re looking for just to call and realize that it’s been under contract for two weeks. If you’re selling and wanting to do it on your own, you’re missing the benefit of the service of the MLS and you could end up being “For Sale by Owner” for a couple of months and missing out on the thousands of dollars that you thought you were saving by not using a realtor.
Just like last month, there has been another interest rate drop by the Fed. Once again, same as last month, it doesn’t have a significant positive impact on the housing market. When the Fed drops interest rates and banks are able to loan more money out at a lower clip, big players in the stock market take note of that and are able to shift their money from the bond market- which is what drives the mortgage rate engine- and they strengthen their investments in the stock market. People consistently ask me if the Fed lowering rates is going to lower mortgage rates. No, it doesn’t have a significant impact. Rates are actually about a quarter percent higher than they were a month ago. Big picture wise, the mortgage industry and rates as a whole are at a very healthy level right now. A big narrative that, for some odd reason, people like to throw around is that we are on the precipice of a recession similar to 2008. I wholeheartedly disagree. That recession was largely based on the lending industry, on the large bank level, was screwing people over by lending money to people that couldn’t afford to pay back their loan payments. There are obviously other major factors (if you’ve watched The Big Short they gave a glimpse in to the big bank issue), but we are nowhere near the problems that were around at that time. Housing, if anything, would hold up a market right now in my opinion.
Last month the average home sales price was about $315,000 in Davidson county. Two months ago it was $318,000, last month it was $316,000. This is because the home market models a bell curve, in which the beginning curve of the bell (January-March) starts off at the low point, the next three months are a steep increase in value as spring begins the boom of the market, and then the height of summer sees things level off. Eventually, once you hit August, usually, you begin to see the taper down as less homes become available, people have done their moving for the year and schools get the ball rolling for the fall. Come the end of the year in a few months, we will see the bell curve level out again at the bottom, but at a bit higher point on the graph due to the average home price being bumped up due to natural property value increases. A home that might have been $300,000 in January 2019 would be worth around $315,000 come January 2020 depending on where it’s located. The bell curve will naturally progress and reflect the market in that way. I think that the market will begin to even more consistently show that curve, which is extremely healthy behavior. Nashville can’t sustain the type of housing market growth that has been around for the last few years. That’s one of the reasons that Metro is putting a halt to non-owner occupied STRs, because out of market investors were making it too hard for people to compete in the market. Eventually income levels will begin to match the home market levels and that will further help Nashville to become a thriving community for everyone, not just people moving from already expansive markets used to even more inflated prices.
Anyway, if you’ve made it to this point, thank you for letting me ramble on and nerding out about the current market. Would love the chance to meet with you and catch up and see if I can possibly be of service and help you find the best home solution for you. I know I have friends outside of the immediate Nashville market, and while I have knowledge of other areas (obviously Clarksville), it’s hard to put out content that doesn’t directly pertain to my area that I live in. Therefore, if that’s you, I’d love to dive in to what life looks like where you’re living and help you. Thank you all for your constant support and readership! Over 400 unique visitors to my site since I got it started a few months ago, so I appreciate you stoking this 3-wing’s heart a bit.