Nashville Real Estate Market | September 2023 Update

What is currently happening in the Nashville real estate market as we head into the back half of 2023? Our temperatures are starting to cool down, but what is our real estate market doing? That's exactly what we're talking about in today's blog post.

So, what IS currently happening in the Nashville real estate market?

One of the big things that we're going to touch on, of course we're looking at statistics, but there's going to be four big things that we're going to be talking about in terms of what you need to be aware of, because if you've paid any attention to the news, obviously there's a lot of doom and gloom headlines out there in the media, especially in regards to the real estate market. But I've said it before, I'll say it again, the real estate market is always going to be a hyper- local market. What could be happening 30 minutes from here can be different than what's happening here. Just like what's happening in Nashville is going to be different than what's happening in California or what's happening in New York or what's happening in Chicago. There are a lot of differences. So it's really important to know what's happening here if you're considering making real estate decisions.

We're going to be taking a look at what our statistics look like for our market as of the end of August 2023. The other thing we're going to be talking about, and I'm going to preface this, because this is what is going to be driving the way that we look at statistics. It's going to be the four indicators that you need to look at to determine whether a market is in transition or whether a market is in a retraction, because again, there's a lot of these headlines talking about bad things happening in the real estate market. It does have a lot of people sitting on the sidelines in addition to the interest rates and all of that, it does have people sitting on the sidelines. But the news, they are not experts in the real estate world. And so when it comes to trying to make decisions, you have to look at what our statistics are showing us, because the news can tell you one thing, but the statistics don't lie.

They give us a clear picture of what's happening in our market. So we need to look for these four indicators, because it's going to tell us do we need to be looking for our market to be retracting to see where we are going to kind of take a bit of a downhill swing or are we just in a transition? So what are those four indicators? As we start looking at these statistics, I want you to keep these four benchmarks in place, and if all four are present, that does typically indicate that you are headed for a market retraction. But if any of the four are missing, you are simply in a market in transition. So what are those four benchmarks? It's a big increase in inventory, starting to see a big decrease in sales, a nice uptick in terms of the number of days on market and then seeing pricing decrease. So those are the four indicators to keep in mind as we take a look at these statistics. So without further ado, let's go and see what our numbers are telling us.

Okay, so you're, taking a look at InfoSparks. This comes directly from our MLS. So as you can see, this orange line, that's the entire MLS and I want to make sure it is selected for single family. Then obviously in the navy we've got Brentwood, all single family homes. Franklin, all single family homes, and then Nolensville. So as you can see over here, this is giving us a one-year snapshot of what we're dealing with, but we will back that out because again, I think it's going to be really, really important. I've mentioned in previous market updates, it's really hard to compare us to... I mean, yes, our market was in transition a year ago, but it's also really hard, because of the anomaly that we came out of in terms of what we saw in 2021 into 2022 in terms of how our market was absolutely white-hot.

So you almost have to start taking a look at what's happening now versus what happened back in 2019 when we were still a healthy seller's market. For those that don't know, to determine whether you're in a seller's market neutral or buyer's market. So a seller market is going to be, if days on market is anywhere between zero to four months, five to six months is a neutral market, and then six months plus is considered a buyer's market. So we were in a healthy seller's market. Nashville for the better part of the last decade has been in some form of a seller's market. So all of that to say is we like to take a look at these statistics, see what's happened over the last year and how we compare, but also sometimes taking a look at how we are comparing to either the beginning of 2020 or even back into 2019.

So remember, we need to see inventory going way up, sales going down, days on market dramatically increasing and pricing decreasing across the board. All four have to be present to show us that we're in a market retraction. So what are our numbers telling us? So if we take a look, now of course this data, it's about a month behind, because obviously you have to get all the closings and be able to input it so that we can get our statistics. This is on median sales price, but we also have average sales price. So let's take a look at both. So if we're looking at the entire MLS versus Brentwood, Franklin and Nolensville, so what we're seeing in terms of the median sales price in the August 2023 snapshot, the entire MLS is up 2.6% from the same time last year.

Brentwood's up 1.4%, Franklin's up 7.7%, and Nolensville is up 7.1%. So overall things have been trending in the right direction. Again, if you're looking at the lines on this map, you're seeing that we continue to see the median sales price increase. When we flip it over to average, and again, they're still trending in the same direction. Now, obviously here with this entire MLS is taking into all counties that make up the Middle Tennessee area, so that's a little bit less of a dramatic climb. But as you can see, everything is still trending. Yes, you can start to see a bit of a tick here, but again, we're not seeing things start to take a nice downward turn. So you got to look in Brentwood, the average home sales price for a single family home is sitting right at $1.425 million. That's almost a 6% increase from last year.

Franklin is sitting at 1.11%. Let's see, that's a 3% increase from last year, and then you've got Nolensville sitting right there at $871K, that's up 11.2%. So as you can see, yes, we may have a little bit of fluctuation in terms of what's happened. You can see a slight variation in these numbers, but I mean it's just by a few thousand. So as you can tell, when we're already looking at what we're seeing in terms of what these average sales prices are, automatically we're not seeing major decreases. One thing for us to take a look at also is percentage of list price. That's going to be another thing that we want to see, because something that I have come across that people have asked me about is when are prices going to decrease? They really want to know when the home prices are going to start coming down in Nashville, because there is this idea that we're super overinflated.

When we start taking a look at what the median percentage of list price is in terms of what things sold for versus what the list price was. As of August, the entire MLS sitting right there at 100%, Brentwood's at 98.5%, Franklin's at 99.7%, Nolensville at 100% now. With the average it does change a little bit, because median, it cuts off the extremes and looks at the middle. Whereas the average, it takes a look at everything that's included. So even those kind of outlier homes that maybe can take a bigger price hit, because there's something not as appealing with the home. So this is something to take a look at. And yes, this chart is trending down a little bit, but again, we got to take a look at what kind of trend are we seeing.

Even with the average percentage of list price, everything within the entire MLS is sitting right there at 98.2%. And then between Brentwood, Franklin and Nolensville, all of those are in Williamson County. You're sitting at 97.7%, 98.2%, 99.1%.  Those are still sitting fairly well in line right there with what's happening with the entire MLS. So again, we're not seeing sellers take 70% of less price or 65% of less price. I mean, they're still getting very close to what their list price was, and this is even as of August 2023. The next thing we want to take a look at is going to be the days on market. So we said when we start to see days on market increase, that can be one indicator of the four that we're headed towards a market retraction. If you take a look, the median days on market, we're still sitting at 12 days, 10 days, seven, eight. Remember anything that is four months or less.

So we're looking at up to 120 days, that's still considered a seller's market. So with these numbers, I mean we're still very much within that seller's market. They're going to increase here with the average when we switch over, but again, we're sitting right there, right around 30 days or so overall. So have we seen the days on market increase? Yeah, we have, especially if you look at where we were, the average was sitting pretty low as of spring, summer last year. Now, let's actually back this out three years ago. This is an interesting graph to look at as well, because this is taking us back to the beginning of 2020. This was before the market got really hot, when we look at it, it trends down, it starts to pick back up. But, even where we're sitting here as of August 2023, we're still not even back to the average days on market that we were prior to what the pandemic triggered for us in terms of our real estate market.

So have we seen days on market increase? Yes, but it's still showing that we're not even back to what days on market was when we were considered in a more normalized seller's market. We've also already looked at price decreasing and we're really just not seeing that. So automatically already, we're not really seeing the makings of what would cause us to have a major market retraction. Now, let's take a look at new listings. We need to see what the inventory looks like, because this is another thing that plays into what's happening in our market. What data is telling us over the last three years is that we are still low on inventory. When we're looking at what is new coming to the market, we've got look at that inventory increasing. That's one of the indicators that we're headed for a market retraction.

We are not seeing inventory really increase. It has certainly ticked up a bit from where we were when our market was white-hot. But overall, we're still, as the numbers show, we're just not seeing... We're actually in Brentwood and the entire MLS in terms of inventory increasing if we're taking a look at new listings, because it's going to tell us whether inventory is increasing or not. The entire MLS is down 8.4% from the same time last year, Brentwood's down 2.1% from the same time last year, Franklin's down 0.2%, and then Nolensville is down 4.4%. So again, overall we do not have inventory increasing. So as you can tell, when it comes to price decreasing, we're really not seeing that. Not enough to even signal a market retraction.

In terms of days on market, yes, that has ticked up, but again, it's not back to pre COVID level. So we're still trucking along, right within a seller's market. And then of course inventory. We know our inventory's not really increasing, and we'll talk about that a little bit more. But then we also have to take a look at sales and whether sales have decreased. So we're going to take a look at the closed sales, where we are going to see where some sales have decreased. The entire MLS sitting right there at 23.8%, Brentwood's at 22%, Franklin's at 12.9%, and Nolensville is at 27.6%. So it's sitting right there around what the entire MLS is doing. So Franklin is still a little bit hotter and Brentwood slightly hotter than the entire MLS. Nolensville, just a little bit slower.

But again, as we take a look at what's happened with closed sales, yes, we have seen a decrease and we have seen an increase on days on market. But again, it's not back to being higher than pre COVID levels. Our prices really aren't decreasing. Everything's still selling right there within 97%, 98% of less price, and then our inventory's not increasing. So as you can see out of those four indicators, we have some, but we definitely don't have all, which means that we are a market in transition. We are not a market in retraction. So when you start to hear things like the housing market in Nashville's going to burst or you're seeing negative headlines, our numbers and what's happening in our market just don't indicate that. Two other things that I wanted to look at before we stop taking a look at all of our charts is going to be month supply.

So this shows us month supply talks about how many months based on what is currently on the market, how long would it take for us to clear out and sell every single one of those homes before we had no inventory left. And so again, anything that is between one to four months seller's market, five to six, you're sitting in a neutral six plus you're sitting in a buyer's market. We kind of do a dip here with these numbers, but as we look at month's supply as of August, the entire MLS is sitting at 3.4. That's still a seller's market. You've got Brentwood sitting right there at 4.3. Franklin's at 3.3. Nolensville is at 3.2. So we are seeing, again, where we have enough inventory to pick us up from where we were at the height of our market.

But again, we already know from looking at new listings and from taking a look at what that looks like, we're still not seeing this massive increase in our inventory. Then let's take a look at price per square foot, because I feel like this outside of even these four indicators, I feel like this is also a really great piece of information to know, especially if you're considering buying in the area. So overall, you can start to see these numbers continuing to trend towards an upward trajectory. Here we're seeing for the median price per square foot, the entire MLS for a single family home sitting at $211, Brentwood sitting at $304, Franklin sitting at $312, Nolensville sitting at $274. All of those have seen an increase in price per square foot from the same time last year. Let's take a look at the average for the entire MLS $228, Brentwood $329, Franklin $345, Nolensville $277. Again, all of those have increased since the exact same time last year. So why is all of this important? Well, that's where we're going to continue the conversation.

So it's really important to know all of that information, because again, when you're hearing media headlines, they're going to paint doom and gloom. If you haven't seen some of my other market updates, I actually worked in the news industry for four years as a producer before I got into PR, which then led me to real estate. If you want to know the story at some point, just ask me. But the important thing to know is as a producer, when you work in the news world, especially TV news, you are tasked with taking stories that can be a minute, minute and a half, two minutes, five minutes, and you have to break it down into a 30 second segment. So you are the one that's tasked with figuring out which information stays and which information goes, and what information can you give when you're having to chop everything out to be able to provide that to the viewer so that they get the overall gist.

But here's the thing, being a news producer that doesn't make you the expert in really anything other than putting the newscast together. I don't mean that in a derogatory sense, it's just real estate, it's hyper-local and there's a lot of nuances in it. And so that's why it's really important to not pay attention to the news, because at the end of the day, the news is driven in terms of being sensationalized. They want to hype you up, whereas real estate is hyper-local. We really want to take what they hype up in terms of their messaging and show you what the hyper-local market is actually doing so that you at least have the best information to make the most informed choice possible. So what do you need to know in addition to what we just talked about? Well, as you could see, the pricing of homes, while overall, especially over the last year, over the last several years, prices of homes have continued to increase.

We've also seen that price per square foot continues to increase. We also know that our inventory, as you saw, our inventory continues to remain low. Part of the reason why our inventory is a bit capped, is because you do have sellers that are sitting with really great low interest rates and they don't necessarily want to have to trade up in terms of moving. And so a lot of times people are just sitting still. That doesn't mean that not all sellers are just sitting and not selling, but there certainly is opportunity out there right now. We also have to look at where Nashville is headed. Nashville in general, we're expected to get another 200,000 people moving to the area by 2025. We're expected to get another 1 million people moving to the state of Tennessee by 2040 with 57% of that landing in Middle Tennessee. So as you can tell, the demand continues to come in.

We have people continuing to move here for both personal reasons. We also have businesses coming here, which is bringing jobs here. So people are also coming for business purposes. Nashville is continuing to grow. And so what does that mean? It means that homes are going to continue to appreciate, so the home, what you may like this year, it's going to cost more next year. Homes are expected to increase by around 6%. That could be on the conservative end. It just depends. Obviously heading into 2024, there's a lot of factors that could be thrown our way that could cause a ripple effect within the local real estate market, which remains to be seen. Interest rates, they are cyclical. I did an interview with one of our trusted lenders, Mike Thayer, and if you want to see that video, I will warn you it is a long video, but it is chockfull with a lot of really great information.

But he explains that interest rates, they're always cyclical. And so if you've got people right now that are sitting on the sideline, if you are somebody sitting on the sideline, because you just don't want to have to deal with that interest rate, I would highly encourage you to reach out, reach out to a lender, because a lot of times, while that number seems scary, there's definitely more opportunity. Especially for negotiations right now, because if you think about it, if you have that mentality that you're going to sit on the sideline and then other people are too, the moment rates start to come down, we will see more people flood back into the market. Which has the ability to bring back multiple offers, bidding over asking, and seeing just a wild market. Maybe not quite to the extent of what we saw in 2021 and 2022, but there is still the possibility for multiple offers to come back, which means you would end up paying more for a home versus having the opportunity now where there's not nearly as many multiple offers.

There still can be certain pockets where you can see a few, but overall, most of the time it's going to be buyers going in doing the negotiating one-on-one, meaning it's just you at the table versus the seller trying to come to a meeting of the minds versus trying to outbid others. So there's more opportunity for negotiation there. There's more opportunity for seller concessions, because when multiple offers come back, sellers do get to pick the best of the best and what works for them, which a lot of times means putting more back on the buyer versus having more negotiating with the seller. So overall, Nashville, our housing market, our pricing, our price per square foot, we continue to move in an upward trajectory. We do have and we do see where we still don't have enough inventory to meet the demand that's coming in, which again, the basic laws of supply and demand do continue to push pricing up.

As we head in, it's going to be really interesting to see what happens towards the end of the year, because a lot of times when it gets colder, people don't want to be out as much. So it's going to be really interesting to see what happens this year, because Q4 was dramatically slow back in 2022. However, 2021 was very strong, 2020 actually had a little bit more steam to it. So it's going to be really interesting to see what happens as we march towards the end of the year. But if you're considering Nashville, if you're considering buying, we are still moving in an upward trajectory. And again, if you're looking at those four factors, they all four have to be present to indicate that our market's headed downwards. And we do not have all four in place to indicate that we're headed into a market retraction. We're just a market in transition, and we are going to continue moving in a positive direction for the foreseeable future.

Of course, none of us has a crystal ball. There could be wild things that happen. However, Nashville, we're very fortunate in that we do have some insulation around us to help protect what happens in our real estate market should something happen on a national scale. But overall, Nashville is a great place to live. Nashville is a great place to invest. If you're thinking about making a move, please do not hesitate to reach out to me. All of our contact information is below. If you're ready to start that conversation, drop us a line! 

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