With all of the doom and gloom on the nightly news, this question has to be asked: Is the news media creating an artificially bad real estate market? Is the news media at least responsible for making a bad situation worse? I believe that the answer has to be a resounding yes. Let me start by clarifying, the real estate market in Nashville is still appreciating and homes are not languishing on the market for years at a time. The story in Nashville is quite the opposite of most of the stories you hear across the United States, but our market has slowed more than what the conditions warrant. For example, our unemployment rate is less than 5% and has not risen in more than 28 months whereas the national unemployment rate is beginning to climb. Our average household income index has also risen faster than area homes prices.
It would be rather unrealistic to gloat that all of Nashville’s indicators are making a positive move, there have been a few traditionally bad signs for the market. The foreclosure rates and numbers are up over last year, but I could make the argument that the people who are losing their homes were overextended to begin with and would have eventually defaulted. It may actually be healthy to trim the uncredited “fat” from the Nashville market and allow currently qualified buyers acquire those properties. Obviously, the media simply talking about a bad national real estate market will not cause foreclosure rates to rise, but the doom and gloom will affect qualified buyers and their willingness to jump into an ownership position.
Perhaps the best economic indicator for Nashville is that rental rates have risen across the board. Single family home rentals, downtown condo rentals, suburban apartment rentals, Germantown townhouses, you name it, they are up on average 8% over last year. What does this mean? It means that there are plenty of people in Nashville who can afford and want to live in Nashville and that housing demand is still high. It also probably means that many people who are qualified and can afford to buy a home are simply choosing not to do so. I would make the argument that the national media has a lot to do with that decision.
Another great indicator for the Nashville market is that the commercial real estate market is one of the strongest in the United States. At the writing of this post most national publications rank Nashville in the top 5. In fact, the Hendersonville commercial real estate and Cool Springs commercial real estate markets are two of the strongest sub-markets in the history of middle Tennessee.