It’s time for us to throw our annual darts at the Nashville real estate market and see what we can predict for 2016. Last year we looked into our crystal ball and did fairly well, so here’s our shot at this years predictions.
1. Faster Rising Condo Prices
Buying a single-family home in some of the trendiest neighborhoods in Nashville has become price prohibitive for many people. The unprecedented increase in home values has left few options for first time homebuyers. However, condo/townhome prices have not increased at the same furious rate as single-family homes.
I expect that to change this year as condos/townhomes offer a more affordable option to landing in one of these hot areas. Also, combined efforts from the City of Nashville and local developers to create more live-work-play developments will make living in the city more attractive than ever, which as a result will drive up condo/townhome prices faster than we’ve seen in recent years. But who needs a yard if you can walk to everything and have public parks around every corner?
2. Single-family home prices won’t be as dramatic
Staying on the same topic of prices, I think that single-family homes won’t see the same 10% increase in 2016 that we saw in 2015. Nashville has a white hot real estate market, so I could be proven wrong here, but we saw a leveling out of prices towards the end of 2015. This could be a sign that the market is starting to stabilize as home prices have begun to reach their peak of affordability in some areas.
Another factor is that Nashville had a record number of building permits issued for 2015, which should help alleviate the housing inventory woes, which in turn will help slow down the rising costs of homes. All things considered, Nashville will still see a nice increase in values – just not at 2015’s pace.
3. Builders shift focus to other areas
Historic neighborhoods have begun to enact measures to prevent the common practice of tearing down older homes and building two properties on one lot. A good example of this is the popular Waverly-Belmont and 12 South area that is imposing a historic overlay to prevent this type of construction. We see both sides of the coin on this issue. Nashville has a huge shortage of home inventory and building two homes on one lot helps to alleviate this issue, but if done irresponsibly it can alter the look and feel of a historic neighborhood.
For builders that prefer the method of placing two homes on one lot, these overlays will help shift their main focus to other neighborhoods that are less restrictive. Wedgewood Houston and Woodbine were already on our shortlist last year for hot neighborhoods to watch, but I think these two will explode with new home activity this year as builders look for other options.
4. Hottest Neighborhoods
This brings us to our next point. As stated above Wedgewood Houston and Woodbine will once again be on our list of hot neighborhoods this year. With the Core’s Six10 Merritt underway, increased activity on nearby 8th Ave and builders shifting more attention to neighborhoods without protective overlays, Wedgewood Houston is primed to have a breakout year.
The other hot areas to watch include the usual suspects of Germantown, the Nations, East Nashville and Inglewood.
5. More affordable housing options.
New Mayor, Megan Barry has been very vocal about her support for creating more affordable housing options in Nashville. These efforts have already begun to take shape as the city just awarded $2 million in grants to developers to build 57 homes in North Nashville. While this is a small number compared to the amount of affordable homes needed, this is a step in the right direction and we should see a continued push for more options under Barry’s leadership.