Nashville housing market faces tight supply
For a year, Andrew Trammell and his wife have been looking to buy another home in The Nations neighborhood where they've lived for a decade.
But finding such a fixer-upper has been a challenge.
"There's not many homes to choose from," said Trammell, a real estate agent with nashvilleonthemove.com, a real estate consulting firm. "But the homes that do become available, they either sell very quickly or the price go up on them due to multiple offer situations."
His experience reflect a Nashville-area housing market where supply is getting tighter, as evidenced by the August home sales data from the Greater Nashville Association of Realtors. Overall, inventory of residential properties fell nearly 5 percent last month versus a year ago, ranging from only half a percent decline for single-family homes to 14 percent for condos. And the 64.5 days homes spent on the market on average in the past three months are the fewest since the housing bubble burst seven years ago.
One analyst expects the tight supply to create upward pressure on home prices in the near term and draw more sellers into the market in the coming months. "Because the market is so tight, homebuyers have less ability to shop around and are snapping up properties quickly," said Alex Miron, an economist with Moody's Analytics.
Although fewer homes were listed for sale last month, GNAR's data showed closings up 4.6 percent to 3,226 homes versus August a year earlier. The condo market seems particularly hot with sales rising even as fewer units were listed for sale. "The condo market has not looked this favorable for sellers since 2005," Miron added.
Home prices, meanwhile, continued to jump year-over-year although the increase last month was about the same as the last three months. The median price of a single-family home was $219,000 for August, up 13 percent from a year earlier. Meanwhile, the median price of a condo rose about one percent to $169,000 versus a year ago.
GNAR's President Hagan Stone called the 4.6 percent jump in closings a sign of sustainability. "With pending home sales up more than 3,000, we hope the market will remain active and healthy in the coming months," he said, citing job growth including recent announcements from Warby Parker and AIG a key part of home sales growth. "The continuation of excellent visibility and positive economic news for Greater Nashville will attract more people to the area and build confidence in the whole community."
Currently, there's only a 3.8-months supply of single-family homes and 2.9-months supply condos on the Nashville area market. That's considered a seller's market.
Al Murphy, a Nashville real estate investor with nine homes, said many new construction homes especially in the $300,000 price range go under contract the first day they hit the market. That's especially the case in areas such as The Nations and East Nashville.
"There's pretty much no supply, so that's why you see developers tearing down a house on one lot and building two single-family homes," Murphy said. "Nashville's growth along with few single-family homes built during the recent economic downturn have caused a pent-up demand with no supply."
The Trammells delayed buying one home because they thought the price was too high, but it was snapped up by a developer that built two homes on the site. "There are more buyers in the marketplace right now than there are homes for sale, particularly in popular urban neighborhoods around Nashville," Andrew Trammell said.