Onward and Upward
It’s no secret that the real estate market lately has been a challenge. Every person I run into says something like: “the market is so hot! business must be so good for you!” Yes and no. It largely depends on your definition of “good.” “Good” to me implies steady, consistent, and positive. I would say God is good. I would say the beach is good. I would say the green smoothie I make every morning is good. I would say my clients are good (people). However, it’s not the term I’d use for the real estate market in Nashville.
From 2015 to 2016, we saw average days on the market each month go from 63 to 33 (1) Around this time, multiple offers within a few hours of listing became commonplace for homes in good condition around the median price point ($229,509 for 2015 and $254,660 for 2016). 2017 was pretty consistent with 2016, and 2018 median prices (per month) are consistently $285,000-$297,000 so far.
So, what increases value that much in that short amount of time? Demand. In 2016, roughly 85 people were moving to Nashville per day. With a crane on every corner and new, large companies moving to Nashville quarterly (some even relocating their headquarters here), people are flooding to the mid-size, soon to be large, city. Between July 2010 and July 2015, the greater Nashville area gained 30,875 people, which translates to a annual average of 1.8 percent growth over those 5 years, which is more than double the 0.8 percent national growth rate (2). Demand is in the driver’s seat of the car (or large, energy inefficient Ford F-250) that is the housing market in Nashville.
However, the kicker for the average first time homebuyer in Nashville is that their wages have not increased like the pace of the housing market (3). So, these people aren’t going to have the appeal that an investor does to a seller. So, in the end, the investor wins the multiple offer battle (because cash, duh) and purchases the house for the worn-out first time homebuyer to rent for another year in hopes of maybe purchasing something the following year.
This isn’t meant to be a pity party; it’s just the way it is right now. Unlike my time as a conservative media blogger, I am not implying anyone is wrong or anyone is right. If I’m the listing agent and a buyer with an FHA loan comes in at $10,000 over asking price (also asking for the seller to pay $5000 in closing costs), then an investor comes in with list price – all cash – of course I am going to advise my client to pick the cash offer. Fortunately, this is business, not politics. Well, business can be very political, but that’s another topic for another time.
My advice to the first time homebuyer in Nashville is to hire a resilient agent (this is more difficult than you think to find, trust me), and expect to lose. If there’s something I’m learning the hard way right now, it’s that my efforts in any particular area are not guaranteed a positive outcome; that’s what makes risk risky, life an adventure, and a support system valuable.
One of my investor clients regularly tells me, ‘you’re out swinging at the ball, and that’s what matters! One “no” is one answer closer to a “yes.”’ And it’s true. Great things rarely happen on accident and without bumps in the road. Careers don’t further themselves; marriages don’t last without consistent, full participation from both parties; and health isn’t a human right, it’s a lifestyle. Purchasing a large asset is no different. There are ups and downs and twists and turns that occur no matter what, and how we act and react determines the end. God give us these opportunities in life to shape us, and we can either be present in our own lives or populate the sidelines.
And finally – the best part – is that what we have in mind usually pales in comparison to what God has in mind, though that is difficult to comprehend in the moment. That’s where faith, patience, and a resilient agent come into play. The right situation is just behind the wrong one you were devastated to lose.
Ya’ll make it a great day now, ya hear?
Blessings,
Syd Phil