Nashville Real Estate Market Update

The Nashville real estate market is constantly changing which is why we felt the need to create a 'living' blog post that monitors and interprets the Davidson County real estate market on a monthly basis. As a real estate brokerage and member of the MLS, we have access to exclusive market data. The goal of this post is to democratize and interpret this data so that potential home buyers and sellers can educate themselves on the current market conditions.

Of course, the best way to get a pulse on the market is to talk with an experienced local real estate agent. If you have any questions about the state of the market or the home buying/selling process, please feel free to contact us at contact@felixhomes.com or 615-354-5731.

September 2023

Single Family Homes

September Key Takeaways:

• 933 new listings hit the market in September – 26.4% fewer than September 2022.
• There were a total of 2,590 homes for sale in September compared to 2,540 in August.
• 677 homes closed in September compared to 808 in September 2022.
• The average days on market in September was 24 days.
• The 30-year mortgage stayed above 7% in September. As of 10/12/23, the average 30-year mortgage rate was 7.60%.
• The average sales price of a single-family home in September was $708,121.

TL;DR:

If the 30-year mortgage stays above 7% for another year, prices will decrease. The average sales price for a single-family home in Davidson County hit a new record – $708,121. While this number is truly astounding in a world where interest rates have hit a two-decade high, it is misleading as the "average" can easily be manipulated by a few extremely expensive sales. The median sales price for example was $489,000, 5.2% higher than in September 2022.

An In-Depth Review:

In investing, the golden rule is "never fight the Fed". This means that when the Federal Reserve is on your side, the tide of the market is likely to rise – and we all know that a higher tide raises all ships.

The opposite is true in an environment where the Fed is working against you. Currently, the 30-year mortgage sits right at 7.60%. We've now experienced 6% - 7% interest rates for one year.

Homebuyers have been accustomed to decreasing interest rates since the 1980s. What happens when rates start to go the other way? The last time the 30-year mortgage was above 7% was in 2001 according to data provided by FreddieMac.

While it may be true that interest rates were at 7% (and even significantly higher) in the past, home prices have risen tremendously in recent years.

For example, the last time mortgage rates were above 7% was in 2001 when the median home price in Davidson County was roughly $150,000. The mortgage payment on a $150,000 home assuming no money down is just $998.

Fast forward just over 20 years and the mortgage payment on a $500,000 home is $3,327. I don't know about you but most people's pay hasn't risen threefold since 2001 to keep pace with the rising cost of housing.

Simply taking a look at the increased cost of a mortgage from 2021 when rates were in the 3% range to today is enough to make most folks sick to their stomachs. And if that didn't do it, calculating the total interest paid over the life of the loan will just about give you a heart attack.

This is precisely why home prices must come down if rates stay this high for another year.

Some will argue that low supply will keep prices elevated – after all, they've done a pretty good job of keeping prices stubbornly high so far. That said, supply is increasing. Builders are constructing homes at a fast pace and those of you who read last month's update know that new construction homes represent roughly 20% of the inventory on the market.

For those of you who've made it this far, what's your perspective? Do you think home prices in Middle Tennessee are in for a correction or will prices continue to rise? Send me an email and let me know what you think!

August 2023

Single Family Homes

August Key Takeaways:

• 1,042 new listings hit the market in August – 21.2% fewer than August 2022.
• There were a total of 2,540 homes for sale in August compared to 2,558 in July.
• 818 homes closed in August compared to 876 in August 2022.
• The average days on market in August was 21 days.
• The 30-year mortgage stayed above 7% in August. As of 8/31/23, the average 30-year mortgage rate was 7.07%.
• The average sales price of a single-family home in August was $667,863.

TL;DR:

New construction is taking over the Nashville real estate market. Out of all the homes that sold in August, over 18% were new construction homes. These new homes had an average sales price of $822,288 which means a buyer would need to have a household income of approximately $215,000 to comfortably afford one.

An In-Depth Review:

As we've discussed in the past, high interest rates are having unforeseen consequences for the real estate market.

As rates stay above 7%, the number of buyers in the market continues to dwindle. The Mortgage Bankers Association measured their fifth consecutive decline in mortgage applications which have hit a 28-year low.

It's easy to see why high interest rates have smoldered buyer demand, however, the other consequence of high rates actually impacts the supply-side of the market.

Nearly 62% of homeowners with a mortgage have locked in a rate under 4%. These homeowners are in no rush to sell since this would cause them to lose their current rate and "trade up" to a higher rate. This is causing a shortage of supply which is keeping home prices elevated.

That said, there is another way to increase the supply of available homes on the market – new construction.

Home builders are crushing it right now making up over 18% of the homes that sold in August. In many cases, builders are offering incentives such as credits towards closing costs, money that can be used to "buy down the rate" as well as upgraded features and appliances at no additional cost.

The average sales price of a new construction home in August was $822,288. According to the 30% rule, this means that a buyer would need to have an annual household income of approximately $215,000 to comfortably afford one.

If that last stat made you sick to your stomach, here's a bit of good news for homebuyers. While prices haven't come down much, sellers are starting to offer money towards closing costs. This is beneficial to buyers as they can use these "seller credits" as a way to offset their closing costs, or they can choose to "buy down the rate".

Roughly 8.5% of home sales that occurred in August involved the seller paying a portion of the buyer's closing costs. Just how much are they paying? For the sellers that contributed towards buyers' closing costs, the average amount was $7,960. This is significant since homebuyers will typically pay between 2% - 3% of the sales price of a home in closing costs alone.

July 2023

Single Family Homes

July Key Takeaways:

• 919 new listings hit the market in July – 36.9% fewer than July 2022.
• There were 2,588 total homes for sale in July compared to 2,494 in June.
• Only 730 homes closed in July 2023 compared to 850 in July 2022.
• The average days on market in July was 17 days.
• The 30-year mortgage continued to climb in July. As of 8/17/23, the average 30-year mortgage rate is 7.37%.
• July set a new RECORD – average sales price was $700,418.

TL;DR:

July is typically the strongest month for the real estate market and this year was no different. The average sales price of a home in Davidson County passed $700,000 for the first time! The median sales price is nearly $500,000. Rates have continued to increase skyrocketing to 7.37% for a 30-year mortgage. Buying a home has never been less affordable.

An In-Depth Review:

Interest rates show no signs of slowing down. The average interest rate for a 30-year mortgage continued to climb throughout the month of July and hit 7.37% as of August 17th according to MortgageNewsDaily.com​.

I've discussed in the past how high rates have some unforeseen consequences. For example, they not only increase the total cost of a buyer's loan but they are also preventing homeowners from listing, creating a shortage of supply. Ask any real estate professional to describe the market we are in using one word and I guarantee their answer is – "weird".

The market is weird because high interest rates should in theory cause prices to come down but, as you can see by the July data, prices have never been higher. Prices should be coming down in an environment where rates are high because it makes it more expensive to finance the purchase (See the chart below).

Prices are staying stubbornly high because the lack of listings on the market is creating an imbalance of supply and demand. For instance, in July 2022, there were 1,456 new listings added to the market, and in July 2023, there were just 919 new listings – a decrease of nearly 37%.

Prices have never been higher in Davidson County. The average sales price of a single family home reached $700,418 and the median sales price in July was $496,870.

While prices are extremely high, there is an untold secret going on in the market referred to as "seller credits". Seller credits, also known as seller-paid closing costs, are when a homeowner agrees to pay for the buyer's closing costs.

Buyers can use these credits how they wish. In the majority of cases, buyers are choosing to use these credits to "buy down the rate". In other words, buyers are using these credits to lower the interest rate they pay which in turn keeps their monthly mortgage payment somewhat affordable.

So, while prices are elevated, we are definitely seeing the "net price" (sales price - seller credits) start to come down.

June 2023

Single Family Homes

June Key Takeaways:

• 1,080 new listings hit the market in June compared to 1,072 new listings in May.
• There were 2,494 total homes for sale in June compared to 2,390 in May.
• Only 794 homes closed in June 2023 compared to 868 in May.
• The average days on market in June was 20 days compared to 25 days in May.
• The 30-year mortgage continued to climb in June. As of 7/11/23, the average 30-year mortgage rate is 7.12%.
• Since January 2023, the median sales price is up 6.5% (to $490,000) and the average sales price is up 2.14% (to $660,193).

TL;DR:

June was a fairly boring month for Nashville's real estate market. The key focus was on the 30-year mortgage rate which has continued to climb from 6.45% at the beginning of this year to a high of 7.22% on July 6th. High interest rates combined with prices that refuse to come down are creating an unaffordable market for home buyers across the country.

An In-Depth Review:

What was the headline in June? Sky-high interest rates!

Rates have steadily increased since 2021 and they may not have peaked yet. In July, the average 30 year mortgage rate hit 7.22%.

High rates are having some unforeseen consequences. Not only do they increase the total cost of a buyer's loan but they are also preventing homeowners from listing, creating a shortage of supply. After all, homeowners want to hang on to their low interest rates. Low supply is keeping home prices elevated even though buyer demand is down substantially.

It should be fairly obvious why buyer demand is down so much. When determining a budget, most home buyers look at the cost of housing based on the monthly mortgage payment. The monthly payment is comprised of a portion that goes towards paying down the principal of the loan as well as an amount that goes towards paying the interest on the loan.

While this may seem intuitive to anyone who has purchased a home before, we've created a table to show the impact higher rates are having on affordability.

In June 2023, a $500,000 loan has an additional $407,901 in interest payments over the life of a 30-year mortgage compared to 2021. An increase of 53%.

The counterargument is that most folks do not stay in the same home for 30 years. That may be true but the monthly payment in 2021 was $2,143 compared to $3,276 in 2023.

So, when will rates go back down? Morningstar made a bold prediction this week stating that "housing affordability" will be restored by 2025. Morningstar's forecast model expects mortgage rates will average 5.00% in 2024 followed by 4.00% in 2025.

At Felix, we're not so confident. Sometimes, you have to admit that you don't know what you don't know. In other words, mortgage rates are extremely hard to predict because they are based off of a complex financial system with numerous unknown factors. Back in January, many so-called experts predicted that rates would come down by the summer, and look where we are today.

That said, there is a glimmer of hope for housing affordability advocates. According to a study by Axios, the number of new permits for single-family homes in Nashville far exceeds national building rates. More than 108 new homebuilding permits per 100,000 residents were issued in the Nashville area in May 2023, up from about 88 in May 2020. An increase in the supply of homes will hopefully stabilize prices.

May 2023

Single Family Homes

May Key Takeaways:

• The number of new listings added to the market in May (1,072 homes) increased 8.1% compared to April (992 homes)
• The total inventory listed for sale was 2,390 in May, 2.5% more than April (2,332 homes)
• 868 homes closed in May
• The average days on market before going under contract was 25 days compared to just 8 days in May 2022
• 30-year mortgage rates went back above 7% topping out at 7.14%
• Since January 2022, the median home price is up 7.6% to $495,000 and the average is up 5% to $678,726

TL;DR:

Limited supply of homes for sale is keeping prices elevated as we head into the peak summer selling season. Purchasing a home has never been so unaffordable, especially for first-time homebuyers as mortgage rates top 7%. According to one study by CBRE, the typical mortgage payment is 37% higher than the typical rent payment.

An In-Depth Review:

Mortgage rates show no signs of coming down as the average rate for a 30-year mortgage topped 7% in May. To put this into perspective, a $500,000 mortgage at a 7% rate would produce a monthly payment of $3,327. That same $500,000 mortgage at a 3% rate is just $2,108.

Given the rise in rates, one would think that prices should come down as the "invisible hand" of the market brings us back to equilibrium. Unfortunately, for homebuyers, this is not the case.

Because the majority of homeowners have locked in an interest rate under 4% during the previous ~10 years of low interest rates, no one is in a rush to sell and trade up to the higher rate. This is causing a market in which there is low supply, keeping prices elevated as a result.

Getting into the numbers, there were 1,072 new listings brought to the market in May 2023, 426 fewer than in May 2022 (1,498). The total number of homes listed for sale in May topped 2,390 which is nearly identical to where we were this time last year. The number of closed sales in May 2023 was 868 which is 15.5% fewer than the number of closed sales in May 2022.

Homes are staying on the market for about 25 days on average in Davidson County before receiving an offer. This may seem like a long time compared to the scorching hot market we experienced last summer although make no mistake – many homes in move-in ready condition are receiving offers quickly.

When it comes to price, homes are expensive. Considering the average sales price of $678,726 and a 7% mortgage payment, a buyer would need a gross annual income of $193,542 (assuming the 28% rule) to comfortably afford the payment. The median home price in Davidson County reached $495,000 which is just 2% less than where we were at the height of the market last year.

How competitive is the bidding environment in the market? While multiple-offer situations are no longer the norm, homes are selling close to their list price. For example, the average percent of list price received in May hit 98.6%. This means that a home listed for $500,000 would end up with a sales price of $493,000 on average.

To summarize, this market is unaffordable for most homebuyers. Those that are buying right now are hoping to refinance to a lower mortgage rate if and when that time comes. The gap between average rent and average mortgage payment is continuing to rise which begs the question: will rent prices start to trend up or will mortgage payments trend down?

April 2023

Single Family Homes

April Key Takeaways:

• The number of new listings added to the market in April (992 homes) increased 4.1% compared to March (953 homes)
• The total inventory listed for sale was 2,332 in April, 9.3% more than March (2,134 homes)
• 689 homes closed in April
• The average days on market before going under contract was 30 days compared to just 9 days in April 2022
• 30-year mortgage rates have hovered between 6.25% and 6.5% throughout the month of April
• Since January 2022, the median home price is up 4.9% to $482,500 and the average is roughly flat (-0.2%) to $645,327

TL;DR:

By the numbers, April looked like a pretty lackluster start to the Summer selling season. But, from our "boots on the ground" experience, it was anything but. Newly listed homes, especially those in the $300,000 - $500,000 price range are selling quickly. This competition is due to how few listings are available at the moment. Buyer's are becoming more accustom to the "new normal" of higher interest rates and many are anticipating refinancing in a few years when rates hopefully subside. Our prediction – the May market update will confirm that we are entering a seller's market.

An In-Depth Review:

This time last year, we were in the middle of a real estate feeding frenzy. It wasn't uncommon for a home to be listed for sale only to end up with multiple offers just a few days later. Granted, that was back when interest rates for a 30-year mortgage were below 5%.

As many of you who read my monthly updates know, the market has since slowed down as rates have increased. The beginning of 2023 was brutal for most home sellers but as we head into the "busy season" that may be about to change.

What is keeping prices elevated is the dynamic between supply and demand. Yes, the demand for homes is much lower than it was in 2022. That said, the number of new listings being brought to the market is also down. This should make logical sense, after all, why would a homeowner who has locked in a 3% mortgage want to sell only to pay 6.5% for their new home?

In April 2023, there were 992 new listings in Davidson County, a 22% drop from the number of new listings in April 2022. That said, homes are staying on the market longer. Thirty days on average in April 2023 compared to just 9 days in 2022. So, the total number of homes for sale at any given time in April 2023 was slightly higher than April 2022: 2,332 (2023) homes compared in 2,120 (2022).

Demand is substantially lower thanks to the high interest rates. For example, in April 2023 there were just 689 closed sales compared to 1,031 closed sales in April 2022 – a decrease of 33%.

Even with low demand, home prices are staying pretty stable. The median price of a home in Davidson County was $482,500 in April 2023 compared to $490,000 in April 2022 (-1.5%). The average price in April 2023 was $645,327 compared to $660,609 in 2022 (-2.3%).

The percent of list price received in April 2023 was a healthy 98.3%. This represents the relationship between the initial list price and the final sales price. For example, on average a home listed for $500,000 would have closed for $491,500.

Competition for move-in ready homes in the $300,000 - $500,000 price range is especially strong.

Our final thoughts...while the April numbers may not blow anyone away, they represent a healthy market. In addition, they may not tell the whole story. For example, within the past 30 days, we've had a few "multiple offer" situations on our listings. While we would still consider April a buyer's market, it may not last long.

If you know anyone looking to buy or sell a home in the coming months, feel free to send them a link to this market update. If they'd like to have a more in-depth conversation or would like market stats for a specific city or county, have them reach out at 615-354-5731.

March 2023

Single Family Homes

The Nashville real estate market looks to be picking up as we head into the peak homebuying season (May - August)!

March Key Takeaways:

• The number of new listings added to the market in March (953 homes) increased 25.6% compared to February (759 homes)
• The total inventory listed for sale was 2,134 in March 2023, 6.8% more than March 2022 (1,998 homes)
• 763 homes closed in March
• The average days on market before going under contract was 32 days compared to just 10 days in March 2022
• 30-year mortgage rates decreased slightly throughout the month of March to around 6.32%
• Since January 2022, the median home price is up 7.6% to $495,000 and the average is up 6.2% to $686,257

TL;DR:

While the Nashville real estate market is not as strong as it was during the height of the market in the Summer of 2022, it has been gradually improving since the beginning of this year. Interest rates have stabilized and buyers have come to terms that sub-4% rates are a thing of the past. The low supply of homes is helping keep prices relatively stable and all signs point to the Nashville market heating up as we head into the peak homebuying season.

An In-Depth Review:

As we head into the spring homebuying season, the preliminary data shows the Nashville real estate market picking up! Even though the 30-year mortgage rate is still fairly high ending the month at around 6.32%, most homebuyers have come to terms with the fact that sub-4% mortgage rates are a thing of the past (at least for the time being). In this market, most buyers are "marrying the house and dating the rate". In other words, if a homebuyer likes a house, they will likely make an offer with the intention of refinancing in a few years when rates go back down.

Since the strength of the real estate market is defined by supply and demand, let's take a look at how the supply side of the market is shaping up.

In March 2023, 953 new listings hit the market in Davidson County. This is slightly higher than the number of new listings added to the market in both January and February, however, it is still nearly 30% lower than the number of new listings we saw in March 2022 (1,316). This low supply is an indication that home prices will probably stay pretty high.

Even though the number of new listings is down compared to this time last year, the number of total listings on the market in March 2023 is up to 2,134. This is because listings are staying on the market longer. For example, in March 2022, the average number of days on market before getting an offer was just 10 days. March 2023 saw an average days on market of 32 days!

The low supply of homes available for sale is keeping prices relatively high–especially for move-in ready homes that are priced fairly. For example, the median sales price in Davidson County in March 2023 was $495,000–significantly more than January ($460,000) or February ($459,950). The average price of a home in Davidson County reached $686,257–a 9.3% increase compared to this time last year.

While the market is not as competitive as it was last year, it has picked up since January. For example, crazy bidding wars may be a thing of the past but it's not uncommon to have two or three offers for a desirable home. In addition, the percent of list price received, which is a stat that compares the final sales price of a home to its initial list price, is fairly strong at 98.3%. This means a home listed for $500,000 will sell for $491,500 whereas at the beginning of 2023, it would have sold for just $484,500.

If you are considering buying or selling, please don't hesitate to contact us at Felix by calling 615-354-5731. We can help you save money in this challenging economy, and our clients have saved over $1,000,000 in commission fees to date.

February 2023

Single Family Homes

Early signs the market is heating back up just in time for Spring!

February Key Takeaways:

• The number of new listings added to the market in February (759 homes) decreased 15% compared to January (893 homes)
• The total inventory listed for sale was 2,086 in February 2023 – 17.9% more than February 2022 (1,769 homes)
• 526 homes closed in February – 31.8% more than the record low in January (399)
• The average days on market before going under contract increased yet again to 38 days compared to just 14 days in February 2022
• 30-year mortgage rates increased throughout the month of February to around 6.65%
• Since January 2022, the median home price is up 6.9% to $459,950 and the average is up 10.9% to $631,714

Like many other real estate markets throughout the country, the Nashville market is facing significant headwinds due to high-interest rates. In fact, the 30-year mortgage is the highest it's been since the early 2000s.

Many of our more seasoned readers may correctly point out that 30-year interest rates were above 10% in the 1980s. But, the key thing to remember is that home prices were significantly lower back then.

Home buyers have one thing on mind when determining how much they can spend on a home – their monthly payment. The average home price in Davidson County in February 2023 was $631,714 and with an interest rate of 6.65% and a 20% downpayment, the monthly mortgage amounts to $3,244.

If we follow the age-old 28% rule which states that your monthly mortgage payment should be no more than 28% of your gross monthly income, then a prospective buyer would need to make $11,585 per month or an annual salary of $139,000 just to comfortably afford a typical home in Davidson County. For any of you who are still wondering why the market has cooled, that is your answer.

If buyer demand is down so dramatically, then why haven't prices fallen to a greater degree? It's true that February's median sales price in Davidson County ($458,000) is flat from one year ago ($459,950). And, the median sales price is down roughly 10.2% since the height of the market in June 2022 ($509,845). That said, what's stopping a full-on price correction is extremely low supply.

Like any market, real estate prices are dictated by the invisible hand which is governed by supply and demand. Buyer demand is down, but the supply of available homes for sale is also down. Why? Well, anyone with a sub-4% mortgage is in absolutely no rush to sell.

Speaking of the supply side, the total number of homes available for sale in Davidson County was 2,086 – about even with the number of homes for sale one month prior. The number of new listings that came to the market in February is lower at just 759 homes or about 20% less than what we would expect this time of year.

For the 759 homes that were brought to the market in February, they're staying on the market quite a bit longer. The average days on market in Davidson County was 38 days compared to just 14 days in February 2022!

So, why does it look like the Nashville real estate market may be heating up just in time for Spring?

Pay attention to the "percent of list price received" or as we call it at Felix Homes – the heartbeat of the market. As a refresher, this percentage indicates what a home's final sales price is compared to its initial list price. For example, back when the market was extremely hot, the percent of list price received was over 100% meaning that the final sales price was more than what the home was last listed for. In a normal market this percentage is typically below 100% meaning if a home is listed for $500,000, it may end up selling for $480,000.

With this explainer out of the way, the percent of list price received in February 2023 was 97.8%. While this number may not blow anyone away on its own, it is the highest it's been since October 2022. An early sign that the market may start to improve as we head into the warmer months ahead.

If you are considering buying or selling, please don't hesitate to contact us at Felix by calling 615-354-5731. We can help you save money in this challenging economy, and our clients have saved over $1,000,000 in commission fees to date.

January 2023

Single Family Homes

With 2022 in the books, what will 2023 hold for Nashville's real estate market?

January Key Takeaways:

• The number of new listings added to the market in January (893 homes) increased 74% compared to December (512 homes)
• The total inventory listed for sale was 2,080 in January 2023 – slightly more than January 2022 (1,921 homes)
• Only 399 homes closed in January – a record low
• The average days on market before going under contract increased yet again to 33 days
• 30-year mortgage rates decreased to just above 6% in January
• Since December 2022, the median home price is up 6.9% and the average is up 13.4%

Reflecting on 2022, we recall one of the most turbulent real estate markets in recent history. Sometimes we think back to the days when homes sold in hours for $10,000, $30,000, or even $50,000 over the list price. The low-interest rate environment and pent-up demand for single-family homes drove prices and buyers to a frenzy. The hysteria reached its peak in summer only to grind to a halt when interest rates sharply increased above 6%. The second half of the year felt like slowly letting the air out of the balloon, not the best scenario, but better than the balloon popping.

So far, 2023 feels like the real estate market is in hibernation. In January 2023, only 399 homes closed in Davidson County, a record low. While fewer closings during winter months is normal due to seasonality, January 2022 saw 37% more closings (635 homes). Homes that go under contract are taking longer to do so. The average days on market in January 2023 was 33 days, another recent record.

The number of new listings increased in January, with 893 added to the market, a 74% increase compared to December. The total number of homes for sale in January was 2,080, which is typical for this time of year. However, we must keep an eye on supply levels. Buyer demand has plummeted due to the sharp rise in interest rates, but home prices are still supported by a lack of supply. If inventory continues to enter the market and takes longer to sell, we may see prices decrease further, assuming buyer demand stays the same.

Early signs show the market continuing to soften. For example, the percent-of-list-price-received, which we often refer to as the "pulse" of the market, was weaker in January. Homes sold, on average, for 3.1% less than the last listing price, indicating a market where buyers hold the upper hand in negotiations. In contrast, January 2022 saw homes close for about 1% more than the last listing price, showcasing the change.

If the Federal Reserve aimed to slow down the market by increasing interest rates, it succeeded. The average 30-year mortgage rate began the year at just under 6.5%, according to FreddieMac's Primary Mortgage Market Survey. It continued to decrease throughout January, a positive sign for potential homebuyers who were sitting on the sidelines. Mortgage experts even anticipated a five-handle on the 30-year rate by the end of the month. Rates bottomed out, for now, at 6.09% in the first week of February.

If you are considering buying or selling, please don't hesitate to contact us by calling 615-354-5731. We can help you save money in this challenging economy, and our clients have saved over $1,000,000 in commission fees to date.

December 2022

Single Family Homes

The turbulent Nashville real estate market of 2022 was shaped by rapidly rising interest rates and low inventory. In 2022, buyers were forced to relinquish their contingencies and pay well above the listed price. As we look back on the past year, we will analyze the Nashville real estate market and provide insight into where it may be headed in 2023.

December Key Takeaways:

• The number of new listings added to the market reached a new low (512 homes)
• The total inventory listed for sale is down to 1,947 homes
• The average days on market before going under contract was 25 days
• 30-year mortgage rates dropped slightly in December (6.27%) but have since increased in January (6.48%)
• Since December 2021, the median home price is up 4.0% and the average is up 10.6%
• Only 569 homes closed in December 2022 compared to 1,092 in December 2021

In December, the Nashville real estate market ended the year with its worst-performing month. Despite the low inventory, the median sales price for Davidson County dropped from $480,000 in November to $457,745 in December, a decrease of 4.6%. Similarly, the average sales price went from $695,662 in November to $597,351 in December.

The significant drop in median sales price is surprising, particularly because the supply side of the market (inventory) is extremely low. In December, there were only 512 new single-family homes added to the market, a 36.3% decrease from December 2021 (804 homes). The holiday season may have played a role, but it is not likely to be the sole reason for this trend.

One possible explanation is that homeowners with low fixed-rate mortgages (around 4%) have little incentive to sell, as they would be subject to today's higher interest rates (around 6.5%) when buying their next home. In fact, 51% of homeowners with a mortgage have locked in a rate below 4%. This unintended consequence of extremely low rates will cause supply headwinds for years to come. Furthermore, fewer homes closed in December 2022 (569 homes) compared to December 2021 (1,092 homes) – a decrease of nearly 48%.

Homes that do get listed also tend to stay on the market longer. In December, the average days on market rose to 25 days, compared to just 13 days this time last year. Additionally, when homes do sell, they are selling at a significant discount compared to the initial list price. In December 2022, the percent of list price received decreased to 97.6%. For example, a home listed for $500,000 would sell for $488,000 on average.

Higher interest rates were the main cause of lackluster demand in the Nashville real estate market in 2022. The average rate for a 30-year mortgage rose from 3.22% in January to just over 7% by the end of November. Even though rates decreased slightly in December, the average 30-year fixed-rate mortgage is still well above 6% according to FreddieMac.

As we look to 2023, it's unclear what the future holds for Nashville's housing market. The trajectory of interest rates will play a significant role, but we have recently seen an increase in buyers entering the market. These buyers are looking for deals and are starting to take notice of the available inventory. Our prediction is that Nashville's real estate market will remain resilient, outpacing other cities such as Austin, Phoenix, Charleston, and Denver, which have seen steeper decreases.

This resilience is due in part to Nashville's strong local economy, with companies continuing to relocate here. Additionally, for nearly a decade, the number of new homes constructed in Nashville has not kept pace with the demand for housing due to the city's population growth. At Felix, we expect the first half of 2023 to be similar to the second half of 2022, characterized by decreasing prices, longer days on market, and strong opportunities for buyers. However, we predict that the market will return to normalcy in the second half of 2023, with prices bottoming out and demand returning. While we may not see the extreme sellers' market of early 2022, we believe that by this time next year, sellers will once again have an upper hand.

If you are considering buying or selling, please don't hesitate to contact us at Felix by calling 615-354-5731. We can help you save money in this challenging economy, and our clients have saved over $1,000,000 in commission fees to date.

November 2022

Single Family Homes

The 30-year mortgage may have peaked in November – what does this mean for the Nashville housing market?

November Key Takeaways:

• The number of new listings added to the market was down (746 homes)
• The total inventory listed for sale was up (2,342 homes)
• The average days on market was 24 days
• 30-year mortgage rates may have peaked (7.08%)
• Prices are down ~5.9% since June
• Prices are up 10.7% since November 2021

Before we take a deep dive into mortgage rates, let's first recap how the Nashville real estate market performed in November.

The number of new listings added to the market in November was just 746 single-family homes. This was the fewest number of new listings added to the market since January. For context, November 2021 saw 982 new listings and November 2020 saw 1,079 new listings. It's safe to say that seasonality plays a role. After all, inventory typically peaks over the summer when most folks decide to list their home. Even taking seasonality into account, the number of new listings in November was very low.

It makes sense that inventory has been low the past few months. After all, most folks aren't going to sell their home in an environment where prices are decreasing, homes are taking longer to sell, and interest rates are at multi-year highs.

The total number of single-family homes for sale in Davidson County was 2,342 in November. Surprisingly, this is actually more inventory than the summer months which averaged about 2,000 single-family homes listed for sale. The low number of new listings but relatively high inventory is a clear indication that homes are taking longer than one month to sell due to low buyer demand.

In fact, the average days on market in November, according to Realtracs, was 24 days! For context, the average days on market in June was just 6 days.

How are prices reacting to a slow market with little buyer demand? It should be no surprise that prices are down. For example, the median sales price for a single-family home in Davidson County in November was $480,000. At its peak in June, the median sales price was $509,845 representing a decrease of 5.9%. While this may seem depressing for Nashville homeowners, keep in mind that the median sales price in November 2021 was $433,700–still up 10.7% compared to a year ago.

How competitive was the Nashville real estate market in November? Taking a look at the percent of list price received (a stat that compares the original list price to the final sales price) we can see that it is definitely a buyer's market. For example, the percent of list price received in November was 97.7%. This means that a home listed for $500,000 will have a final sales price of just $488,500. Gone are the days of selling your home for more than it was listed for.

What do we have to thank for this dismal real estate market? You guessed it...interest rates.

The average interest rate for a 30-year mortgage according to a survey by FreddieMac reached a whopping 7.08% in November. Thankfully, mortgage rates have come down since then and are currently sitting at 6.31% as of December 15th. Let's hope that lower mortgage rates will begin to add more demand to the real estate market.

If you're thinking about buying or selling, feel free to give us a call at 615-354-5731. At felix, we'll help you save money in this challenging economy. In fact, our clients have saved over $1,000,000 in commission fees to date!

October 2022

Single Family Homes

The real estate market is at a standstill. Home prices are down in Nashville but not as much as in other markets.

October Key Takeaways:

• The number of new listings is down
• Demand is at a multi-year low (thanks to 7% interest rates)
• Homes are taking significantly longer to sell
• Those that list are doing so at a discount (prices are down 5.3% since June)
• Those on the market are taking price cuts (33.4% of listings in September dropped their price)

Like any market, real estate prices are dictated by a simple supply and demand equation. At felix, we're here to analyze both sides of the market to see if this is 2008 all over again or if we are in a short-term correction.

Let's start with the demand side of the market. The historic rise in interest rates (see below) has brought demand to a multi-year low. Combined with rampant inflation, a struggling stock market, and talks of layoffs at Fortune 500 companies, it's easy to see why potential home buyers have pumped the brakes.

We know demand is down but how about the supply side of the market?

The supply of homes currently for sale is also historically low. At felix, we predict high interest rates will lead to decreased mobility and a lower long-term supply of listings. After all, why would a homeowner who locked in a sub 4% interest rate over the past few years want to sell their current home and be forced to purchase with a 6%+ interest rate?

Let's take a look at a few examples to put things in perspective. The change in monthly mortgage payments from September 2021 compared to September 2022:

• A $200,000 loan has increased by $381 per month
• A $400,000 loan has increased by $762 per month
• A $600,000 loan has increased by $1,142 per month

Now that we've explained the supply and demand sides of the market, let's look at the latest data courtesy of Realtracs MLS.

The median sales price in Davidson County in October was $497,500. On a price-per-square-foot basis, this represents a decrease of roughly 5.3% compared to the market's highs we saw in June.

This is significantly less than other markets. For example, according to Money.com, the following cities have experienced the largest decrease in median home prices since June:

1. Austin, Texas (-10.3%)
2. Phoenix, Arizona (-9.9%)
3. Palm Bay, Florida (-8.9%)
4. Charleston, South Carolina (-8.6%)
5. Ogden, Utah (-8.6%)
6. Denver, Colorado (-8.0%)
7. Las Vegas, Nevada (-7.9%)
8. Stockton, California (-7.7%)
9. Durham, North Carolina (-7.5%)
10. Spokane, Washington (-7.4%)

There were 2,432 active listings for sale in Davidson County in October and 932 new listings were added to the market throughout the month.

Supply and demand are both low but make no mistake, it's definitely a buyer's market. The percent of list price received which we refer to as the "heartbeat" of the market was 98.2% in October. In other words, a home that was listed for $500,000 ended up selling for $491,000 on average.

Last, homes are taking longer to sell. Gone are the days of homes going under contract in a matter of hours. The average time it took for a home to go under contract in September was 18 days compared to just 6 days on average in June.

If you're thinking of buying or selling in this challenging market, give us a call today at 615-354-5731. We'll help determine a strategy using data and analysis and help you decide if it's a good time to buy or sell.

September 2022

Single Family Homes

Interest rates are up, prices are down – the Nashville real estate market has continued to cool since reaching record highs at the beginning of the summer.

There were 1,051 new listings brought to the market in Davidson County during the month of September. This is actually the fewest number of new listings added to the market since April. While seasonality definitely plays a role since not as many people list their homes in the Fall, high interest rates may also be contributing to the low supply.

High interest rates decrease housing mobility. After all, why would someone who locked in a 3%, 30-year mortgage decide to move and be forced to purchase their next home with a 6% interest rate?

The number of active listings in September was 2,411. This is slightly higher than the number of active listings in August as a larger percentage of unsold inventory has carried over from the previous month. Homes have stayed on the market longer. In fact, the average days on market in Davidson County during the month of September was 16 days. While 16 days may not sound like a long time, keep in mind that the average days on market in June was just 6!

Higher interest rates and a slight increase in supply are causing prices to come down. Luckily, this is not a "crash". Instead, it's a healthy pullback in the market which was previously growing at 20%+ per year. The average sales price of a single-family home in Nashville was $597,737 during the month of September. This is 13.6% lower than June's average sales price ($691,468). The median sales price for a home in Davidson County was $475,000, 6.8% lower than the June high ($509,845).

The market has gotten less competitive. Gone are the days of paying over the list price! In fact, the average percent of list price received during September was 98.2%. In other words, a home listed for $500,000 would sell for $491,000. Compare this to April when homes were selling for 4.1% over the list price on average and that same $500,000 home would have sold for $520,500.

Rising interest rates are in large part to blame for the slowdown we've been experiencing. From just over 3% for the average 30-year mortgage at the end of December to 6.7% at the end of September, rates have more than doubled.

What does this mean for the average home buyer? Let's look at two scenarios:

If a buyer purchased a $500,000 home in December and put down 10%, their monthly mortgage payment would have been just over $1,900 per month. Today, that same $500,000 home with 10% down would result in a monthly payment of approximately $2,900! In a nutshell, this is why the national real estate market has cooled so quickly.

If you're thinking of buying or selling in this challenging market, give us a call today at 615-354-5731. We'll help determine a strategy using data and analysis and help you decide if it's a good time to buy or sell.

August 2022

Single Family Homes

Have you ever been fishing where you sit out on the water all day and leave without a single bite... not even a nibble? This is the current state of the Nashville real estate market. It is safe to say that the fish just aren't biting. The second half of June was when the first signs of a slow down became apparent. This slow down hasn't been reflected in the market data until August.

August saw 1,089 new listings brought to the market. This was slightly fewer than July, however the total number of homes available for sale has increased to 2,273 as homes listed in previous months have remained on the market. That being said, supply is still not as high as it was in August 2021 (3,186). The steady increase in supply over the past couple of months is not helping prices.

According to data provided by Realtracs, the median sales price for Davidson County in August ($470,000), was down 3.69% since July ($488,000). On the ground, we are seeing price reductions becoming the norm. When buyers choose to make an offer, no longer are they accustom to pay over the list price. In fact, the percent of list price received in August was 99.2%, falling below 100% for the first time since March 2021. This is a clear indication that we are officially in a buyer's market.

The lack luster demand for housing is largely being driven by higher interest rates. The average rate for a 30-year mortgage started out the month of August at 4.99% and ended the month at 5.66%. Currently, the interest rate for a 30-year mortgage is the highest it has been since 2008.

What does all of this mean for folks looking to buy or sell in the Nashville area?

For sellers, the key is to remain patient and understand that it may take a few weeks or more to receive an offer. In our experience, higher priced listings are taking especially long to sell since higher borrowing costs means there are fewer buyers that can afford that price point.

For buyers, the key is to understand that prices are negotiable. If you see a home that you are interested in, however you think the price is a bit on the high side, don't be afraid to make an offer that may be significantly lower that what the home is listed for.

July 2022

Single Family Homes

It's official, the music has stopped. Inventory is up, and the insane housing market that has lasted roughly two years has come to an end.

Every market relies on supply and demand to determine price and the real estate market is no different. So, for those looking to buy or sell in the near future, what does a high supply, low demand environment look like for the Nashville real estate market? Will prices go down and if so, by how much?

For the past two years, Nashville homeowners have had a dream scenario – low supply and high demand which has resulted in home prices appreciating by nearly 30%. Keep in mind that real estate is not supposed to appreciate by 30% in just two years. Under normal circumstances, it would take roughly 6-10 years to see the same level of growth.

Let's take a look at the supply side of the market first. Determining the supply side of the market is straightforward since we can take a look at how many listings were added to Realtracs in Davidson county. Since January 2021, the number of single-family homes for sale at any given time in Davidson county fluctuated between 1,100 - 1,700. This was shocking because prior to 2021, we were used to having about 3,000 active listings on the market at any given time. Simply put, the supply side of the market was cut in half.

Gauging the demand side of the market is a little more difficult as there is no way to accurately assess how many serious buyers are out there. That said, I think we can all agree that demand for Nashville homes in particular surged during the past two years. This was due to:

• Increased mobility due to "work from home" policies.
• Flight from high-cost coastal cities to lower-cost cities.
• Historically low-interest rates which made getting a mortgage seem like "free money".
• Millennials gaining the buying power to go from renting to owning.
• A booming stock market and healthy economy that allowed "mom & pop" real estate investors to purchase multiple homes.
• Institutional real estate private equity funds that purchased single-family homes by the tens of thousands.

So, now that we know what caused the "dream scenario" for homeowners which led to 30% appreciation in two years, let's take a look at where we are at today. In July 2022 there were 2,250 active listings for sale. So, we're still below 3,000 active listings, however, back in April 2022 (which was the peak of the housing market), there were only 1,297 homes actively listed for sale. This represents an increase in inventory of 73% in just three months! It's likely inventory will continue to increase in August and September as sellers rush to list their homes in an attempt to capitalize on what was a perfect seller's market.

What does higher inventory mean for buyers and sellers?

• Increased days on market: In June, the average days on market before getting an offer was just 6 days. This number increased to 10 days in July and it will continue to increase. Similar to the pre-pandemic market, it will become normal again for a home to be on the market for 14 - 30 days before getting an offer.
• Homes will not sell for more than the list price: At Felix Homes, one of our favorite stats is the percent of list price received. This number represents the relationship between the final sales price compared to the initial list price. For the past two years, the average percent of list price received was over 100% meaning that homes were actually selling for more than their list price. April for example saw homes selling for 4.3% more than their list price. In July 2022, the average percent of list price received was just 100.9% and we will likely see this number dip back below 100% in August for the first time in over a year.

But will prices decrease and if so, by how much?

Yes, it's likely that prices will go down – that is just simple market forces at work when supply is greater than demand. While we are confident that Nashville will be sheltered from a significant decrease that other cities may experience, there is no doubt that prices could realistically come down by 3% - 7% over the next year. While we don't have a crystal ball, it's logical that any market that has appreciated so much, so quickly would see a correction. Keep in mind we are using the word "correction", it will NOT be a crash. This is not 2008.

How should sellers handle the new market environment? Be patient. Your home will likely not sell in the first few days and that's okay. Adjust your expectations when it comes to price. Just because a neighbor sold their home for $500,000 in April or May doesn't mean that you will be able to sell your home for that price if you list in September or October.

How should buyers approach the new market? Understand that the tide is shifting. If you see a home you like but you feel the price is too high, offer a price you think is fair even if it is significantly below the list price. Buyers should also be thinking long-term with the assumption that they will live in the home for at least three years. This is enough time to weather the current market conditions and build equity.

There's no denying that we are entering a new chapter in the housing market. If you're thinking about buying or selling in the near future, let's have a conversation. We will understand your unique situation and recommend a path forward. Plus, our reduced commission model on the buy and sell side means you'll save a whopping $8,100 in Realtor commissions on average. Give us a call today at 615-354-5731 to talk about how the market is doing or to schedule a complimentary home valuation.

June 2022

Single Family Homes

You've probably heard in the news lately that the real estate market is on the brink of a major correction. Just Google "real estate market" and you're bound to see articles explaining that sellers are reducing their prices at a level we haven't seen since the great recession. The recent inflation headlines and soaring gas prices add to a rather bleak outlook for the economy. Luckily, we live in Nashville, the "it city" which should experience less of an impact if there is a slowdown in the housing market, right?

The June market data courtesy of Realtracs is in but unfortunately, the numbers may not tell the entire story. The main thing to keep in mind is that real estate data lags behind the actual market. Take for example the June market data. Homes that closed in June likely went under contract in April or May since most home closings take approximately 30 - 45 days. We won't actually know how the market performed in June until the August data is published. Not to worry, as your local real estate expert, Felix Homes is here to fill in the gaps and tell you how the market is currently doing from a "boots on the ground" perspective. More on this in just a bit but first, let's see what the numbers say.

The number of new listings added to the market in June was 1,281. This is a healthy number and is fairly consistent with the number of listings added in May (1,225). The total number of homes available for sale in June was 1,894 which is about 300 more than May (1,589). This is slightly concerning as less demand for homes and more supply of homes for sale means that prices are likely to come down.

While lower prices may be on the horizon, we haven't seen lower prices show up in the data...yet.

June set another price record with the average sales price of a single family home in Davidson County reaching $691,468. The median sales price was not far behind at $509,845.

Our favorite metric at Felix Homes is the percent of list price received. This metric compares the initial list price to the final sales price. In other words, if the percent of list price received is over 100%, that means on average, homes are selling for more than the list price. The May market data included a percent of list price equal to 104.1%. On average, homes were selling for 4.1% over the list price in May. June, however, saw a percent of list price of 102.7%. This is still a healthy number although it is a bit concerning the extent to which it has decreased compared to the previous month. The sky may not be falling down but it's definitely something to keep an eye on.

Homes are still selling fairly quickly. In June, homes went under contract in just six days on average.

What's causing the market to slow? It's largely attributed to the abrupt increase in interest rates. At the beginning of January, the rate for a 30-year mortgage was approximately 3.22% according to FreddieMac's Primary Mortgage Market Survey. The beginning of June saw the 30-year mortgage rate cross 5% and it continued to increase throughout the month. Rates peaked the last week of June and hit 5.81% but have since come down slightly. This unpredictability is causing many buyers to put their plans on hold as they wait to see if rates come back down in the coming months.

Are you considering selling your home but think you missed the boat? At Felix Homes, we pride ourselves on being your local market expert. Plus, our reduced commission model on the buy and sell side means you'll save a whopping $8,100 in Realtor commissions on average. Give us a call today at 615-354-5731 to talk about how the market is doing or to schedule a complimentary home valuation.

May 2022

Single Family Homes

What did May have in store for the Nashville real estate market? According to Realtracs MLS data, the number of homes for sale in Davidson County throughout the month was 1,589 which is a slight increase compared to April (1,297) but still over 50% lower than May 2021 (3,232). The number of new listings added to the market in May was 1,225 which is roughly the same as the number of new listings added last May (1,314) and slightly more than the number of listings added one month ago (1,009). While it is typical for the supply of listings to increase as we head into the peak summer selling season, it is definitely something to keep an eye on.

May was yet another month of increasing prices. The median sales price for a single-family home in Davidson County surpassed $500,000 which is more than $80,000 compared to this time last year. The average sales price set another record in May coming in at $673,740 which is $20,000 higher than April 2022 ($653,998).

Our favorite metric at Felix Homes is the percent of list price received. We refer to this as the "pulse of the market" as it allows us to gain insight into how competitive offers are. April 2022 came in at an astounding 104.3% and May was about the same at 104.1%. This means that on average, homes are selling for roughly 4% over their initial list price. If this number continues to decrease, it may be a sign that the market is starting to slow down.

Last month, we wrote about the nervousness in the market as rampant inflation, rising interest rates, a declining stock market, and talks of a possible recession caused some buyers to put a pause on their home search. So, are interest rates still rising rapidly? According to Freddie Mac's Primary Mortgage Market Survey, the 30-year peaked in the second week of May at 5.3%. Rates have since come down slightly ending the month at 5.1%.

What are we seeing on the ground? We've definitely noticed a slight slowdown in the market. A slowdown doesn't necessarily mean that prices have decreased – yet. However, we are seeing homes stay on the market for a slightly longer period of time. In addition, over 20% of home sellers have had at least one price reduction since listing their homes. According to Bloomberg News, home sellers are cutting prices at the highest level since 2019.

We've also noticed buyer contingencies starting to tighten. For example, it's been common over the past two years for the buyer to pay for title insurance in Tennessee. Now, we are starting to see more offers where the seller is paying for title insurance. Same goes for the inspection. While it was the norm for the buyer to do a "pass or fail" inspection over the past two years, now we are starting to see some buyers asking for repairs.

Our final take is that the market remains relatively strong, however, we wouldn't be surprised if the market starts to cool off in the months to come. Keep in mind that a cooling market may not necessarily mean that prices will decrease. We will start to see homes staying on the market for a longer period of time, a percent of list price received that is closer to 100%, and tightening buyer contingencies related to the inspection, appraisal gap, and closing costs.

If you're looking to buy or sell in this changing market, rely on a team of experts who are up-to-date on the latest trends. At Felix Homes, we believe that the most successful outcomes start with understanding the current market environment. Plus, our reduced commission model on the buy and sell side means you'll save a whopping $8,100 in Realtor commissions on average. Give us a call today at 615-354-5731.

April 2022

Single Family Homes

Have we reached the peak? April was the strongest month yet for the Nashville real estate market but could we be reaching a turning point? Rising interest rates, hiring freezes, and talks of a potential recession in the near future are having an impact on the stock market but will the real estate market follow suit? (I've misplaced my crystal ball otherwise I would tell you...)

April saw nearly 1,300 homes listed for sale throughout the month, a slight increase from one month prior (1,151) but still nearly 60% lower than one year ago (3,202). Supply is expected to ramp up throughout the summer as more people list their homes to coincide with the school year. The number of new listings brought to the market in April was 1,009 – about the same as March (990) but roughly 23% less than April 2021 (1,315).

How did prices fare if inventory remained about the same? Well, the average price of a single-family home in Davidson County hit $653,998 – a new record by a decent margin. To put this in perspective, March was also a record month with an average sales price of roughly $625,000. The average sales price in April 2021 was just $512,746. The median sales price in April 2022 hit $485,445 which is nearly 24% higher than the median sales price one year ago.

One of our favorite metrics, the percent of list price received, had a blowout month coming in at 104.3%. This means that on average, buyers are paying 4.3% above the list price. This is likely caused by a rush to get homes under contract at all costs before interest rates continue to skyrocket.

Speaking of interest rates, the 30-year mortgage rate hit 5% in April, the first time since 2011. I know what some of you old-timers are thinking, "when I bought my first home, rates were at 10%". While this may be true, anyone who has purchased a home in the past 10 years was accustomed to a low-rate environment. We've been conditioned to expect low rates which have fueled our economy since the Great Recession.

What's more frightening is not that rates are now above 5% but rather the swift pace at which we've gotten there. Prior to January, you could have locked in a 30-year interest rate at just above 3% and while this may not seem like a big deal, it's the difference in your mortgage being $2,700 per month vs $2,100 for a $500,000 home. This is what is causing so much anxiety and fear in the market.

If you're looking to buy or sell in Nashville, don't do it alone! Let's talk about the market and come up with a strategy to navigate this challenging time. While home prices and interest rates are skyrocketing, one thing remains the same – at Felix Homes, we offer a 5-star service for a lower commission. Sellers can take advantage of our 1% commission and buyers can save up to 1.5% on the sales price of their home. Give us a call today at 615-354-5731.

March 2022

Single Family Homes

I think it's safe to say that the Spring "real estate season" is officially upon us! At Felix Homes, we've been predicting that the limited inventory of homes available for sale coupled with the strong demand from out-of-state buyers will create the perfect storm resulting in a highly competitive market – even in the face of rising interest rates. So far, this hypothesis has proven true.

In March 2022 the number of homes available for sale throughout the month was 1,151. How does this stack up? It's actually a slight increase compared to February (1,101) however inventory is still down over 63% compared to March 2021 (3,179). The number of new listings added to the market during March 2022 (990) tells a similar story. The number of new listings is up compared to February (786) but still about 25% lower than this time last year (1,313). Our analysis of this data is – yes, we are facing a period of low supply, however, we believe a surge in demand for Nashville homes is just as much to blame for skyrocketing prices.

Where is this surge of demand for Nashville homes coming from?

• Buyers who have been looking to purchase homes for the past 6-12 months who now feel the urgency to get something under contract before interest rates continue to increase.
• Costal out-of-state buyers who generally have more buying power due to the higher cost of housing in the states they are fleeing.
• Large institutional real estate investors who are purchasing single-family homes by the thousands and renting them out.
• Smaller "Mom & Pop" real estate investors who are building a real estate portfolio.

This is bad news for first-time homebuyers as three of the four groups above are likely paying cash (and waiving contingencies) when purchasing.

I don't think there is any question about how this is impacting prices. The average sales price of a single-family home in Davidson County reached $624,416 in March 2022 – a new record by a decent margin. This represents a 29% increase in the average sales price compared to March 2021 and just over a 5% increase compared to the average sales price one month ago! The median sales price does not paint a nicer picture at $479,890 or just over 26% higher than this time last year.

The competition in the market is not just about the price someone is willing to pay. A home seller bases their decision on which offer to choose based on the contingencies (or lack thereof). From our experience representing countless clients on both the sell-side and buy-side of a transaction, it's safe for us to say that the lack of contingencies has never been greater. For example, "pass/fail" inspections have been fairly common for over a year now but we are currently seeing an increase in waiving the inspection altogether. Appraisal gaps have also been fairly common but have generally been around 5% of the home price. Now appraisal gaps are commonly seen at 10% with some buyers waiving their appraisal contingency to compete with cash buyers. The last example is seller occupancy. It never used to be common for a buyer to allow a seller to stay in the home after closing rent-free. Now, 30-day rent-free occupancy is common with some sellers even requesting to stay longer at NO COST!

One of our favorite metrics at Felix Homes is the percent of list price received. We like to think of it as the pulse of the market as it represents the relationship between the initial list price compared to the final sales price. If the percent of list price received is 103.7% (which it was in March 2022), that means on average, homes are selling for 3.7% above their initial list price. You could say that the pulse has never been stronger.

Part of what's driving this market and a cause for concern is rising interest rates. The Federal Reserve increases interest rates as a way to curb inflation – the less "cheap money" available, the less people may spend. That said, rising rates are causing panic among homebuyers who are not paying cash (yes they exist) as their monthly mortgage payment at a 5% interest rate is noticeably higher than it was at a 3% rate. According to Freddie Mac, the 30-year rate at the end of March was 4.67% up significantly from 3.11% at the beginning of January.

If you are even considering selling or buying a home in this wild market, trust Felix Homes. We are the leaders in analyzing and interpreting the latest market data plus our business model allows us to see countless transactions on both the buy-side and sell-side. Give us a call today at 615-354-5731.

Townhomes and Condos

The market for Townhomes and Condos is just as hot as the single-family home market in Davidson County. It's being defined by low inventory and extremely high buyer demand.

Moving forward, our monthly market update will no longer breakout townhomes and condos as the analysis is nearly identical to that of the single-family home market above. If you have any specific questions about the local market for townhomes and condos, please feel free to reach out to us by email at contact@felixhomes.com or 615-354-5731.

February 2022

Single Family Homes

If January and February are any indication of how the Nashville real estate market will perform this year, 2022 could be on pace to set new price records.

The total number of homes listed for sale in Davidson County during the month of February was just 1,101 compared to 1,170 in January and a whopping 3,114 compared to February 2021 – a nearly 65% decrease. The number of homes added to the market during the month was 786 or about 23% less than the number of homes added in February 2021.

The low supply of homes for sale and the prospect of rising interest rates are sending buyers into a frenzy. This imbalance in supply and demand is predictably sending home prices higher. In fact, the average sales price of a single-family home during the month of February was $594,187 – 20% higher than the average sales price one year ago. The median sales price in Davidson County was $459,500 or over 25% more than February 2021.

The percent of list price received is a stat we like to pay close attention to because it is a proxy for how competitive the market currently is. In a normal market, we would expect the percent of list price received to be less than 100%. This means that on average, the final sales price of a home will be less than the initial list price. In February 2022, the percent of list price received was 101.8%. This tells us that on average, a home will sell for 1.8% above its list price – although many competitive listings will have a percent of list price received well above this figure.

Sales price is only one variable that comprises an offer. With multiple-offer situations common in today's market, buyers are not only paying well over the list price but they are waiving contingencies to make their offers more attractive. In fact, many of the winning offers we receive on the homes we list have limited contingencies. Whether the buyer is willing to waive the inspection, include a significant appraisal gap, or allow the seller to have a short-term leaseback at no-cost – these are just a few of the variables that a winning offer typically includes.

What's causing this frenzy? There are really three key components:

• The likelihood that interest rates will rise throughout the year is causing buyers to increase their aggressiveness.
• The limited inventory of homes for sale is causing a major supply crunch.
• The demand coming from out of state buyers – many of whom are able to offer higher prices and better terms to sellers.

The 30-year mortgage rate according to Freddie Mac reached a peak of 3.92% in February but has since come down off its highs. While rates will likely rise above 4% throughout the year, we should keep in mind that even 4% is extremely low for a 30-year mortgage by historical standards.

Townhomes and Condos

The market for townhomes and condos in Davidson County throughout the month of February remained competitive. The total number of condos and townhomes for sale was just 280 compared to 1,240 in February 2021 – a 77% decrease! There were 246 new listings added during February but many went under contract a day or two after hitting the market.

Similar to the single-family home market, townhomes and condos are typically selling for over their initial list price. The average percent of list price received was 101.8% or 1.8% over the list price.

Prices have risen dramatically with the average sales price of a townhome passing $420,000 in February 2022 – the median price was $346,058.

By all measures, this is a competitive market. The question we have to ask ourselves is when will it start to slow?

January 2022

Single Family Homes

A new year and a fresh start to the Nashville real estate market. So what does the first month of the new year predict for Nashville's housing market in 2022? Unfortunately, it looks like we'll be facing many of the same trends we have for the past two years including low inventory, multiple offer situations, and bidding wars primarily coming as a result of out-of-state buyers.

In January 2022, there were 1,170 single-family homes for sale in Davidson County. A slight increase compared to December 2021 (1,151) but still significantly below the number of homes for sale one year ago in January 2021 (3,146). 721 new listings hit the market throughout January which is 120 more than in December 2021.

Unsurprisingly, prices remain high. In January 2022, the average price for a single-family home in Davidson County was $572,319–a nearly 18% increase compared to one year ago. The median sales price was $429,900.

The percent of list price received which represents the difference between the list price and final sales price was 100.9%. This means that a home listed for $500,000 will end up selling for $504,500 on average. Move-in-ready homes in certain neighborhoods in Nashville can sell for quite a bit more with a few routinely selling for 3%-7% above their list price.

Interest rates are projected to rise over the course of 2022 with sub 3% interest rates likely a thing of the past. According to Freddie Mac, the 30-year rate averaged 3.5% during January. While still low by historic standards, increasing interest rates could potentially help cool the red-hot real estate market as borrowing costs rise.

Townhomes and Condos

The market for townhomes and condos during the first month of 2022 remained strong. With just 272 townhomes and condos available for sale throughout the month, it is no wonder prices increased. The average price was $358,126 which represents a nearly 15% increase compared to January 2021. The median sales price was strong too at $309,250 compared to $299,950 in December 2021.

Bidding wars were common among townhome and condo sales in January 2022 with the percent of list price received averaging 100.6%.

December 2021

Single Family Homes

2021 was a year defined by low inventory and the final month of the year brought with it the lowest inventory we've seen yet. Just 1,151 single-family homes were listed for sale in Davidson County during the month of December. This is 59% lower than December 2020 and nearly 400 fewer homes compared to November 2021.

The number of new single-family listings added to the market during December was just 601 explaining why the total number of homes for sale hit a new low.

Demand for housing across the Nashville market is still strong. Like any market defined by low supply and high demand, prices increased. The median sales price for a single-family home in Davidson County in December 2021 was $440,000. For reference, the median sales price just one year ago was $359,900. The average sales price for a home in Davidson County was $538,144 in December 2021.

The percent of list price received which compares the final sales price to the original list price was 100.9%. This means that on average, homes are selling for slightly more than their list price. Bidding wars, especially for desirable "move-in-ready" homes are still prevalent.

According to Freddie Mac, the 30-year mortgage rate ended the year above 3% and has accelerated during the first few weeks of 2022 hitting 3.22%. While rates are still historically low, if this trend continues, it could be the catalyst that causes the market to cool.

What will 2022 hold for the Nashville real estate market? Will 2022 also be defined by low inventory causing the bull market to continue or will rising interest rates cause the market to cool off? If you're interested in buying or selling in 2022, give us a call at 615-354-5731 to discuss the market and get the latest insight on what we're seeing as Nashville's low-commission brokerage.

Townhomes and Condos

Similar to the market for single-family homes in Davidson County, the townhome and condo market saw historically low inventory to end the year. Just 317 townhomes and condos were listed for sale in December 2021 compared to 1,156 one year ago. Just 163 new listings were added throughout the month which was a new low.

Interestingly, even with low inventory, we saw the median price for townhomes and condos decrease in December 2021 to $299,950. While still significantly higher than prices a year ago, the median sales price in November 2021 was $322,000. The average price for a townhome in December 2021 was $367,307.

The percent of list price received was just over 100% meaning on average, a townhome will sell for the price it is listed for. Keep in mind that more desirable townhomes will still command a premium over the list price.

November 2021

Single Family Homes

November is historically a period of low inventory as families prepare for the holidays and November 2021 was no different with just 850 new listings added to the market. The total number of single-family homes reached 1,538 which is 53% less than November 2020 (3,294).

The median price of a single-family home in Davidson County was $429,500 which is nearly $55,000 more than the median sales price one year ago. The average sales price rose to $583,545 which represents a new monthly record! The percent of list price received which allows us to compare the initial list price to the final sales price averaged 101.3%. This means that a home listed for $500,000 would end up with a sales price of $506,500 meaning that bidding wars between buyers is still the norm.

Townhomes and Condos

The market for townhomes and condos in Davidson County during the month of November remained healthy with 258 new listings being added to the market for a total inventory of 468.

The median sales price was $322,000 which has been steadily increasing throughout the year. In November 2020 for example, the median sales price was just $265,000. I wonder how many of you wish you could go back to the beginning of January to buy more properties? The average sales price for a townhome returned to a more normal price of $385,292 which is significantly below October 2021's average sales price of $462,431. The percent of list price received was 100.1% meaning that the market for townhomes was slightly less competitive than the single-family home market in November.

October 2021

Single Family Homes

Yet another month of historically low supply. October added just 949 new listings to the market in Davidson County, a 35% decrease compared to October 2020. The total number of single family homes for sale in Davidson County was 1,718 compared to 1,770 in September 2021.

The median sales price for a home in Davidson County was $434,950 and the average sales price was a staggering $576,273. The percent of list price received was a healthy 101.1% which means that bidding wars are still the new normal in the Nashville real estate market.

We'll see how the next few months shape up heading into winter but as of now, the housing market shows no signs of slowing down.

Townhomes and Condos

In October, there were 322 new townhome and condo listings brought to the market. While this is 25.5% less than October 2020, it pales in comparison to the single-family home market which saw the number of new listings drop 35% compared to a year ago. The total number of townhomes and condos for sale in October was just 532 which represents a nearly 60% decrease compared to October 2020 (1,284).

The median sales price for a townhome in Davidson County reached $314,088 in October 2021 and the average sales price set a new monthly record at $462,431. The percent of list price received is hovering around 100% which means on average, a townhome or condo listed for $300,000 will end up with a sales price of $300,000.

September 2021

Single Family Homes

Is this the "new normal"? September showed no signs of a market slowdown for single-family homes located in Davidson County! There were 1,077 new listings added to the market compared to 1,437 new listings added in September 2020. The total number of homes for sale in Davidson County was 1,770 in September 2021 compared to 1,691 in August 2021 and 3,675 one year ago.

The median sales price for a home in Davidson County was $415,000 in September 2021. This is the third month in a row where the median sales price has declined compared to the month prior. That said, we don't believe this is necessarily a sign that the market is starting to 'slow down'. One year ago in September 2020, the median sales price in Davidson County was just $360,000. The average sales price surpassed $550,000 in September 2021. This is roughly a 20% increase from this time last year (thank you Californians)!

The percent of list price received which is one of the clearest indications of how hot the market currently is came in at 101.6% in September 2021. This means that a home listed for $500,000 would end up selling for $508,000 on average. In a 'normal' market, we would expect the percent of list price received to be slightly less than 100%. For reference, in September 2020 the percent of list price received was 98.8% meaning a home listed for $500,000 would end up selling for $494,000. We've consistently seen the percent of list price received above 100% since April 2021. This indicates that many buyers are paying over the list price due to multiple offer situations (AKA bidding wars).

According to Freddie Mac, the 30-year mortgage rate started the month of September at just 2.87%. Rates steadily rose throughout September breaching the 3% mark. We anticipate rates to hover around 3% for the remainder of the year.

The bottom line–the market for single-family homes in Davidson County remains healthy. There are no current signs of a market slowdown as we head into the winter months. How long can this market continue and is this the new normal for Nashville real estate?

Townhomes and Condos

The market for townhomes and condos in Davidson County during the month of September remained fairly consistent with the August numbers.

The number of new listings in September 2021 was 334 compared to 316 in August 2021 and 454 one year ago. The total number of townhome and condo listings in Davidson County during September (539) remains roughly 60% lower than this time last year (1,291).

Prices have stayed relatively constant compared to August 2021. In September 2021, the median sales price for a townhome/condo in Davidson County was $300,000 compared to just over $251,000 one year ago–a 19.2% increase. The average sales price was just under $350,000 compared to roughly $366,000 in August 2021.

The percent of list price received which compares the final sales price to the original list price was a healthy 100.3%. In other words, a condo listed for $300,000 would end up selling for $300,900 on average. For perspective, the percent of list price received in September 2020 was 98.8% meaning a condo listed for $300,000 would sell for $296,400 on average.

The bottom line–the market for condos and townhomes in Davidson County did not change much compared to August 2021. That said, prices are still up significantly from one year ago and the market doesn't show any early indications of slowing down.

August 2021

Single Family Homes

Has the Nashville real estate market hit its peak? In August 2021, there were 1,113 new listings added to the market in Davidson County compared to 1,052 in July 2021. Inventory in August 2021 was still down considerably with only 1,691 single-family homes actively listed compared to 3,752 active listings this time last year, a decrease of nearly 55%.

Do you know what else has decreased since July 2021? Prices. In August 2021, the median sales price for a single-family home in Davidson County was $424,950. While this may seem high compared to the median sales price in August 2020 ($360,000), it's down over $16,000 compared to the median sales price in July 2021 ($441,000). The average sales price for single-family homes in Davidson County has decreased as well compared to July 2021 from $560,236 to $532,233.

The percent of list price received is an important metric we like to follow at Felix Homes because it gives us insight into how competitive the market is. If the percent of list price received is over 100%, then homes are selling for more than they are initially listed for. In August 2021, the percent of list price received was 101.7%. This means that a home listed for $500,000 would end up selling for $508,500 on average. In July 2021, the percent of list price received was 102.5%. While this may not seem like a large difference, it may be an early indication of a slightly less competitive market.

According to Freddie Mac, the 30-year mortgage rate started August at 2.77%. Throughout the month of August, it slowly increased to a high of 2.87%. This time last year, the 30-year rate was slightly higher (2.87%).

What's the bottom line? While it still may be too early to tell if the frenzied Nashville real estate market is ready to cool off, we did see a few leading indicators that may suggest a return to some sort of normalcy in the market. Only time will tell if more inventory will hit the market in Fall and Winter and if the number of people moving to Nashville has finally hit its peak.

Townhomes and Condos

August 2021 saw just 319 new condo and townhome listings across Davidson County, down from 448 new listings in August 2020. Total inventory was down as well in August 2021 with just 526 condos and townhomes listed for sale. Compare this to July 2021 (592) and August 2020 (1,330).

Prices for condos and townhomes have remained relatively flat since the previous month with the average costing $366,243. The median sales price during the month of August was $300,000 which was about $8,000 less than July 2021.

The percent of list price received was 100.1% in August 2021 meaning if a condo or townhome was listed for $300,000, it would sell for roughly the same amount on average.

The bottom line is that the condo and townhome market in Davidson County still looks strong. That said, we've noticed in the past that the condo/townhome market trails the single-family home market so it may start to level off in the coming months as well.

July 2021

Single Family Homes

When will more inventory return to the Nashville real estate market? It's anyone's guess at this point. July saw just 1,052 new listings in Davidson County. This represents a 36% decline from the number of new listings added in July 2020 (1,649). The number of pending sales in July 2021 was up 37% compared to one year ago meaning homes are being snapped up as soon as they hit the market.

Who is responsible for buying these homes? The answer may not be what you think. Institutional buyers such as Invitation Homes and American Homes 4 Rent are purchasing single-family homes at a record pace, according to a study conducted by The Real Deal.

The total number of homes for sale in July was 1,636. How does this number compare to this time last year? In July 2020, there were over 3,700 homes listed for sale!

The median sales price in Davidson County was up 24.2% since July 2020 to a record $441,000. Great news for anyone who currently owns a home, however, incredibly frustrating for those looking to buy. Just one month ago, in June, the median sales price was $417,000.

The percent of list price received which is a strong indicator for the likelihood of a bidding war was 102.5% in July 2021. This means that on average, a home listed for $500,000 will end up selling for $512,500. In comparison, the percent of list price received in July 2020 was just 99.0%, meaning that a home listed for $500,000 would sell for $495,000.

Are mortgage rates expected to rise? Not anytime soon. According to Freddie Mac, the 30-year mortgage rate hit a peak at the beginning of April (3.18%). The month of July saw the 30-year rate steadily decline back under 3%, closing out the month at just 2.8%.

The bottom line–if you currently own a home in Davidson County, you are loving this market as you continue to see your home equity rise. If you're looking to purchase a home, especially as a first-time homebuyer with limited cash to put down, this market is your worst nightmare.

Townhomes and Condos

The market for townhomes and condos in Davidson County has been slightly more bearable compared to the single-family home market. In July 2021, the Davidson County market added 377 new listings, compared to 465 new listings in July 2020. The number of pending sales was up a staggering 64.4% in July 2021. Similar to the single-family home market, condos and townhomes are being purchased just days after hitting the market.

The total number of townhomes and condos available for sale in July 2021 was 592. This is 54% less than July 2020, however, slightly more than June 2021 (574).

The median price for a condo/townhome in July 2021 was $307,850 which is slightly less than June 2021 ($319,950). That said, the percent of list price received was 100.5%, compared to 99% in July 2020 and 100.3% in June 2021. Yes, even condos and townhomes are selling above their initial list price.

The bottom line–the market for townhomes and condos is slightly less competitive than the single-family home market, but not by much. It's a hot market no matter which way you cut it.

June 2021

Single Family Homes

Is the Nashville real estate market starting to slow? It may be too early to call it. But, the number of new listings added to the market in June 2021 (1,128) did outpace May 2021 (1,065) by nearly 6%. This is the second consecutive month where the number of new listings added to the market was greater than the month prior. That said, the number of new listings being added to the market is still 26.7% less than one year ago in June 2020 (1,565).

The number of new listings added to the market each month is important, however, how did total inventory fare? Total inventory or the number of homes currently for sale has remained constant in Davidson County since May. In June 2021, inventory totaled 1,586 single-family homes for sale while May's inventory was 1,577. While inventory has remained fairly constant month to month, it's still down over 55% compared to this time last year. We are still in a supply crunch folks.

Unsurprisingly, the median home price in Davidson County continued to rise. You can expect to pay $417,495 for a single-family home in Davidson County. Nearly 20% more than what a single-family home would have cost one year ago. The average price of a home in Davidson County is even more staggering at $578,276.

At Felix Homes, we pay close attention to the "percent of list price received" which compares the final sales price to the original list price. If the percent of list price received is higher than 100%, buyers are paying more than the list price for a home on average. This is typically the result of hotly contested bidding wars. In June 2021, the percent of list price received was 102.5% compared to 98.9% in June 2020. This means that if you see a home listed for $400,000, it's likely that the final sales price will be $410,000 or more depending on the level of interest.

How are mortgage rates doing? During the first week of June, the rate for a 30-year mortgage hovered around 3%. Historically low interest rates have fueled a buying frenzy across the country. Rates steadily rose throughout June however the first week of July saw the 30-year mortgage rate drop to 2.9%.

Townhomes and Condos

There were 340 new townhome and condo listings added to the market in June 2021. Just 46 fewer new listings than May 2021 (386). Similar to the single-family home market, the number of total active listings is down over 50% compared to this time last year. In June 2021, there were 574 active condo and townhome listings on the market compared to 650 active listings in May 2021.

As with any market where demand outpaces supply, prices will rise. The median sales price of a condo or townhome in Davidson County was $319,950 in June 2021. A nearly 25% increase from June 2020. The average sales price just surpassed $375,000.

The average percent of list price received was 100.3% in June 2021 meaning that condos and townhomes typically result in a final sales price equal to the initial list price.

May 2021

Single Family Homes

Is the Nashville real estate market returning to some sort of normalcy? Perhaps. May was the first month since the beginning of the year where housing inventory was greater than the previous month! In May 2021, there were 1,577 single-family homes available for sale compared to 1,522 in April 2021. Not a huge increase but we'll take it! Keep in mind this is still peanuts compared to the level of inventory in May 2020 which was 3,492. The number of new listings added to the market in May 2021 (1,065) was also higher compared to April 2021 (1,011) which is a great sign for buyers who have been discouraged by intense bidding wars. Part of this increase is likely due to seasonality as May, June, and July are historically the most popular months to list a home. These are also the months when buyer demand is at its greatest.

Prices continued to rise in May with the average sales price of a home in Davidson County surpassing $550,000! This represents a 29.1% increase compared to the average sales price in May 2020 and is $37,025 higher than the average sales price in April 2021 ($514,543). The average number of days on market continues to be historically low. At Felix Homes, our average days on market since the beginning of the year is just 7 days!

Even with the slight increase in inventory, multiple offers and bidding wars are still common. Buyers are increasingly making offers above the list price. In fact, the average percent sales to list ratio in May 2021 was 101.8%. This means that on average, a home with a $500,000 list price will sell for $509,000.

The 30-year mortgage rate was at its highest since January during the first week of April but has since dropped back below 3% in May. Some are expecting rates to rise in the coming months as the Federal Reserve tries to keep inflation under its target of 2%.

Townhomes and Condos

The number of townhomes and condos for sale in May 2021 was 650, a 43.7% decrease compared to this time last year (1,154). That said, the number of new listings added in May 2021 was a healthy 386–just 10% less than May 2020.

The market for townhomes and condos has been lagging behind the single-family home market but it's safe to say it's finally caught up. The average price of a townhome in Davidson County in May 2021 was $371,996, a 24.4% increase compared to May 2020. Month over month, the increase is equally as staggering. The average price of a townhome in April 2021 was $315,827!

Bidding wars are just as common in the townhome market as they are for single-family homes. In fact, the average percent sales to list ratio in May 2021 was 100.0%–it's safe to say there are no deals to be had in this market.

April 2021

Single Family Homes

For those who thought the supply crunch in Davidson County couldn't get much worse, guess again. According to Realtracs MLS, just 1,011 new single-family home listings were added to the market in April 2021. This represents a 21.1% decrease from the number of new listings added in April 2020 (1,281). Unsurprisingly, the number of total listings on the market continues to dwindle as fewer new listings replenish the homes that sell every month. There are just 1,522 active listings as of April 2021 compared to 1,544 in March 2021 and 3,251 one year ago.

How are prices responding? The average price of a home in Davidson County broke $500K to $514,543 which is 21.1% higher than this time last year. Bidding wars have become the norm and buyers are waiving contingencies left and right. Hot listings are receiving offers for 5%-10% above their list price. In fact, we recently listed a home for $430,000 which sold just 8 months ago for $399,900. In a matter of 4 days, we received multiple offers and the winning offer was willing to pay $465,000. The average percent of list price received broke 100% in April to 100.8%. This means that on average, a home listed for $400,000 will sell for $403,200. Keep in mind desirable listings will typically command a significant amount over their list price.

Apprisers are having a difficult time in this market. Prices have appreciated so much so quickly that they are finding it hard to select comps that justify a given sales price. This is an issue as most buyers choose to finance the purchase of a home using a mortgage. As a listings agent, it's important to determine the likelihood a deal will close. For example, in a scenario where you receive five offers two of which are waiving the appraisal contingency, it may be worth potentially taking a lower sales price if the buyer is willing to waive the appraisal contingency as opposed to rolling the dice on an offer that is contingent on the appraised value equaling or exceeding the sales price.

It's hard to envision a catalyst that will return some sort of normalcy to this market. Our hypothesis is that the lack of inventory is due to the fact that nobody wants to be a buyer in today's competitive market. Yes, you can sell your home for a record price but unless you are planning to leave the country or rent, you will have to enter the brutal battle of being a buyer in what is turning out to be one of the most competitive housing markets in recent history. One thing is clear, if you are an investor or have an opportunity to sell your home, you likely won't find a better time to capitalize on the market.

30-year mortgage rates hit 3.18% during the first week of April according to Freddie Mac but have since relaxed to below 3% in the subsequent weeks.

Townhomes and Condos

The market for townhomes and condos didn't experience nearly the same level of shortage compared to the single-family home market. 377 new listings were added in April 2021 compared to 312 in April 2020 and 394 in March 2021. The number of active listings on the market in April was 687 which represents a 30.1% decrease from April 2020 (983).

The average townhome in Davidson County closed for $315,827 in April which is up 20.9% compared to this time last year. We listed a condo in West End in April for $360,000–a record for the neighborhood. After two days on the market, we received three offers with the winner offering $380,000. An offer so high above the list price can seem suspicious. In this scenario examining the contingencies closely is crucial to ensure your client is protected. Just because a buyer is willing to offer a certain price in the purchase agreement doesn't mean they will necessarily close the deal for that price. Now more than ever, it's necessary to weigh offers that will waive the appraisal contingency or those that are willing to pay a guaranteed dollar amount above the appraised value. In the example of our listing in West End, we negotiated for the buyer to waive their contingency. This means that if the appraisal comes in at $350,000, the buyer will need to contribute an additional $30,000 in cash at closing.

March 2021

Single Family Homes

The supply-side crunch continues in March for single-family homes in Davidson County with just 1,053 new listings added to the market. While this may sound like a lot, it's a 21.8% decrease from March the previous year. Not only are fewer new listings being added to the market but the number of homes that are currently listed are being purchased at a record pace.

In March 2021, there were only 1,544 homes available for sale in Davidson County compared to 3,121 homes in March 2020. A historic 50% decrease that's likely to continue if the number of new listings being added to the market continues to decrease.

Bidding wars are becoming more common and it is not unusual for listing agents to utlize an "offer deadline" which is a date and time that all offers must be turned in by. In March 2021, the average percent of list price received was 99.9% compared to 98.9% in March 2021. This may not seem like a big jump, it means that the average home is selling for its list price. Since this number is an average, it means that a large portion of homes are selling above their list price. In our experience, it is common for some homes to fetch 5%-10% above what they are currently listed at and for there to be 10 or more offers on competitive listings.

What impact is this having on prices? The median sales price in Davidson County in March 2021 was $376,000 compared to $341,000 in March 2020, more than a 10% increase. The median home price in March 2021 was also quite a bit more than February 2021 which was $368,000.

In our experience, appraisers are having a difficult time in this market since home prices have risen so quickly. This is important because if a home doesn't appraise at the sales price, it risks killing the deal unless the buyer and seller are willing to renegotiate the sales price or the buyer is willing to make up the difference in cash.

The 30-year mortgage rate in March breached the 3% threshold. While rates are predicted to continue rise from their January lows, it's likely they will remain historically low. We predict rates to stay within the 3%-3.5% range throughout 2021.

Townhomes and Condos

The market for townhomes and condos continues to be stable. In fact, the number of new listings added to the market in March 2021 increased by 4.2% to 394 compared to March 2020 (378 new listings).

While new condo/townhome listings are being added to the market at a healthy rate, they are being purchased quickly. The number of condos and townhomes on the market decreased by 25% to just 700 listings in March 2021 compared to March 2020. This is a continuation of the trend we noticed in February.

The number of condos and townhomes on the market is decreasing which is causing prices to increase. In March 2021, the median sales price was $280,608 which represents a 7.8% increase compared to the prior year. While prices haven't increased as much as the single-family home market, it is definitely something to keep an eye on. If the inventory of condos/townhomes continues to decrease, it is likely that prices will rise even faster.

We don't see as many bidding wars when it comes to condos/townhomes compared to the single-family home market. This could be because condos and townhomes are desirable to a smaller demographic whereas there are more potential buyers for single-family homes. The average percent of list price received for a condo/townhome in March 2021 was 99.3%, a healthy number that is just slightly above the March 2020 figure (98.8%).

February 2021

Single Family Homes

The single-family home market for Davidson County extended its shortage of supply in February with only 799 new listings compared to 1,095 new listings in February 2020 and 1,136 new listings in January 2021. Seasonality is definitely playing a role as February isn't a particularly popular time to list a house although the 27% decrease from 2021 compared to 2020 may hint at something else going on.

The inventory of homes for sale has also decreased compared to the prior month with just 1,642 homes available for sale in Davidson County in February 2021 compared to 1,773 in January 2021.

Prices are up compared to February 2020, however, not as much as in January 2021. The median price for a single-family home in Davidson County in February 2021 was $368,000, an 8.3% increase compared to February 2020.

The market is getting more competitive though. Another stat we like to look at is the percent of list price received. This tells us how close the final sales price is to the initial list price. If the percent of list price received is less than 100%, then the final sales price was lower than the initial list price. In February 2021, the average percent of sales price received was 99.6% compared to just 98.4% in February 2020.

The demand side of the equation continues to be strong. 30-year mortgage rates during the first week of February hit 2.73%, up slightly from January (2.65%). There continues to be strong demand for Nashville real estate as out-of-state buyers flock to the city.

Townhomes and Condos

The market in Davidson County for townhomes and condos continues to be stable. In February 2021, there were 319 new listings added to the market, a slight decrease from the 322 new listings added to the market in February 2020.

Prices have also remained stable with a median sales price in February 2021 of $275,000, just 6.1% more than the median in February 2020.

The number of condos and townhomes listed for sale dropped by 17% in February 2021 to 733 compared to 883 condos/townhomes available for sale in February 2020. If this trend continues, it will be interesting to see if the median sales price for condos increases at a faster pace.

January 2021

Single Family Homes

2020 was a crazy year for Nashville real estate. As Covid-19 started to shut down parts of the economy in March, 2020, the real estate market was met with a lot of uncertainty. The real estate market got a boost from low interest rates which were allowing buyers to finance the purchases of homes extremely cheaply.

This trend has continued into the new year. The 30-year mortgage rate was 2.65% during the first week of January according to freddiemac.com. Coupled with the ongoing trend that Nashville continues to be a popular choice among homebuyers fleeing California, New York, and Illinois means that prices will inevitably move higher.

Buyer demand is only one side of the coin. The Nashville real estate market is also being impacted by a shortage of homes available for sale. Comparing the number of new listings in January 2021 to January 2020 shows that there was 8.8% fewer new listings added to the market. Even more alarming is the inventory of homes for sale which has decreased by nearly 40% from 2020 to 2021.

Increasing demand and decreasing supply for Nashville homes is creating the perfect storm for rising prices. In January 2020 the median sales price for a home in Davidson County was just under $320,000 whereas the median sales price in 2021 was over 15% higher ($369,450).

Townhomes and Condos

The real estate market in Davidson County for Townhomes and Condos hasn't been impacted by the same supply-demand imbalance that we've seen in the single-family home market. Looking at the data, there was close to a 50% increase in the number of new listings in January 2021 compared to January 2020. The total inventory of condos and townhomes for sale was only lower by 4.4% in January 2021. Overall, the median sales price was up by 8.4% to $265,165 which is only slightly higher than we would expect in a growing market such as Nashville.