Nashville Real Estate Market: Housing, Buying and Investing

If you’re considering buying a house or investing in land in Nashville, now could be a good time. Whether you’re a first-time buyer or a full-time investor, here’s what you should know about the Nashville real estate market, how it has evolved over the years and how it might change.

Nashville housing market trends

The Nashville real estate market has seen a steady rise of up to 16% in home prices every year. The market peaked, and prices soared during and immediately after the pandemic months, making Nashville one of the hottest housing markets in the US.

In a joint release, Urban Land Institute and PwC placed the city in the “Supernova” category, saying it “exploded into prominence” and showed “above-average levels of economic diversity and white-collar employment, leading to strong investor appeal.”

However, the real estate market in Nashville is cooling after the pandemic boom. “Demand for home buying has waned as interest rates rise,” said Joel Sanders, the founder and CEO of Apartment Insiders, which is based in Nashville. “Nashville was a highly competitive real estate market on both the buying and renting sides during all of 2021 and the beginning of 2022, but now buying offers are including more contingencies for financing, inspections and appraisals than they were during those competitive times.”

The decline is clear when you dig into the numbers. More than 4,000 homes were sold last October. That dropped to 2,832 for October 2022. Similarly, only a little more than 5,000 units were available last October, but the number of units on the market doubled to 10,128 this year.

Are prices dropping in Nashville?

“Nashville had been a seller’s market, but now prices are decreasing,” said Maria Holland, a real estate agent in Nashville.

Some real estate agents report more than a 30% decrease in closings, while a recent report by Moody’s Analytics predicts a 20% decrease in home prices. The median home price was $468,500 in June 2022, which dropped to $445,350 in September.

“I have seen the market drop by about 10% and as much as 15% in some outer-lying areas,” Holland said. “Sellers are having a harder time accepting the new price point.”

This makes it difficult for people to sell a house and buy a new one with that money. The old houses aren’t selling so new houses aren’t being bought, and the cycle goes on.

Nashville rental market trends

Similar to housing costs, the rent in Nashville is also going down. According to the Nashville Rent Report this month, rates have declined by 1.4% since November—and this is the third consecutive monthly decrease. However, the rental rate is still nearly 5% more than it was in December 2021.

“While rents are still up over last year, the pace at which they are growing has significantly chilled out,” Sanders said. It’s possible more people move toward renting instead of buying. “Due to the major increase in interest rates, the cost to rent in Nashville is hundreds of dollars per month less expensive than buying with a typical 30-year mortgage payment. Typically, monthly mortgage payments and rent amounts were much closer to being the same.”

Where to buy in Nashville

All neighborhoods aren’t the same, and where you buy can make a huge difference in the cost, the amenities and the range of resale value. The best neighborhoods in Nashville are based on your needs and wants.

“The younger crowd has a tendency to enjoy the walkability factor,” Holland said.

The most walkable neighborhoods in Nashville

• East End
• Downtown Nashville
• Germantown
• Bellmont-Hillsboro
• Edgefield

Best neighborhoods for shopping and entertainment in Nashville

• Green Hills
• Hillsboro Village
• 12 South
• Gulch
• West Nashville

Best neighborhoods recommended by Nashville real estate agents

“Anywhere in Davidson County is a strong bet to live near the job centers of the city,” Sanders said. “Neighborhoods such as Madison, Rivergate, North Nashville, Joelton and anything near the East Bank or Century Farms are starting to see a lot of revitalization.”

Where not to buy in Nashville

Some neighborhoods can have a higher cost of living, fewer amenities and higher than average crime rates, making them less desirable than others. Here are some of the neighborhoods you may want to avoid.

Bordeaux

Bordeaux has a high crime rate up to 323% above the national average. The violent crime rate is 656% above the national average and the property crime rate is 258% above the national average, making it one of the most unsafe neighborhoods in Nashville. Another deterring factor is that the schools in the region are rated below 3/10 while the unemployment rate is 24% higher than the national average.

Greenwood

Greenwood has a violent crime rate 183% above the national average and residents have a 1-in-21 chance of becoming a victim. The schools are also rated lower so families with children might benefit from considering other neighborhoods in Nashville. The unemployment rate is 28% higher than the national average, and the per capita income is 19% lower than the national average so standards of living tend to be lower.

Buena Vista

Buena Vista is another Nashville neighborhood with higher-than-average crime rates. The violent crime rate is 148% higher than the national average, and education and employment opportunities are lackluster as well, making it one of the most undesirable places to invest in the Nashville real estate market. For instance, the unemployment rate is 133% higher than the national average and the per capita income is 54% lower than the national average.

Other factors to consider when avoiding a neighborhood

• Long commute times
• High cost of living
• Low-ranking schools
• Few work opportunities
• Lack of healthcare facilities

Related: See Nashville homes for sale

Who’s buying in Nashville?

Nashville has a mixed population, but the working population dominates most neighborhoods.

“Nashville has strongly benefited from the work-from-anywhere cohort that began to move and settle during 2021,” Sanders said. “Nashville has had an influx of buyers from coastal markets who lived there for their jobs. Now they can work where they choose and many of those knowledge workers have chosen Nashville while still earning higher coastal salaries.”

“The diverse business climate in Nashville continues to attract many millennials,” Holland said. “They are nationally our highest home-buying market. We have millennials and retirees buying in Nashville. With our low tax profile and no income tax, many retirees find our milder climate, terrain and atmosphere perfect for retirement.”

Nashville real estate: Should you invest?

If you’re investing in the Nashville real estate market, consider the neighborhood you want, your budget and whether you can live in or sell the unit quickly.

Nashville is a buyer’s market, so investors can buy a house and hold on to it until it’s a seller’s market, which is likely to happen soon given the current market trends.

In the last 10 years, the Nashville real estate market has grown up to 166.38%. This rate of growth is higher than any US city.

“Five years from now, investors will look back and be thankful they bought a home,” Holland said. “With all of these businesses moving to Nashville, it’s a good and stable climate for investors.”

Your finances may be a key decision-maker here. If you have the resources and are less dependent on mortgage financing or less susceptible to interest rate increases, Nashville’s long-term prospects for growth and diverse economy make it a great place to invest.