Looking to break into the Nashville, TN market

[Joe Mathew]

Hi. Anyone here successfully investing in Nashville or surrounding areas?

[Luka Milicevic]

Originally posted by @Sean Yan:

@Luka Milicevic and @Reid Chauvin, certainly cities got busted in the last round of real estate boom, such as Phoenix and Las Vegas — I personally knew a friend investing in one of that cities and got burnt severely.

could you please provide some analysis about Nashville area’s local fundamentals (and I am interested in how different this time is it in Nashville)?

I will never say the words "this time it's different".....

A couple of notes on Nashville...

In 2017/early 2018 new construction prices took a hit. We had over built and there was so much inventory sitting, especially in East Nashville around the 400k price point. We had prices come down some during that time.

This actually slowed development down quite a bit, and we have not been able to catch up since then. 

In the last 3 years the city has added 10-25k plus/house in expense which has slowed development, and made prices go up even more. (all in the name of affordable housing). This is good news if you are a property owner as supply is being artificially reduced with the increased building constraints. 

In terms of future growth....we are getting all of California's money and business, as well as that of NY and Chicago. If you look at all the companies moving to the area it paints a very bright picture for future growth. These companies are bringing high paying corporate jobs. This trend will continue as TN as a whole is a business friendly state, and we have one of the lowest tax burdens of any state in the US (2nd after Alaska I believe). 

Add job growth+lack of housing supply=appreciation

If you look at the sub markets of Franklin, Brentwood. Those are self sustaining cities that have tons of corporate jobs and are filled with 1%ers. Those markets are going to see minimal impact from a recession as the people in that bracket are less impacted. 

I have seen in the last 2 months things slow down some. Fewer offers on homes, homes sitting longer, price reductions, etc. The market is still red hot, but slightly slower now. 

I do think things will slow down even more once interest rates come down, prices might stabilize, might even go down some at certain price points, but I don't see a full on crash of 20% or more in price reductions. Not with how things are going right now. 

This is just the opinion of one person, though....