We had an extreme sellers market for two years. Now we’re transitioning to a more balanced market.
Buyers paused when interest rates surged from 3.1% to 6.28%. It was a shock. Add in stock market volatility and inflation, and people naturally took a breath.
For the second half of the year, rate volatility will subside. Rates are in the mid to high 5% range now. Inventory is still near historic lows, but growing slightly.
Buyers will feel more confident as the fear of the unknown goes away, and sellers can list their house knowing buyers are ready to make a move.
1. What will happen with appreciation?
Because our Nashville market is so desirable, we will still see appreciation this year. Not the skyrocketing appreciation of the past two years, but around a more normal 6-7% appreciation.
2. Will prices come down?
There is still a very large pool of ready, willing, and able buyers out there. Houses in good condition that are priced correctly and will sell quickly for list price.
Special properties will continue to go for over asking price. Sought after school zones, amazing renovations, potential for rental income, etc will get competing offers.
Don't wait for a clearance sale on houses in Nashville.
3. What about the price reductions I'm seeing?
If a home has a price reduction, it was priced on the assumption the market was continuing to skyrocket. We squeezed a decade of appreciation rate into less than 24 months, and if you priced higher based on the market continuing at that pace you have to adjust.
We are not seeing homes selling lower than the last comparable sale.
4. Will there still be competition for homes?
Consider the number of homes for sale in the greater Nashville area over the past few years. Supply is still constrained.
May '19 → 8,254
May '20 → 7,086
May '21 → 2,557
May '22 → 4,114
That doesn’t mean your house can be overpriced or poorly presented. Buyers have to pay more per month due to higher interest rates, and they’ll be choosier. However, a correctly priced home in excellent condition will draw plenty of showings and offers.
5. How do rates affect my plan to buy?
Mortgage rates shot from around 3% to around 6% this spring, but don't expect them to double again. They may inch up throughout the end of the year, but not with the kind of startling increase we experienced this spring.
Today the average 30 year fixed rate is in the mid 5% range. See current and past rates here.
When it comes to financing discuss ALL your options, not just the obvious ones, with a trusted local lender. For example, consider an ARM (adjustable rate mortgage). And remember you can always refinance.
How do I personally feel about the market?
I’m happy to see it balance out a bit.
I put my money where my mouth is.
I continue to personally invest in Nashville real estate.
I am grateful to be in Nashville where our fundamentals are strong,
and we have the ability to sustain growth.
Even in a market shift, this town still has so much upside!
Wendy Monday, Broker
Village Real Estate
Village Real Estate 2206 21st Ave S Nashville 37212 615.383.3964