Can You Believe This Market? Nashville Real Estate Report for May 2013
Overall, the Nashville Real Estate Market is good, but we have a few areas that are struggling with inventory or buyer activity.
I still think this is a great time to both buy and sell in Nashville. However, it will not last long. For those looking to sell their home; a limited inventory and an increase in the number of buyers have prices trending up with Days on Market decreasing. For buyers, interest rates are hovering near all-time lows and the median home price is the same as it was in 2007.
April 2013 – Nashville Real Estate Sales
Nashville Real Estate Sales for April 2013 are at a peak that we haven’t hit since August 2007. Home Sales in April were up 27% over April 2012, and were up 8% over March 2013. This is on top of the 44% month over month gain that we experienced in March.
In February, I speculated that real estate sales in Nashville would surpass the 3,000 units mark in the summer and would likely finish up the year at 2,500 sales per month. Based on April sales figures, I fully expect to hit 3000 sales in May 2013. If so, we could have four months in a row above 3,000. That would be amazing. August 2007 was the last time the Nashville Real Estate Market has more than 3,000 sales.
April 2013 – Nashville Real Estate Inventory
Nashville’s residential inventory continues to slowly creep upwards which is expected this time of the year. However, we are well under the numbers of homes we have seen on the market in the last five years. We have a six month supply of homes at the current rate of sale. The inventory typically peaks in April or May each year and trends downward as the year progresses. If the home sales this summer hit expectations, the declining inventory will continue to put upward pressure on prices.
April’s inventory is 15% below the number of homes on the market in the same month in 2012.
Attention Nashville Home Owners: Thinking about making a move? We need your home on the market to help fulfill the needs of all the active buyers. Nothing else can fill the gap. Builders are a few years away from making a significant impact on our market.
April 2013 – Nashville Real Estate Average Price
For the last few months, I have been saying that 2013 is the Year of Price Appreciation in Nashville. I was not expecting double digit increase, but I am happy to report that April 2013 was up 10.7% over April 2012 and nearly 9% over March 2013. After several years of stagnation and decline, it is easy to get overly excited about a 10% increase in price.
Before you start doing back flips, I want to remind you that this is only one month. Check back with me in August and I may be joining you.
The average Days on Market has decreased five days in the last month to 76 days. In April of 2012, we averaged 88 days on the market.
Nashville Real Estate Outlook
I do not know anyone that is not excited about the Nashville Real Estate Market. Due to the fragility of the national economy, outside factors could play a major role in our market. The following factors have the highest potential to impact the Nashville Real Estate Market and economy.
- Lending: I expect the increase in FHA loan costs will have some affect on areas that are popular with first time homebuyers. PMI rate increases were effective in April 2013. Starting in June, low down payment borrowers are expected to pay PMI for the life of the loan. This could easily equal $50,000 in additional payments during the life of the loan. Interest rates are expected to stay low through 2014 with continued economic intervention by the Federal Reserve.
- Government: Investigations into Benghazi and the IRS have the potential to sidetrack the attention of Congress for the rest of the year. A distracted Congress: Is this a good thing? What do you think?
- National Economy: The GPD for 2013 Q1 expanded at an annual rate of 2.5%. Although higher than expected, the increase is not enough to claim a thriving economy. Any effects from the Sequester are expected to dissipate by the end of the year. My biggest long term concern is the fallout over the Affordable Health Care Act which will be fully implemented in 2014. This could have a significant impact on jobs and the economy.
The real estate data was provided by the Greater Nashville Association of Realtors, Middle Tennessee’s largest trade association for Real Estate Professionals. The background photos in the charts are from the skies in sunny Nashville, TN.
What Are Your thoughts on Nashville?