Nashville is unaffordable! Navigating complex household market, by Marqueze Williams.

Nashville is unaffordable!

Navigating complex household market

By Marqueze Williams

Nashville is one of the hottest real estate market in the country right now and this has a snowball effect to the social dynamics of this market. Even before the Pandemic hit in 2019, the average buyer was spending about 28% of their annual income on housing alone, which meant that many were already cost-burdened.

In case you are wondering, when a household is cost burdened, this means they are paying more than 30 percent of its income towards housing expenses. The Department of Housing and Urban Development recommends a household to not use more than 30 percent of its income on housing, a point if breached then the household is put under the cost-burdened category. A household is said to be severely cost burdened if it spends more than 50 percent of its income towards housing expenses. While households in Nashville are not yet at either points, I feel that we are fast approaching these levels.

In order to make an argumentative case, we need to first understand what the term household and family means. A household according to the U.S. Census Bureau is defined as all the people who occupy a single housing unit regardless of their relationship to one another. Therefore this means that we could have a house occupied by four to six different people all working and contributing to the livelihood of this household. On the other hand, a family is defined as a group of two or more people related by birth, marriage or adoption residing together. To put our discussion in perspective, majority of Nashville households are approaching the costburdened levels which means families are having it hard!

In 2021, homebuyers who bought into this market for median properties were spending an average of 33% of their income which is relatively high considering that this income is being spent on housing alone. Keeping in mind the economy in the area is also high.

While the real estate market in Nashville seems to be slowing down, the term ‘slow’ is used in this context as a relative term.

Nashville was White Hot! But now, we are getting to the red hot levels. Demand is seems

to be growing stronger by the day despite rising mortgage rates and inflation rates! The robust performance of this market has earned it a place in the top 10 places to buy a house (more so for investment purposes).

Home prices have moved up by 24% over the past years and it has remained to be among the highest in the nation. The local government has tried on how to work with builders to strengthen construction and to at least make the prices affordable to people willing to enter the market them but it is still a challenge.

Inflation is also increasing at a rapid rate. This is bad for the industry overall. The effect of inflation is that the cost of construction materials is rising rapidly. This means, builders cannot build fast enough to keep up with the crazy demand. Consequently, home prices have also increasing and inventory’s rate is moving down. While the economy might be performing better with more low unemployment rates, the same cannot be said of the disposable income. House prices are rising exponentially but the salaries and wages have stagnated.Nashville market is a seller’s market and might stay that way for a while. We have to address the inventory problem if we want Due to low inventory, bidding wars are becoming more frantic which again pushes the prices of properties high up!

BUT WHY ARE PEOPLE STILL BUYING?

Despite it being one of the overpriced markets in the country, Employment rate in Nashville is the highest in the country and there is a constant job growth in all sectors.

Nashville is one of the fast-growing cities in the United States and it was ranked as the 17th best place to live last year, with high quality of life.

Compared to other cities like California and New York, Nashville market is cheaper and there is no income tax. Those who are going to buy home from Nashville are going to keep more of their income. Nashville houses are also going to increase in demand because there are tourists who want to rent home, retirees wasn’t to settle down and student who are closing schools will rent home to. House price in Nashville is also going to increase in the month of June and supply has to be improved.