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The milliondollar question Corporations are gobbling up Nashville homes and building new ones. What does it mean for the local housing market? BY STEPHEN ELLIOTT
uying a house in Nashville is not easy right now. Those circumstances are not confined to Middle Tennessee, and they cannot be blamed on any one thing. Lumber and other supply materials costs have skyrocketed in the past year and a half, in part because of supply-chain logjams. New construction has both slowed and become more expensive due to those factors and a labor crunch. Compounding forces have created a situation where homes are snatched up hours after they come on the market and owners who would otherwise be looking to sell are holding off for fear that they won’t be able to find somewhere else to live. But a relatively new phenomenon — especially in Nashville and other similarly hot markets in the Southeast and Southwest — also is contributing to the crunch. Corporations such as American Homes 4 Rent, many of them founded in the wake of the 2008 financial crisis and housing bust, are gobbling up single-family homes — and even building entire neighborhoods of them — exclusively for the purpose of renting them, rather than selling them, to residents. American Homes 4 Rent, founded in 2012, owned nearly 3,000 single-family homes in the Nashville area at the end of 2020. Earlier this summer, one single-family rental operator sold more than 1,000 homes in Nashville and Atlanta to a peer in a $300 million deal. And the numbers are rising.
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“There’s truly not much of an end in sight,” says Bruce McNeilage, a local developer who rents out about 70 homes, mostly in Williamson and Maury counties. McNeilage first started building, buying and renting out single-family homes in the mid-2000s, “before it was even an industry.” Now, he’s a smaller player in the growing space and has bought and sold from the larger companies while also at times competing against them for renters. Does the companies’ focus on Nashville hurt potential local homebuyers? “100 percent,” he says. That’s because these companies, some publicly traded and some backed by private-equity millions, have the ability to close on a home almost immediately and without conditions. It’s a best-case scenario for a seller. “They don’t have any mortgage contingencies. They don’t have an appraisal. They don’t have an inspection,” he says. “They pay all cash and can close in a few weeks. You don’t need
to paint, carpet, clean out. They’ll take care of everything. They’re a very attractive buyer to a seller, and yes they certainly are beating out the general public.” Still, McNeilage says, the new focus is actually helping people find housing, even if they can’t own it. “In essence, there are more houses available because we are creating them ourselves,” he says. “I don’t think we’re hurting people. We’re helping people.” Local real estate brokers, even those who occasionally work with investors, see it differently. They, of course, are incentivized to encourage home ownership over renting. Brian Copeland, a broker and president of Greater Nashville Realtors, says that the large corporate acquisitions of single-family homes makes it significantly harder for buyers looking for something affordable. “When you’re working with a normal retail buyer, there’s emotions involved in it. They’re looking through selections, the color of the cabi-
