Mike Reicher, USA TODAY NETWORK –Feb. 12, 2018
The metro area had the third-highest home price appreciation among the nation’s largest markets, at 12.5 percent, and sellers saw the largest profits here since at least 2000.
Year-end data released by the real estate company ATTOM Data Solutions showed Nashville continued to bask in the glow of a humming economy and hot housing market.
“One of the reasons for this skyrocketing home price appreciation in Nashville is ‘migration’ from other high-cost markets,” said Daren Blomquist, senior vice president at ATTOM. “People are moving because the jobs are moving, and they’re better-paying jobs. They still see it as a bargain. Their context for what makes a good deal on a home is different, and they’re often willing to pay more than a local buyer.”
Homes sold for a median price of $224,900 in 2017, compared to $200,000 in 2016.
Nashville’s increase ranks behind only Kansas City and San Jose, Calif. among metro areas with more than 1 million residents. Kansas City, like Nashville, is growing rapidly and experiencing a shortage of affordable housing. There sales prices climbed by 14 percent. Silicon Valley buyers have driven up the San Jose median price beyond $950,000, as the tech sector thrives.
The Nashville market’s spectacular rise, though, brings some concerns.
“There are some signs that it’s getting over-heated or over-valued. It’s just not sustainable to have double-digit appreciation, even if you’re having jobs coming in,” Blomquist said.
Housing experts anticipate that appreciation will slow down, but they don’t expect a crash like the last housing bubble implosion. Home sales this time are more fundamentally sound — driven by supply scarcity and job growth — while the previous run-up was driven in part by looser lender standards.
In the fourth quarter of 2017 Nashvillians sold their homes for an average of 51 percent, or $76,600 more than what they bought them for — more than the highest profits realized here during the last housing boom in the early and mid-2000s.
This contrasts with some other markets, which saw higher profits the last time around. Nashville’s stronger economy can explain the change, Blomquist said. The labor force has grown by more than a third since 2000, according to federal statistics.
Despite the rising prices, Blomquist cautions that residents “don’t get caught up in the frenzy of buying — that you have to buy now or you’ll miss out. The most important thing is to make sure you can afford what you’re buying.”
Top 10 Metro Areas: Median Home Sales Price Gains
Markets with 1 million or more residents
Kansas City, MO-KS
2016: $151,730 2017: $172,098 (13.4%)
San Jose-Sunnyvale-Santa Clara, CA
2016: $847,000 2017: $960,000 (13.3%)
2016: $200,000 2017: $224,900 (12.5%)
Las Vegas-Henderson-Paradise, NV
2016: $204,879 2017: $230,000 (12.3%)
Salt Lake City, UT
2016: $238,000 2017: $264,000 (10.9%)
2016: $369,900 2017: $410,000 (10.8%)
2016: $187,000 2017: $207,000 (10.7%)
Tampa-St. Petersburg-Clearwater, FL
2016: $162,638 2017: $180,000 (10.7%)
2016: $315,000 2017: $348,051 (10.5%)
2016: $169,900 2017: $187,000 (10.1%)
Source: ATTOM Data Solutions