Nashville home prices jump as wage increases crawl

Nashville-area housing costs continue to outpace wages this year, jumping 8 percent since 2017 while income went up just 2 percent, according to a report released Thursday comparing federally reported sales deeds and wages.

But the housing-cost increase declined from double-digit hikes in the first quarter of 2017 when Davidson County's heated housing market peaked, according to ATTOM Data Solutions, a California-based national property data warehousing firm.

"Prior to this year, we saw two years of double-digit price increases in Davidson County, and got as high as 18 percent in the first quarter of 2017," said Daren Blomquist, senior vice president with ATTOM Data Solutions. "That does support a cooling or slowing of price appreciation. But the price point, in that $200,000 to $250,000 range, is still going to be pretty appealing to buyers coming from out of state particularly."

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Home prices have gone up 74 percent since 2012, when the median cost was just $140,000. This year so far, the the median sales price of a home in Davidson County was $243,500, according to the U.S. Home Affordability Index report.

Nationwide, the median home price in the first quarter of this year is $229,500, and home prices in 304 of the 446 counties analyzed in this report were found to be too expensive for average wage-earners.

'A double-edged sword'

For the first time in five years, U.S. Census data showed the metro area's fast-paced population growth decreased from 100 people per day to 94 new residents from 2016 to 2017.

Davidson County ranked as the seventh least-affordable area out of 130 counties nationwide that are home to at least a half-million residents, according to the ATTOM report.

Workers earned an average salary of $57,564 in the first quarter of this year, but needed $66,437 to afford a median-priced home with 3 percent down and a 30-year fixed-rate mortgage.

"It's a booming market but it's becoming less affordable for people who already live there and are making the average wage," Blomquist said. "The coastal markets have become so expensive that it's pushing people and jobs to less expensive inland markets, which are then in turn benefiting. But it's a double-edged sword."

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Dallas, Austin and Denver were also among the least affordable cities in this population bracket, though coastal communities in California and New York topped the nation's list for the most expensive places to live.

Nashville-adjacent Rutherford and Sumner counties saw double-digit surges in home prices this year. Those counties, which include Murfreesboro and Hendersonville, also together welcomed more than 11,000 new residents.

Metro intervention

Despite the surging real estate values, wages across the region increased only 1 or 2 percent.

Nashville's Office of Housing has increased efforts to develop new affordable housing since 2015 in an effort to combat the price gap.

"The city has put more than $50 million toward affordable and workforce housing in two years and provided 70 properties," said Adriane Bond Harris, director of the Mayor's Office of Housing. "Our focus is creating tools for nonprofit and for-profit developers to create affordable housing."

A 110-unit development on a city property is underway at 12th and Wedgewood.

The Barnes Housing Trust Fund provides grants for developers to create new affordable housing opportunities, and they are actively looking for partners.

A pilot program now underway pays the difference between what low-income households can afford and the market rate of a housing unit.

Nashville must add 31,000 new affordable rental units between 2017 and 2025 to prevent a major housing shortage for teachers and other workers, according to a city report.

"The fund has invested in the development of 1,300 units in the last two years," said Morgan Mansa, housing program manager for the Barnes Fund. "It was critical that we provide donations of property to nonprofit developers to help with their bottom line."

Mansa said the recently-launched Community Land Trust program is designed to create islands of permanently affordable housing. But the program's long-term survival is being challenged by the state, which also blocked Metro's effort to institute inclusionary zoning rules that put demands on developers to include affordable units.

"The state has limit on a Community Land Trust, even though we really need it," Mansa said. "Being a blue dot in a red state makes our job challenging."