Nashville property values increasing at ‘historic’ clip

Nashville has become a city of construction cranes, a place where tall condos have uprooted one-story buildings and where neighborhoods once avoided are today the prize of developers.

Now, the red-hot real estate market is expected to lead to a “historic increase” in property values during the next reappraisal.

Davidson County Property Assessor George Rooker Jr. is estimating an average increase in residential property values of between 33 and 37 percent when Metro’s next property reappraisal comes in 2017. Appreciation varies by neighborhood, with rapidly developing communities — Inglewood and other parts of East Nashville, for example — seeing the largest gains in property values over the past two years.

The city’s last appraisal in 2013 was a 5.3 percent increase over 2009.

The anticipated increase would mark Nashville’s single-largest spike in property values since the state of Tennessee in 1989 started requiring municipalities to reassess the value of properties every four years. The current record for Nashville is 33 percent from 1993 to 1997.

Rooker discussed his projections — which involve only single-family residential properties — before a newly created Metro Council Ad Hoc Affordable Housing Committee last week. Prompted in part by the issue of affordable housing gaining traction, he’s taken the same presentation to chambers of commerce, neighborhood groups and others. It’s an attempt to alert the public to the trends a year ahead of when he normally would.

“It will probably be the biggest increase we’ve ever seen since we started doing four-year reappraisals,” Rooker said.

“This is such a historic increase that we just thought we better get out ahead of the curve,” he said of making the projections earlier than usual. “And the affordable housing issue was such a big issue in the mayor’s race that we thought it was important to share this information with as many folks as we could.”

Properties are appraised by taking into account property sales on a neighborhood-to-neighborhood basis. According to the assessor’s office, Nashville’s median sale price for a single-family home in 2015 is $217,900, up from $183,000 last year.

Nashville’s average home value has increased more over the past year than virtually all its peer cities, Rooker said, including Charlotte, N.C.; St. Louis; Indianapolis; Memphis; Louisville, Ky., and Jacksonville, Fla.

The increase in Nashville's land values doesn't equate to a countywide hike in property taxes, but the tax burden will likely go up for neighborhoods with the largest appreciation after the 2017 reappraisal.

By state law, Metro will still collect the same amount in property tax revenue after the 2017 reappraisal because of an automatic adjustment of the county’s tax rate. Metro’s last property tax increase came under former Mayor Karl Dean in 2012.

The biggest increases in property values have occurred in older, gentrifying neighborhoods near Nashville’s urban core. Some of the biggest spikes remain in places such as Sylvan Park, Belmont-Hillsboro and East Nashville’s Five Points area — all which emerged as real estate hot spots a decade ago or longer.

But these aren’t the top hot spots anymore.

Instead, neighborhoods with the greatest property value increases are places that have become popular destinations in more recent years: Inglewood leads the way followed by Cleveland Park and other East Nashville neighborhoods west of Gallatin Pike. The next largest increases are properties in The Nations in West Nashville, as well as 12South and Wedgewood-Houston near the Metro-owned fairgrounds.

All 35 Metro Council districts have seen property values increase, with the lowest increases being parts of Neely's Bend and Madison, North Nashville, Joelton and Goodlettsville.

The top property value increases from 2013 through this year by Metro Council district are:

District 7, which includes East Nashville’s Inglewood — 27.2 percent (median sales price of single-family home: $230,000) District 5, East Nashville’s Cleveland Park, west side of Gallatin Pike — 25.6 percent (median sales price of single-family home: $200,000) District 17, 12South and Wedgewood Houston — 23.8 percent (median sales price of single-family home: $439,500) District 20, The Nations and parts of West Nashville — 22.9 percent (median sales price of single-family home: $189,950) District 6, East Nashville’s Lockeland Springs, Edgefield, Five Points — 21.9 percent. (median sales price of single-family home: $304,600)

Each of these percentages is expected to approach 40 percent by the time Davidson County’s reappraisal comes in 2017. Despite increases in these districts, by far the highest property values and median sales prices for homes remain in parts of Forest Hills, Green Hills, Belle Meade and the Vanderbilt area.

Councilman Anthony Davis, whose District 7 tops the list, said that he’s not surprised that Inglewood has seen such high increases in the price of homes and values of property.

“Everyone wants to live in East Nashville now,” Davis said, noting that the affordability of places like Inglewood and neighborhoods in District 5 that have attracted new buyers who can’t afford homes around the Five Points area.

“The good news is that everyone’s property value has gone up,” he said. “The bad news is, conversely, you have to pay for that in higher taxes.”

Most of these neighborhoods with large bumps in values are places where low-income residents have been displaced by younger, more affluent families moving in.

As a result, they are neighborhoods that are front and center as Nashville looks to create a new policy to retain and create more affordable housing. The Metro Planning Department, following a directive by the Metro Council in June, is to recommend a plan for the city in January.

“The thing that is most interesting — right after, just the really high amount of appreciation — is that the appreciation is not really evenly spread across the county,” At-large Councilman Bob Mendes said. “Places with super-high appreciation are going to pick up proportionately so much more of the tax load compared to other places.

“It’s going to be a shockingly high increase in some places of the county, and we’ve still got a couple of years where we need to get people prepared for the fact that that’s coming.”

Reach Joey Garrison at 615-259-8236 and on Twitter @joeygarrison.

Interactive map: Property value increases by council district