December 3rd, 2018 1:41 PM by Jesse Gonzalez
The 2019 Nashville real estate market will prove its self a tale of two markets, pre-recession and post-recession.
Even the most optimistic housing economist is predicting a slowing of the market while others are predicting a sharper contrast from 2018. This sharper contrast is potentially the harbinger of the coming buyer’s market if it’s not already upon us.
Here locally, it’s a little more complicated. As of the last 6 years or so, our homeowners have truly strong-armed the purchase negotiations making demands of buyer’s that were unconscionable pre-recession. This “new norm” has altered the mindset of many homeowners who are going to find 2019’s turn toward buyers a reality they can’t resolve themselves to. Large portions of entire developments and in some cases whole developments are filled with buyer’s who paid upper-class premiums for middle-class housing. Potentially creating neighborhoods and communities filled with homeowners who are upside down in their mortgage with even the modest of downturns.
We started seeing this shift back in the market in April of 2017 however, it was on a micro scale and most didn’t really feel its effect. The shift didn’t really start hitting the Macro (or Nashville Metro and Surrounding Counties) as a whole till late Summer this year. We noticed the 2nd quarter of 2018 home prices were rising but, at the slowest pace since 2015. Personally, I’ve noticed more and more Realtor announcements about “Price Changes”, “New Prices” and “Buyer Incentives” this fall than I can remember in recent history.
With all that being said, we have to keep this in perspective, like I said, this is a tale of two markets. So, even though we are slowing in comparison to the last 6 years, compare it to pre-recession and we are still going gang busters. None the less, don’t forget, even a modest reversal of those post-recession gains will leave many up-side down in those mortgages because they simply over paid. For goodness sakes, some neighborhoods saw a 24% equity increase in 24 months, that is unsustainable, and those buyers may be in trouble.
Which neighborhoods will feel this pinch first? Nashville’s housing demand is squarely placed in the affordable housing arena. Therefore, homes at or above the area average will feel the pinch or recognize the buyer’s market first. Homes $250,000.00 or less may actually continue their price increase through the summer of 2019 while more expensive homes will begin noting price reductions, and increased days on market starting Fall / Winter of 2018.
All said and done, for the most part, the housing boom peeked Summer of 2017 and has measurably been plateauing ever since. With more new homes than ever before coming onto the market demand is starting to be met and home prices are growing at a slower rate than they have for the past three to five years. Homeowners can expect increased days on market, price reductions and paying buyer incentives as early as now. Spring of 2019 will be noticeably slower while the summer of 2019 may be the slowest growth post-recession we have seen. Those neighborhoods under 250,000 will hold their value well for now while more expensive homes bought in the last 5 years may see their mortgages become upside down. The days of seeing 12% growth per annum for most, if not all of us is over and selling a home in 24 months for profit will end by Summer / Fall of 2019.For more information on how I can help you list, market and sell your home for a flat fee of $999.00, call me today at 615-424-0961 or email JGonzalez@LHRLLC.com. You can always visit on-line at www.ListWithLiberty.com or our Flat Fee site, www.LHRLLC.info.