Residential Real Estate Prices Likely Going UP
12 months ago we first heard about the coronavirus in Asia. Has this not been the longest 12 months of your life?!
In mid March when the shutdowns began, I heard from lots of real estate investors. I heard predictions and had my own assumptions. One investor predicted a 20% haircut, or 20% drop in median residential prices. Another seasoned investor predicted a price drop between 5-10%.
Well what happened last year in middle TN? Supply lowered and demand increased. Parts of middle TN appreciated 10% in a year! As a homeowner and investor, I welcomed the good news. What does 2021 look like?
Amazon announced workforce housing help. Like you, I'm skeptical when the local government announces plans to coerce the market into developing cheaper housing. Regulations typically increase the cost of land and development. Amazon continues to defy expectations as a leading business and I welcome their goal to assist folks in the purchase of 22,000 housing units over three metro areas where they operate.
The New York Times published an article on why we have an affordable housing crisis. I think the answer to this crisis is allow homeowners to upzone their property and increase density. Increased density will have an affect on city infrastructure, but it's a price we have to pay to allow more people to live in a city. This article references a Redfin study that states Cali buyers have 50% more money in their home buying budget. This is a trend that will keep pushing middle TN real estate prices higher, especially in Nashville, Brentwood, and Franklin.
Williamson County recently voted to change their zoning laws in unincorporated parts to allow only one home per five acres of land. This will dramatically increase land and home prices. The local government officials stated this will help alleviate school overcrowding and traffic. This will certainly hurt private property rights.
Williamson County Assoc of Realtors publish residential sales data each month. Brentwood median home prices are over a million in January 2021.
The Federal Reserve sets monetary policy for the US and the world in general. The Fed plans to keep interest rates low for the foreseeable future. When interest rates rise, the home prices will plateau. Let me know what you think! Call or email me to share your thoughs.