Millennials are key to Nashville’s Real Estate market
As Music City, it stands to reason that one of the best ways to describe Nashville’s bustling real estate market is through club music. That’s right, club music.
Johnathan Smoke, the chief economist for Realtor.com — who also moonlights as DJ Smokey Smoke — played a series of songs for audience members at the Greater Nashville Association of Realtors’ annual conference that he felt describe the area’s current housing market.
Take Kygo’s “Raging.” It is a song about success and chaos, which Smoke said perfectly describes how the area’s market is behaving now with its low inventory rates, fast turnover and competitiveness.
Smoke said the area’s influx of millennials is playing a critical role in boosting our housing market, even if they are more attracted to apartment living right now.
“It’s OK, because they’re not paying more than 50 percent of their income on rent,” he said.
Smoke argued that since Nashville renters on average pay less than 50 percent of their income each month on rent, they are able to save money toward one day becoming a homeowner, which millennials in cities such as San Francisco cannot readily do.
This means that even with the 4 percent year-over-year rent increases seen in Nashville, renters are still able to secure affordable options in relation to the wages they earn.
But what is even more promising for Nashville’s home market is that the city’s millennials seem eager to plant their roots.
The current homeownership rate for millennials is 45 percent, according to Realtor.com. In the Nashville market, 42 percent of mortgages issued from January to August of this year were for homebuyers under the age of 35, according to Smoke. This is higher than the national average, where 34 percent of mortgages were given to millennial buyers.
Smoke said the reason the region’s millennial buyers are able to buy their homes is simple — the area’s economy is booming. Smoke cited a growing job market, increasing wages and an expanding population as three clear reasons why Nashville remains a competitive place to buy a home.