Impact of Nashville Apartment Vacancies on Current Home Sales

How are vacancies affecting home sales in Nashville?

The real estate market in Nashville is vast, and has many sub-markets that perform differently depending where they are in our city. Homes in some neighborhoods are still receiving multiple offers (and multiple rental applications), whether that be from investors speculating on the growth of a neighborhood or buyers / renters desiring specific school districts, walkability and convenience to nightlight, or the love of an old historic home that they just can’t live without.

However, apartment vacancies in Nashville will continue to put downward pressure on real estate sales over the winter months unless we see substantial changes to the mortgage rate environment, which seems unlikely. What does this mean for homeowners and buyers?

Monthly supply of homes has continued to rise alongside interest rates especially the last 24 months as affordability has become more of a challenge. 

While overall inventory especially in the 400-500k range remains relatively low and total active inventory remains below 3000 units for Nashville as a whole, we continue to see homes siting on market for longer. And, in part, rental vacancies for apartments and apartment incentives drive this lessened demand in the short term. This is an important metric for home owners to understand as we see rental rates fall and vacancy rates remain between 9-11% for the Nashville rental market. 

According to Nashville Planning’s Executive Summary for Fall 2024, many units have been absorbed, bringing the vacancy rate down from 20% in 2023. This reduction in vacancies, alongside the apartment incentives we’re seeing for 2 month’s free or reduced rental rates for the first year, will likely be short lived. However, as rates remain somewhat elevated, and 1/10 units are unrented, this will continue to place downward pressure on real estate sales over the winter months unless we see substantial changes to the mortgage rate environment, which seems unlikely.

Many factors affect the supply and demand of our market, but it’s no surprise that having a higher than normal vacancy rate in apartments and rental units when many people are choosing to rent in the short term and await rate reductions.

Our future assessment is that, due to new housing construction not pacing with overall market demand, many people with high equity positions and many home buyers waiting on more affordable monthly payments, we’ll see a substantial uptick in home sales, listings, and home buying in 2025/2026.

Many people want to move or want to buy, but currently are having trouble justifying it, meaning we’ve got a lot of pent up demand overall for changes in lifestyle waiting to hit the market. 

If you’re on the fence right now and trying to determine when is the right time to sell or when is the right time to buy, there is no right or wrong answer. It’s all based on what works for you, your family, and your lifestyle. If you’d like more detailed information or want to schedule time to discuss these factors and how they might affect you now or in the future, our team will be happy to guide you. 

Hope you have a wonderful month and Happy Holidays/Merry Christmas if I don’t speak to you before then. 

Ian H. Ratliff 

Broker/Owner of RATLIFF…