Monday Morning Coffee – What’s with all of the new construction?

Nashville‘s skyline has become a veritable construction crane farm!

Deb and I were driving into town from Hendersonville (I-65 South), and Deb commented on how remarkable the skyline is looking these days. If you haven’t seen it in a while, I recommend you go on a little field trip. Drive yourself North to Vietnam Veterans Parkway – Then turn around and head South and then West on I-40 . . . You’ll see some FABULOUS views of our fine city.

Bring your camera and do this with a friend to be your driver (or hire an Uber), so you can take lots of pictures,

One thing Deb and I noticed was the plethora of construction cranes throughout the city.

This begged a few questions:

  • Could the Builders/developers be “over-building?”
  • Who are all of these people who will be buying or renting all of these new, Urban Residential apartments, condos, and in-fill houses?
  • What will happen if the market crashes again?
  • Will the Nashville infrastructure be able to handle this apparent HUGE influx of residents?
  • From where is all of this MONEY coming? (The pricing of condos and houses is hitting Historic HIGHS)
  • What effect is this having in all of the “Sub-Markets” of Middle Tennessee? (Individual Neighborhoods)

I figure we’re not the only folks asking these questions and in the pursuit of “Owning” my incessant penchant for having a solid grip on the state of our local real estate market, I decided to do a bit of research and report back to you.

First! There are no indications that the current level of new construction has any possibility of being “too much” . . . With @ 7,000 residents currently living in the core of Nashville and the projected influx of new residents, the number of residential units under construction coming on-line dose not even hold a candle to the demand . . . Occupancy of all residential units is expected to be 97+ % for a minimum of 2 more years.

In short . . . The construction “boom” you are witnessing is not much more than “a good start.”

Our city is going to continue to buzz with new construction for a long time.

One interesting perspective I heard recently from the on-site sales team at the beautiful new TwelveTwelve Condominium highrise is that urban dwellers should not buy in a highrise “for the view” because many of the panoramic views will become obstructed over time as other highrise buildings sprout out of the town. The real allure of living down-town is all that comes with living downtown . . . It’s the buzz of the city, not the views, and Nashville has never had this (Zoning didn’t allow downtown residential construction until about 20 years ago).

Nashville is growing – There are people move in from the “burbs” and from other cities. They love the vibrancy and warmth of our city . . . The music . . . The Weather . . . and the PEOPLE!

For the infrastructure to appropriately support this “Project” of growth, our city leaders must take action FAST on a few critical components (Nothing new here) . . .

  • MASS TRANSIT – The need is for fewer cars in the city, and the only viable option (IMHO) is RAIL to reduce the number of cars that flow into the city each morning and out each afternoon. I-24 and I-65 are both traffic CF’s EVERY rush hour . . . and parking in downtown cannot possibly support all these cars
  • EDUCATION – If Davidson County doesn’t get a good handle on the state of our school system quickly, people with children will flee to find better options.
  • CORE COMMERCIAL – This is about grocery stores and drug stores and large retailers and Theaters moving into the downtown core. People living in the city don’t want to have to leave the city to do their shopping in the burbs.

Nashville’s Leaders have done a good job of create a create “Play Space” in the form of many public parks and Greenways and Convention Center, Sports Facilities, and concert/festival venues.

So . . . How is all of this relevant to what’s happening in YOUR neighborhood?

You ask: “WIIFM?” (What’s in it for me?)

When you hear “Housing Statistics” on the news, you’re hearing analysis of broad markets. While these are decent indicators of trends, they seldom have much direct relevance to YOUR neighborhood.

“Homogenized Statistics” take the edges off the real data . . . They may report 3% Pricing increases citywide, and the pricing increase in your neighborhood could be 12% . . . or -6%

If you are interested in what’s REALLY happening in your neighborhood, the ONLY reliable source of that analysis is a LOCAL Real Estate Sales Professional. Don’t rely on internet valuation.

What you see on the internet is not ALWAYS true.

It’s that Professional REALTOR who’s driving the streets and living and breathing the essence of your neighborhood every day who REALLY knows what’s happening.

Pareto Realty’s business model is simple . . . Our agents understand the importance of NICHE SPECIALIZATION so they can be THE quintessential resource for ALL things Real Estate for the residents in their “AE” (Area of Expertise).

When you’re “THE Expert,” you’ve gotta consistently do the diligence to stay on top of the nuances of YOUR market.

This morning, I wondered about the Inventory of New Construction in West Nashville (My primary AE), so I did a little research.

I dug into the Multiple Listing System to get a read on what’s happened with West Nashville New Construction Residential Houses since January 1, 2014 – Price range $500,000-$1 Million . . . and snapshot check on the current inventory of new houses for sale.

Here’s what I found:

  • 73 Active Listings
  • Average Listing Price $762,945 with Average Price Per Square Foot 211.46
  • Median Listing Price $749,900 with Median Price Per Square Foot $212.50 (Indicates a very balanced “Sample”)
  • 14 of those listings are under contract with Financing Contingencies
  • 3 Pending – $539,900 – $609,900 – $999,900 – Avg P/SF $193.04 – =Med P/SF $181.95
  • 85 have closed since 1/1/2014
  • Average Listing Price of Closed $739,357 – $203.90/SF
  • Median Listing Price of Closed $719,900 – $203.05/SF
  • Average Selling Price $734,744 – $202.63/SF
  • Median Selling Price $705,000 – $201.26/SF

Some observations:

  • 102 Houses have “Left the market” since 1/1/2014 – Contingent, Pending, Closed
  • That’s 9.5 months, so an average of 9.5 per month
  • 59 currently available without contingency, so we have an under construction inventory of 6.21 months supply
  • Considering it takes 4-6 months for construction, this is a healthy market
  • The difference between Listing Price and Selling price is miniscule (less than 1%) – Builders are seldom accepting less than asking price
  • This market is well balanced with good options for Buyers looking for new construction in West Nashville at all price points between $500K and $1M

If you’re a builder, this is good news . . . If you can find the dirt, buy it and build on it 🙂

Certainly, more analysis comes from this, and your local Real Estate Sales Professional is quintessentially equipped to do this for you in your neighborhood and offer you sound advice.

Nashville is a city on the move.

When you’re ready to move in, move on, or move up, Pareto Realty is poised and ready to get you moving.

Hope you have a great week,

b

 

Published by Barry Owen

Strategist-CEO of Pareto Realty Real estate sales Professional Inviter-Facilitator-Practicer of Open Space Technology Opening safe space for people & organizations to self-organize around issues & opportunities BarryOwen.US Invite-Listen-Love

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