On Tuesday, Pro Teck’s Valuation Service Home Value Forecast analyzed the upside and downside of recovering housing markets such as Nashville Tennessee, where the population and employment growth has helped and hindered a return to prosperity.
Nashville has remained at the top of Pro Teck's CBSAs for two months and counting, has a stable economy and an upward trend in employment opportunities, and population growth at a 9.2 percent increase from 2010 to 2015. This has led to a rapid increase in housing cost per square foot, which has spiked to 50 percent since before the housing crisis.
"Unlike similar metros across the country, Nashville didn't experience drastic price reductions post-crash, only losing 6 percent of value before the last four years of impressive appreciation," said Tom O'Grady, CEO of Pro Teck. "This combination of population growth and job creation has insulated Nashville from the downturn-limited inventory also played a part."
Although the growth in Nashville should be looked at as a positive from a recovery standpoint, there was a decline in the housing starts following the crisis. From 2003 to 2006 Nashville averaged 15,000 building permits a year and by 2014, the housing market in Nashville came to a halted with a shortage of 53,000 new homes and causing a backup for almost four-years.
"Looking at Months of Remaining Inventory (MRI) by price show there are not many options for those looking to purchase a home for less than $300,000," said O'Grady. "With investors paying a premium for land near the city, they are building bigger and more luxurious homes to make a profit, thus leaving a shortage of affordable housing."
Every month the Home Value Forecast uses a statistic of leading real estate market based on single-family homes as an indicator to rank the strongest to the weakest. The top CBSAs this month include: Bellingham, Washington; Colorado, Springs Colorado; Greeley, Colorado; and Nashville Tennessee to name a few.
The bottom consists of El Paso, Texas; Miami, Florida; Huntsville, Alabama, and Albuquerque, New Mexico. “Recovery in these markets is still being impacted by foreclosure sales and large REO discounts. With the current lack of inventory, the REO discount should shrink, helping these markets to recover.”
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