Middle Tennessee bucking the trend of increasing rent prices
Writer: Jerrica DuBois
June 2024 — According to Redfin, Nashville residents are beginning to see a bit of a break on rent prices. The real estate company reported that median asking rent in the area dropped 5.9% year over year in April, marking the third largest drop in rents nationwide. Music City came behind Seattle with a drop of 7.4% and Austin, which decreased by 6.6%.
“The Sun Belt has built a ton of new apartments in recent years, partly to meet the surge in demand brought on by the flood of people who moved in during the pandemic housing boom. But the boom is over, and now property owners are struggling to fill vacancies, which is causing rents to fall,” said Redfin Senior Economist Sheharyar Bokhari as cited by the Nashville Business Journal.
According to Redfin’s report, the Sun Belt, which includes Florida, Southern California, Arizona, Texas and Tennessee, has been the biggest beneficiary of decreasing rent prices. Nashville’s median asking rent in April was $1,599, coming in below the national median price of $1,648. On a national scale, rent is increasing by 1.2% year over year.
Rent prices continue to be a concern as cities struggle to provide affordable housing, a key focus for entities like The Housing Fund.
“We’re focusing on three key areas,” Marshall Crawford, president and CEO of The Housing Fund, told Invest:. Firstly, we want to create more affordable housing opportunities as we aim to increase the availability of affordable housing across the state. Secondly, we want to preserve and enhance existing affordable housing units since we’re committed to improving the quality of life for current residents by preserving and upgrading affordable housing options. Thirdly, we want to expand our reach statewide because we intend to extend our impact beyond our current boundaries.”
Several markets in the South and the West saw the largest year-over-year declines in rent. According to Realtor.com, Music City led the 50 metro areas Realtor.com analyzed, with Austin close behind with a decline to $1,494. Austin also saw the largest drop of 11.5% from its peak of $1,689 in September 2022. This drastic drop in rents was partially driven by an influx of new multifamily homes in the area, according to the report.
The Sun Belt’s good fortune, however, has not been widespread. Three Midwest markets, Indianapolis, Milwaukee, and Minneapolis, all saw their median asking rents hit a five-year high in April. Unemployment remains below average and multifamily home construction continues at a slow pace in the region, all while rents continue to increase. If the current environment remains, although rents in Cincinnati, Cleveland and Chicago are below peak, all three cities could hit record highs this summer.
Nationally, monthly rents fell annually for the ninth consecutive month in April, according to Realtor.com. The median asking rent fell by 0.7% to $1,723, only $33 less than the August 2022 peak.
“Being in Nashville is good, offering a potential reset from the previous challenging pace,” Allen Arender, senior vice president of Holladay Properties told Invest:. “The current situation, combined with upcoming projects and changes in interest rates, seems beneficial for the city in the next two to three years. A reset in the cost of living may attract more people.”
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