Mind The Gap

Dated: 06/15/2017

Views: 84

A big issue affecting Nashville and major cities all over America is the "affordability gap." And boy, do we struggle with it daily.

We have a client, they've worked hard and done their due diligence to get approved for a home, but there's just nothing available for them. Home prices have risen as much as 25% over the last five years, bucking the appreciation rates we're used to in Nashville. Wages, as we're all sad to acknowledge, haven't kept pace.

Nationwide, a family earning the local median income could afford 44% of all the homes listed for sale in that area as of 2012. Skip to 2016, and that has dropped to 32%. While I don't have hard numbers for Nashville, we can see that daily as median list prices rise and plots are bought up to build multiple units on a single lot.

"People need to focus on the fact that we have a major housing shortage in this country," Yun says. "This is a direct result of nearly a decade of sluggish home building, and there's no sign that builders will be able to kick-start construction now. We're only seeing incremental increases in home building," said Lawrence Yun, chief economist of the National Association of Realtors in Washington.

While that's true nationally, it doesn't address the lack of easily-developed land around Nashville. Because the city if so sprawling compared to other metros, we've seen a push by home buyers to move further and further out to find affordable housing. In the past few years, areas along I-24 like Antioch, Smyrna, La Vergne, and Murfreesboro have seen explosive development to help house commuters. Likewise, we're seeing pushes into Columbia and Greenbriar as spaces fill up around northern Nashville and Springhill.

Unfortunately, expensive cities tend towards growing more expensive because they're so densely packed with existing homes and businesses. Adding to this, people are staying in their homes longer, as the number of homes for sale has declined. Where you could once set your watch that the average American moved every six years, that number has slowly climbedto around 10 years.

All-in-all, this leaves us with more renters (who are also facing an inventory crunch) and a growing homeownership divide. As affordable homes are less and less available, those in the middle class are increasingly finding themselves on the renter side. This in turn slows their ability to buy and seed future wealth from home ownership.

So I've painted a worrisome picture, but how do you succeed if you're looking to own a home?

Plenty. First things first, we'll want to look at the growth trends of where you're hoping to buy. No one can predict the future, but we can certainly see where a town or area has been and is projected to go - and we might find a place you haven't considered that would better suit you. Adding a few minutes of travel time could shave tens of thousands off your price.

If there's an area that's on its way up or being ignored in the buying frenzy, chances are it won't last long. Finding these pockets in the market - sometimes entire cities, sometime just neighborhoods with slow turnover of homes - can produce surprisingly affordable opportunities.

Second, pair up with an agent who is churning the market. If you're pinning your success to the right home coming packaged up in a daily e-mail of new listings, then you're competing on the open market. Good agents hunt for homes that aren't yet listed, and turn over people who were considering, waiting, and preparing to find you a deal. Sometimes this means it doesn't have the fresh paint of the new floors the seller put in before selling, but it can save your thousands and allow you to choose.

Next, start early. Our market is very seasonal, with the bulk of sales happening in the Spring and Summer. Waiting until 30 days before your lease is up to talk to your lender is not the path to success. We can often take advantage of lower competition in the off season, or find people who were waiting to list until after the holidays.

Yes, this may mean paying the fee to break your lease, but if we can find something when the market isn’t as hot, we can often save you more than you’ve lost.

Finally, consider your criteria. Sit with your agent and go over the “must haves,” your “wants,” and your “deal breakers.” Location and layout should be your primary concerns – cosmetics like granite and hardwood shouldn’t. Any updating can be done later, and belongs firmly in the “want” column.

If your agent has a good understanding of what you need, they’ll be able to find you a home you might not have considered. For instance, I told my agent I had to have a garage. After missing several homes and almost overpaying, I finally explained I need a garage for a workshop – not my care. A week later we were under contract for a home with no garage, but a wood-working shop in an unfinished section of the basement.

The point is – it may be harder to find a home in this market, but it’s still very doable if you team up with the right people. As we continue to watch the market fluctuate and adjust to all the new people pouring into Middle Tennessee, we’ll adjust our strategy to make sure our clients succeed.

If you need help – reach out. Call us at 615-439-7670, or e-mail at info@weichertandrewsgroup.com

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