When Brandon Sanslow and his wife, Kristin, learned they were expecting a baby, he said they began looking to move from Nashville to Williamson County to be closer to Brandon’s job and for the coveted Williamson County Schools district.

But even with a budget of more than $600,000, they were consistently being outbid by buyers ready to spend thousands over asking prices, often with all-cash offers.

“We looked and looked and looked and couldn’t find anything,” Sanslow said. “We’d pick houses that we liked and, of course, they’d go off the market in just a day or two.”•With inventory in the county down by 67% from May 2020 to May 2021,••according to the Williamson County Association of Realtors, local real estate agents said competition for homes in the county is booming, with buyers from California and other states often pushing offers significantly over a home’s appraised value. From January to May, the median price for homes sold in the county rose by 15% to more than $670,000. Prices in Franklin and Brentwood rose 25.7% and 20%, respectively.

Dave Webber, owner of Limestone Title and Escrow in Franklin and a Realtor with Regal Realty, represented the Sanslows in their search for a home. Webber said Williamson County in particular has been a tough market to get into.

“We know for a fact that a lot of the people that we were competing against were from California and out of state and they were coming in and writing cash offers, and a lot of them were sight unseen,” Webber said. “The first day on the market, there were five homes on the market that fit [their budget]. They liked one, we wrote an offer for $50,000 over asking and it wasn’t even close.”

After six unsuccessful offers, the Sanslows ultimately widened their search and found a home in Hendersonville. While they still paid above asking price, Sanslow said the process was much easier than in Williamson County.

“We still went $30,000 over asking up here, so it’s still pretty bad, but I think it’s worse in Williamson County,” he said.

Betting on Williamson County

Local real estate agents said there are a number of factors bringing out-of-state buyers to Middle Tennessee, such as large companies like Amazon, Mitsubishi and Alliance Bernstein setting up in the Greater Nashville area, as well as schools that offered in-person options during the coronavirus pandemic.

“Schools are a huge deal, especially in Williamson County,” said Tedd Anger, co-owner of the Anger Group and Realtor with Keller Williams Realty. “A lot of people are coming from areas where they shut down the schools, and they’ve lost confidence in that if something pops up again, they’re going to shut all the schools down again. They have more confidence that it will be handled differently [here].”

Anger said because of the lower tax rates in Tennessee compared to states with income taxes and higher median prices, out-of-state buyers also often have a higher budget after selling their previous homes. According to data from the National Association of Realtors, the median home price for a home in San Fransisco is about $1.1 million.

Because of this, he said buyers are willing to pay over asking prices, even if that is higher than the appraised value, which is closer to the home’s actual worth.

“You run the biggest risk because you’re betting on your home appreciating when you say, ‘hey, I’m willing to pay what I think it’s going to be worth a couple of years from now,’” Anger said. “You’re betting on this market still appreciating at a pretty good pace when you go really high on your offer.”

Anger said the appraised value of a home includes a number of considerations, including what homes in that area have recently sold for, market conditions and school ratings. However, appraisals can sometimes be subjective, and in current market conditions, they may not mean much to buyers.

“It’s really up to the appraiser, but right now there can be a big difference between the appraised value and what the market is willing to bear,” he said.

In addition to high offers, Webber said many buyers are also waiving contingencies, such as home inspection negotiations. However, he said local buyers should still be cautious about going overboard with offers, even in a market like Williamson County.

“I literally had to call [buyers] and say, ‘hey listen, it is really hard for me to put this down on paper and push you in this direction because this is a terrible deal if anything in this market changes,” he said. “[If it changes] this price is going to tumble and you’re going to be stuck in this house not able to sell. I’ve never done that before. I’ve written quite a few contracts over the years, and it was pretty crazy to sit and say ‘don’t do this,’ and then they would say, ‘no, I still want it.’”

Sanslow said prospective homebuyers should be prepared to research how much a home is really worth, rather than risk spending more than the home is worth.

“Definitely do as much of your homework as you can because there’s a very good chance you’re going to have to waive the appraisal,” he said. “You really need to understand how to appraise it yourself. That way you’re not getting in a bad financial situation.”

Unintended effects

With home prices continuing to rise, local officials have expressed concern over how increased competition will affect the area’s existing affordability issue.

When considering teacher pay raises during its June 21 meeting, members of the Williamson County Schools Board of Education said although the district plans to raise pay by 4% this year, it has not been able to keep up with the cost of housing in a way that would allow teachers to afford a home in the district.

“Zillow today says the average cost of a home in Williamson County is [about] $600,000, and let’s say you were kind of starting out in the younger years—you’ve recently graduated from a school of education; you have a master’s degree. You could scratch up 15% to put down on that; ... your payments would be $30,000 a year,” District 9 Board Member Rick Wimberly said. “For that first year with a master’s degree, we start [pay] at $44,000.”

Those looking to rent while they wait for the market to cool down may also be out of luck, Anger said. The same issues of high competition for inventory and high offers also exist for rental homes in the area, he said.

“I’ve watched the rental market go crazy as well,” Anger said. “Rents have skyrocketed, because people are trying to get here. People are getting aggressive on their rents. They’ll go over asking on rental prices. They’re willing to pay two years upfront and in cash.”

According to July statistics from Apartmentdata.com, rental prices in the Greater Nashville region have been on the rise since November, increasing to an average price of approximately $1,300 per month. The Franklin and Brentwood area alone has become the third most expensive submarket in the region.

Webber and Anger said it is not clear when or if the Williamson County housing market will slow or return to pre-pandemic levels, especially if factors that draw people to the area remain.

“I lived here during [2009] when the housing crashed around the country. It’s almost like [home sales in] the Nashville area just flattened out. ... It didn’t like tumble down; it just slowed down for about two years,” Anger said. “Now we’re at this fever pitch. Obviously, no one has a crystal ball, but it just seems like there’s a lot of factors that will continue to drive people here for a long time.”