As Nashvilleâ€™s housing market continues to see unprecedented growth, Green Hills and Belle Meade real estate experts say the local market will remain strong but expect some factorsâ€”such as inflated listings and new residential constructionâ€”to slightly soften the local market.
Despite the need for price correction, experts say some homes are priced too high to garner multiple offers, homebuyers are now paying more per square foot and homes are spending less time on the market.
However, in Green Hills, the median sales price is down nearly 8 percent from last July to $600,000, according toÂ housing market data provided by real estate service Redfin. Despite the drop, sales have fluctuated between $600,000-$680,000 since January 2017, rising to the mid-to-upper $600s duringÂ peak months (May-Sept.) and dipping by an average of $40,000 during non-peak months in both 2017 and 2018. Buyers in Green Hills are now paying slightly less per square foot at a median price of $228.
In the Belle Meade-West Meade-Hillwood area, the median sale price is up nearly 11 percent from last July, while the price per square foot rose 6.5 percent at $239.Â
Homes now take about 62 days to sell in Green Hills, down from 66 last July. In the Belle Meade area, houses are selling in about 57 days, significantly down from 71 days around this time last year. If current trends hold, homes will stay on the market longer beginning around October.
â€œRight now, and probably over the past 90 days, we have seen a slight amount of softening in the market,â€ said Whit Clark, a partner and broker for Green Hills-based Fridrich & Clark Realty. â€œThat doesnâ€™t mean the marketâ€™s not strong, itâ€™s just not at the frantic pace we had a year or two ago.â€
Data shows that growth in Green Hills and Belle Meade, as well as Davidson County, is not just the product of one good year. Instead, the median sales price has climbed from the mid-$400s in July 2015 to where it is now. Across Davidson County, the median sales price is now around $300,000, nearly $50,000 more than three years ago.
New construction driving down real estate market in Green Hill
Since last August, Metro Nashville issued 135 permits for new residential properties in the Green Hills area. Of those properties, many are duplexes or â€œtall skinnies.â€ This is up slightly from 133 permits the previous year but down from 163 issued August 2016-15.
â€œIt appears that new residential construction in Green Hills is driving the current market,â€ Clark said. â€œI would even say the new construction market has taken the strength out of the resale market.â€
Clark said new homes, which are often listed for $800,000 or higher and leave the market before completion, will correct resale listings that he considers to be too high, meaning homeowners will need to become more realistic about their listing prices in order to to attract multiple offers.
â€œWeâ€™re hearing less instances of multiple offers these days,â€ Clark said.
Luxury market holds strong in Belle Meade
The evidence of a strong real estate market lies in the luxury space, where sales are competitive and flying off the market in record time. In Davidson County, there are currently more than 340, million-dollar homes on the market, while a 2014 report lists 150 homes. More than half of the million-dollar homes are located in the 37215 (Green Hills) and 37205 (Belle Meade) zip codes.
On a national scale, a home is considered luxury when listed for $800,000 or higher. In Nashville, a luxury home begins at $1 million.
â€œThe real estate market here is extremely dynamic with a lot of luxury real estate happening,â€ said Fiona King, an agent with Worth Properties, LLC. â€œAnd right now the market in Belle Meade is hot."
King said a home located on a one-acre lot in Belle Meade will likely sell between $750,000 and $3.5 million, although some sales have topped $6 million as of late.
â€œI remember when [luxury homes] were on the market for $500,000. The next thing you know they are $750,000 and then $1.2 million,â€ she continued. â€œThat $1.2 million became $1.6 million, and now now everything is $2.2 million. The incremental changes in what buyers are coming after keep rising.â€
Unlike new construction in Green Hills, the homes are older and in need of renovations. King said buyers in Belle Meade are catering to their specific tastesâ€”not just what might be considered trendyâ€”even if that means investing even more for renovations later on.
"Iâ€™ve sold many in the Belle Meade area recently that need significant improvements, but the prices keep going up," King says. "Five of eight recent properties were listed as needing major renovations, and three of those five homes sold during first two days on market."
To maintain a healthy market, agents suggest pricing with multiple offers in mind
King said she often encounters homes that are listed â€œtoo highâ€ and she worries that if owners insist on charging too much, buyers will go elsewhere.Â
â€œSellers are hearing that the Nashville market is on fire and is the place to move, so naturally everyone wants a premium for their house,â€ King said. â€œBut you have to look at the competition.â€
The best thing for sellers to do, King suggests, is to price the home where multiple buyers will express interest.
â€œBuyers donâ€™t want to pay too much in case the market takes a downturn, and sellers want more because they think the marketâ€™s doing great,â€ she continued.
However, both King and Clark agree that Nashvilleâ€™s housing market, including the Green Hills and Belle Meade areas, will remain healthy.
â€œWe have experienced unprecedented growth as a city over the past decade or so,â€ Clark said. â€œI donâ€™t see a significant slowdown anywhere on the horizon.â€