Business opportunity and weariness with the culture wars brought Sarah and Brandon Johns from Colorado to Tennessee, where they bought a newly built house in a rapidly redeveloping neighborhood in East Nashville.

“It made sense to establish roots in Nashville, Tennessee,” says Sarah Johns, who is expanding her event and floral design business, Something Styled, from the Denver area to Middle Tennessee.

“The other reason is to be more politically aligned with a state we believe in,” she says.

Cindy Peek moved back to her hometown, Shelbyville, after living in nearby Murfreesboro for 40 years. She purchased a home in Wheatfield, a new subdivision developed by Ole South, and says she is happy to be closer to her grandchildren. Her neighbors include commuters who’ve decided the 60-mile drive to Nashville is a fair trade for Bedford County’s significantly lower home prices.

Higher interest rates have dramatically slowed sales, but buyers are still moving to Nashville or to new neighborhoods within the region, which has grown beyond the “doughnut counties” immediately surrounding Nashville.

Carbine & Associates is building six courtyard homes in its new Green Hills boutique neighborhood, The Enclave at Kimbark.

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“The ‘first-ring’ counties surrounding Nashville have been an attractive and more affordable place to call home for many homebuyers over the years,” says Ole South vice president Trey Lewis. “As home prices and interest rates rise, many are having to stretch their commute into second-ring counties. Putting it simply, ‘drive until you qualify.’”

Longer Commute, Lower Price

Dedrick and Stephanie Tanner added a few miles to their commute but saved thousands of dollars by moving from Murfreesboro to Shelbyville, where they bought a house in Wheatfield.

He works for a Nissan supplier in Rutherford County. She commutes to her office in Brentwood.

“We looked in Rutherford County. It was a bidding war,” Dedrick Tanner says.

Prices can go down as distance from Nashville increases. New construction houses in the neighborhood where the Johns purchased their home, for example, recently listed for $850,000. The couple’s home is in the heart of Nashville, in the Porter Heights neighborhood. The Shelby Bottoms Greenway is a short walk away.

Sixty miles away in Shelbyville’s Wheatfield subdivision, where Ole South is building more than 150 houses, prices range from $262,990 to $332,990.

The average home price in Bedford County was $352,974 in December, the latest figures reported by the Middle Tennessee Association of Realtors reveal. In Davidson County, the median price of a single-family home was $460,000 in January, Greater Nashville Realtors reports.

This Wheatfield home has a spacious interior. Prices in Shelbyville are lower than in nearby Murfreesboro or Franklin.

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Across the nine-county Nashville market, which does not include Bedford County, the median price of a single-family home was $450,000 in January. The price was lowest in Dickson County, $312,500, and highest in Williamson County, where it was $880,000.

Prices varied from county to county: $325,000 in Robertson, $429,490 in Sumner, $330,000 in Cheatham, $440,000 in Wilson, $443,880 in Maury and $412,000 in Rutherford.

By February of this year, the typical home in the nine-county region was only about $4,000 more expensive than in February 2022, but rising interest rates put a damper on sales. There were 2,924 closings in February 2022, and the average home was on the market for 29 days.

Closings fell to 2,186 in February 2023 and homes were typically on the market for 59 days.

Higher interest, less house

Even though closing prices were stable, higher interest rates raised the cost of borrowing money. Some buyers could no longer afford the monthly payment on the house they wanted.

The financial advice website Money Under 30 offers this example: A monthly house payment of $2,834 on a loan with a 3.5% interest rate jumps to $3,801 at 7%. That’s $1,000 more per month for the life of the loan.

Some buyers face a choice of waiting until interest rates come back down or buying a less expensive house.

This Wheatfield features a kitchen open to the great room and seating at the island.

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“People could afford to buy a half-million-dollar house because it was at 3.5%,” says David McGowan, president of Regent Homes. “At 7%, that payment has almost doubled.”

Some homebuilders are offering to buy down interest rates by prepaying discount points. The builder agrees to pay a portion of the interest up front, and the buyer benefits from a lower interest rate and lower monthly payments.

“The combination of higher interest rates, inflation and availability of infrastructure is creating an ‘imperfect storm,’ taking the American dream of homeownership out of the reach of more and more families,” says Lewis at Ole South.

“We continue to pursue opportunities in outlying areas that allow us to offer the most affordable home possible, and making the purchase process extremely easy. In all of our Middle Tennessee neighborhoods, you can purchase a new, move-in-ready market home with just a $99 contract deposit.

“Making it even more attractive, use Ole South’s preferred lender and pay only $99 in total closing costs. Interest rate buy downs are also available, as are zero-down payment programs for first-time buyers,” he says.

McGowan says he worries about the lasting impact of high prices and interest rates.

“Gen Z will start buying in the next four years,” he says. The oldest members of that generation, also known as Zoomers, are approaching 30.

“Will they be able to buy or will they have to rent? Only 57% of the people in the housing market today can afford to buy,” McGowan says.

Regent Homes has launched neighborhoods in locations that might have been unexpected just a few years ago, such as the Sugar Creek subdivision in rural Mt. Pleasant in Maury County and in Fairview in Williamson County.

“Twenty years ago, the reason to go to Fairview was to buy a pony,” McGowan says. “Now we’re selling $700,000 to $900,000 executive homes. They would cost $1 million to $2.5 million in Franklin,” just 25 minutes away.

Smartphones and the ability to work remotely have freed many people from the office, making long commutes less of an issue.

“The Zoom world has definitely affected the high-end real estate world. They can work anywhere,” McGowan says.

Other homebuyers still want to live in the city. A new boutique neighborhood in Green Hills, The Enclave at Kimbark, is a good example. Carbine & Associates is building six courtyard homes. The first are expected to be available within three months.

The courtyard homes, designed by 906 Architects, offer a lock and leave lifestyle in the heart of Green Hills says Daryl Walny, Carbine partner and vice president.

“With an incredible location, we are creating six homes beginning around $1.9 million with square footage ranging from 3,700 up to 4,270 with a cohesive look for the community,” he says.

No Income Tax

Sarah and Brandon Johns say they are happy with their new house in East Nashville, but not with their interest rate of 6.25%.

“Our hope is we can refinance in the next year or so,” she says.

But they are happy about moving to a state with no personal income tax.

“We are taxed like crazy in Colorado. You work your tushy off and the money’s gone,” says Sarah Johns.

The Johns’ story is not unusual, says Realtor Lisa Culp Taylor, team leader at LCT Team Parks. Meredith Zeller, a Realtor with the team, was the Johns’ real estate agent.

“People are moving here for jobs or the way of life. The culture,” Taylor says.

“They enjoy the area. A lot of people are moving here for tax reasons. No state income tax, a better tax environment for them. A lot of times they want to get their families into a slower pace, what they see as a safer area,” she says.

Southern hospitality is a pleasant surprise for many homebuyers new to Nashville.

“So many times I hear they’re in awe of how nice people are,” Taylor says. “People still say hello and thank you, hold the door. As natives, sometimes we don’t know what that means because we’re so accustomed to it.”

Development is taking place in every direction farther and farther from Nashville, especially along interstate corridors.

“You get a little bit more land and more house” in the suburbs. “For people moving from other areas, an hour commute is not a big deal,” Taylor says.