Rising interest rates were the center of discussion when the Greater Nashville Realtors presented Nashonomics, a look at real estate market conditions in the Greater Nashville area.

What’s in a rate? The answer is that on a $480,000, 30-year fixed, 6% loan, the payment would be $2,877.84 per month. At 4%, the same loan would have a payment of $2,222.95. That difference of almost $655 means that a person must make an additional $2,000 per month, or $24,000 annually, in order to be able to buy the same house.

To make matters worse, real estate prices are holding to the values they had when rates were 4%.

When rates remain the same for a few years and prices inch upward – a scenario that settled upon the Nashville area for most of the last 30 years – Nashvillians bought each others houses when conditions in their lives changed. If a single person bought a home and then needed a larger home, there was equity in the current home to put down on the future home, and the interest rates were close to the same, so the overall monthly payment did not change much.

Now there is an onslaught of buyers migrating into the area, bringing with them a bundle of cash to invest in the property or a need to buy regardless of rates because their companies are relocating. This environment allows prices to remain firm as the supply is low. Inventory remains low because those with 4% rates are staying in their homes and avoiding 6% rates.

With divorce, death, change in financial condition (for better or worse) and aging remaining as the main reasons that existing houses come on the market, the inventory is stagnant and will remain so.

Banks are closing ranks on speculative homebuilders, as well. Builders who were able to keep six or seven homes under construction are now only allowed to have two or three going at once.

Large builders are buying land for development, but they are using 2026 and 2027 as targets for finished construction. Many are planning for another boom in 2026. Until then, lenders feel 5% is the new normal.

Sale of the Week

Once again, a $3 million sale has occurred in a land where such pricy transactions are not pervasive.

Last week, 8170 Charlotte Pike – near the confluence of Charlotte Pike and Highway 70 South in Bellevue – sold for $3 million, even after listing agent Brittany Meurer brought the property to the market at $3.199 million. Meurer’s license rests in the Berkshire Hathaway Home Services Woodmont office, where principal broker Ginger Holmes runs the show.

The property includes 50 acres, which accounts for some of the price, but the manse that rests upon the acreage has 4,878 square feet with four bedrooms, four full bathrooms and two half bathrooms. The $656 price per square is slightly deceptive as the acreage has no bearing of price per square foot, nor do pools, garages, hardscape and landscape. Sale price divided by square feet is the price per square foot.

The owner of this house purchased the residence in 2021 for $1,875,000. Listing agent Brittany Meurer, one of the most effective brokers in town, noted “the backyard features miles of trails, a pond, a heated pool and hot tub.” The home includes “a gourmet kitchen with designer finishes, an oversized island and butler’s pantry and opens to a family room with a stone fireplace,” she adds.

With that much land, Meurer noted that there was an all-terrain vehicle available with the property, and that the property has a greenbelt designation. The home was built in 2020 and is, along with the pool, under warranty, another piece of the real estate puzzle not included in price per square foot.

Many buyers place too much emphasis of price per square foot and do not consider the age of the mechanicals or the money invested in the house that added no square footage. For example, is a house priced at $500 per square foot with aging equipment a better deal than the house next door at $600 per square foot with two new HVAC units, a new roof, new kitchen appliances, new copper and PVC plumbing and a pool.

Those improvements could cost as much as $350,000, or $100 per foot on a 3,500 square foot house.

Just as all feet are not the same, all square feet are not the same.

Richard Courtney is a licensed real estate broker with Fridrich & Clark Realty, LLC and can be reached at Richard @richardcourtney.com.