Stonecrest Townhomes on Cannongates Lane in Murfreesboro.
-- Michelle Morrow | The LedgerWith Nashville housing prices going through the roof, homebuyers continue to look at Rutherford County as an affordable way to work and live near Nashville despite increasing gridlock along the I-24 corridor.
But they may need to hurry and buy, because, even though on average a home in Rutherford County may cost a buyer $100,000 less that a home in Davidson County, Rutherford County is quickly going through whatever inventory is still available, and housing prices there are rising faster than those in Nashville.
Steve Dotson, who heads up Red Realty, a Middle Tennessee real estate company, says a comparison of pricing from March of 2017 to March of 2016, shows that the cost of a home in Rutherford County was up 16 percent as compared with Davidson County’s rise of 14 percent over the same time period.
The author of a real estate blog, redrealty.com/blog, Dotson supplies housing data to banks and realtors in Middle Tennessee. He says that the county’s affordability is the actual reason for the fast increase.
“Rutherford is the only little pocket in Middle Tennessee in that price range. If you want to buy under $300,000, you are probably going to buy in Rutherford County; there are no other options,” Dotson explains. “There is little inventory, and that is going to drive those prices even higher.”
Rutherford County realtor Matt Sargent agrees and adds that buyers no longer want to settle for not getting the extras they are used to seeing in average homes such as great rooms.
“For $200,000 in Nashville, you’re not getting much, but for $200,000 in Murfreesboro, you’re getting a pretty good average house but with some of the amenities people won’t find in other counties around Nashville.”
Looking at higher-end sales, 422 homes have sold for $500,000 or more in Williamson County so far in 2017, Chandler Reports research shows. Rutherford County, in stark contrast, has 20 during that same period. There have been 410 sales of $500K or more in Davidson County in 2017, 35 in Sumner County and 36 in Wilson County.
“The rental market in Nashville is outrageous, that’s pushing people down here, as well. It’s also just cheaper to live in Murfreesboro,’’ Sargent adds.
In Murfreesboro, he says there is a slim week’s worth of housing inventory, meaning they sell fast at and/or above asking price.
“This is a sellers’ market, of course, which means less than four to six months’ worth of inventory, and right now we have less than a month,’’ he points out.
“I would say for houses less than $200,000, we have less than a couple of days. Right now in Middle Tennessee there is just no stock. I am selling homes overnight just from putting a sign in the yard.”
Sargent says he believes that the concept of a “starter” home has gone by the wayside in most areas of Middle Tennessee. Condos, once considered a type of starter home, are fast moving out of that category because of demand for reasonable housing and because some builders are developing high-end condos.
“Condos had become the new starter home, but those are starting to get really expensive,” Sargent points out.
“There are $200,000 condos in Murfreesboro, and that is an average price point when condominiums should be really at the lower end. You have two-bedroom, two-bath condos with no garage selling anywhere between $150,000 and $160,000, when initially they were initially selling at $125,000. Within 18 months they were up to $150,000 and higher.”
With a dearth of available lots to build on in Rutherford County, Dotson says that issue has pushed up the price of buildable lots in the county. “There are really no lots there that are under $60,000, so new homes would have to be over $300,000,” he adds.
Both Dotson and Sargent say comparing Rutherford County to Williamson County is comparing apples to oranges. Williamson County has its own demographic, one in which money is often not an object and when it is, the quality of the schools make it worth the financial effort.
“Franklin is executives and music industry talent, so the average sales price in Williamson County is around $440,000 versus Rutherford county’s, which is around $230,000,” Sargent says.
“I don’t think we’ll ever get to the Franklin level, but Murfreesboro is slowly catching up. We’re never going to be tearing down houses and building $400,000 houses like what is happening in Nashville.”
Dotson agrees.
“They [Rutherford County] are never going to catch up to Williamson County, but that gap is going to narrow,” Dotson explains.
Scott Troxel, president of the Greater Nashville Realtors Association, concurs that the problem isn’t particularly complicated, a lack of “average home” stock being the prime issue.
“I know a lot of people who live in Murfreesboro who work in Nashville even though the drive has become more and more unpredictable,’’ Troxel says.
“Part of the reason is the housing stock down in Murfreesboro is so different. There is such a high demand for that particular medium-priced house, a three-bedroom, two-bath with maybe a bonus [room] over the garage, [is] the most consistent criteria you hear.’’
He adds that without a drop in consumer confidence and/or a hike in interest rates, he doesn’t see the Greater Nashville market cooling down anytime soon.
“Without those two things happening, the dynamics are going to remain very, very strong for the Nashville area,” he says.
As well, Troxel adds, it remains to be seen how long the drive time between Nashville and the Murfreesboro area will be doable for commuters and the employers they have to answer to.
“One day the drive can be 40 minutes and another an hour and a half or two hours,” Troxel says. “It’s tough for employers in Nashville if you have critical employees calling you and saying, ‘Well, I haven’t even made it to La Vergne yet.’”
Sargent says he thinks the market will begin to soften in Rutherford County for home buyers in a few years.
“From what I understand, we are going to get back to a healthy market, which is anywhere between four to six months worth of inventory on the market, somewhere between 2018 and 2020,” Sargent says.
“I don’t expect the market to ever crash like it did because there is simply more government control and lending is tougher.”
Sargent says the time to buy in Rutherford County is now.
He advises being ready to go once a home hits the market and also be willing to pay asking price and closing costs. If homebuyers are willing to wait, they might not only have to deal with higher prices but also higher interests rates, which is expected to happen.
“I think Murfreesboro’s prices will keep climbing,” Sargent points out. “One thing I’m excited about as far as being in real estate in Murfreesboro is I think we are still one of the fastest growing counties in the country so when the market levels out I think we’re going to level out at a much higher spot.’’
Troxel says in the end, growing pains or not, growth benefits everyone.
“It’s healthy for everyone if it’s an appreciating market,” Troxel adds. “Buyers aren’t going to be incentivized as much to buy if values are staying level.
“Everyone wants it to go up. The buyer wants to be able to increase their equity by appreciation and by lowering their principal.
“No one brags about how much they paid down their principal; they brag about how much their home values have gone up.”