Investor interest in the Nashville housing market is fading somewhat, creating an opening for would-be homebuyers, according to new data from Redfin.
The brokerage and data company found that investors bought nearly a quarter of homes sold in the Nashville area in the first quarter of 2022, but that the total number of Nashville homes bought by investors was down more than 16 percent from the fourth quarter of 2021. That can partly be explained by a slowing housing market overall, as national trends allowed investors to represent a larger market share while still buying fewer homes than in previous record quarters.
According to Redfin, home purchases by investors increased at the start of the pandemic. Investors bought approximately 59,558 homes nationally in the first quarter of 2021, and that number jumped to 87,910 homes in the fourth quarter of that year.
Local real estate agent Milton Greene said investors may be turning their attention more to commercial and multifamily properties rather than single-family homes. And that could mean it’s a good time for independent buyers to enter the market, despite rising interest rates.
“It is beneficial for regular homebuyers because they're no longer competing with conglomerates and hedge funds and investors on single-family residences,” he said. “Although some people are getting priced out, for those who are still able to purchase, they won't have as much competition with people who have unlimited sources of cash, which was the issue that kind of started this housing market issue in the first.”
However, as the market is looking better for prospective homeowners, the rental market is looking worse. Nashville is among the top cities for increases in rental rates, according to multiple reports.
With rent on the rise, Green notes an additional benefit for the homebuying market. (Still, the rent hikes make it harder for most potential buyers to save for a down payment.)
“The knowledge of generational wealth within real estate being more widespread now is the reason that people who were previously renting now understand the value of a home,” Greene said. “People who have friends purchasing homes see how much equity that they put in their home over time. Why waste money paying for something that you'll never own when you could buy something that's going to go up in value over time?”