If you live in the United States, you’ve probably heard rumors of a “recession” coming in our near future. In fact, many economists believe that our next recession will happen by the end of 2020. Whether it’s due to U.S. trade policy, interest rates or a stock market crash, a recession is eminent and there’s not much we can do to stop it. However, if you’re a Nashville resident, we may have good news for you! Especially if you’re planning to buy or sell a home in the coming years, it might be helpful for you to understand where Nashville will stand when the next recession comes!
First, let’s discuss what is considered a “recession” in economic terms. Real estate prices and trends must decline for three straight quarters for a market to be considered “in a recession”, If it declines and upticks shortly after before declining again, this is NOT a recession. During the past three recessions, Nashville actually came out of them stronger and in better shape than many other parts of the nation. During the Great Recession (yes, we’re talking about 2007-2009), we saw a huge hit to our economy when banks shut down financing in an instant, lending was at an all-time low and home sales dropped in half. But what was happening in Nashville in the meantime? A local Nashville real estate brokerage stated, “From the peak in 2007 to the trough in 2009, the median sales decreased from $184,000 to a low of $165,995, or a 9.8% drop in median price.” Compared to the rest of the country, the outlook in Nashville wasn’t looking too bad. Most of the country averaged a 33% drop in value, when Nashville was experiencing less than a 10% drop..
If you are one of the future home buyers who are waiting for the next recession to buy a home, you might be interested in reading our previous blog post to find out why that might not be in your best interest. Especially if it’s true that Nashville will hopefully continue to withstand future recessions, waiting for the next recession to buy a home would especially not be wise! If we take a look at past recessions that our country has experienced, Nashville still proved to be in a better position than the rest of the country! In 2000-2001, the dot-com bubble “burst” and 9/11 occurred. During this time, “home sales in Nashville increased from 24,811 to 26,556, or about 7%. And median home prices over the same time period increased by 2%.” When the 1990 recession occurred, during Operation Desert Storm and the price of oil was on the rise, home sales were shown to rise by 4% during this economic drop as well.
There are a few things that we can look out for when it comes to our next recession, but Nashville seems to be steering clear from these warning signs for now! The first thing we can do is watch for consumer trends. During times of economic downfall, consumers tend to spend less and begin to lose confidence. But according to the Tennessean, Nashville’s retail market is seeing incredible growth! One retail expert claims, “There is something like 200 projects in Nashville alone currently underway, which is incredible. I think it speaks highly to the local economy that there is money to do it and there is investment being put it into it.” Other things that point to a recession are car sales lowering, the stock market decreasing, people building homes less frequently and inflation heating up. Factories will begin to quiet down and unemployment will be on the rise. However, when comparing Nashville’s present state to the rest of the country, unemployment is 2.7% in Nashville while the United State’s average is 3.7%. Nashville is also seeing growth every day when it comes to new companies (hello, Amazon!) and new homes constantly being built in so many areas!
Though many economists do not believe the next recession will be as bad as our last one (more of a market correction), it’s comforting to know that Nashville should come out strong once again! But if you are eagerly waiting for the next recession to buy a home in hopes of the housing market dropping like it did in 2008, we suggest that you think again! There’s no better time than now to become a homeowner. If you or anyone you know is looking to buy, sell or invest in the Nashville or Middle Tennessee area, or if you need real estate advice, let us know! We’d love to help!