Jesus Christ, maybe I should sell something and buy in Nashville. My aversion to country music and fear of tornados be damned.
According to a Redfin update that crossed my radar on Saturday, home sellers outnumbered buyers in the Music City 2.4 to 1 last month, an astounding statistic that suggests a well-qualified house hunter could drive a very, very hard bargain.
Let me take this opportunity to reiterate that Redfin’s data section is a macro lover’s dream. Their figures are more timely, better researched and far more comprehensive than any other housing market datasets I’ve come across in a decade of writing for public consumption.
Although not every locale’s as buyer-friendly as “Nashvegas,” a return to seven-handle mortgage rates and the associated hit to demand pushed the nationwide buyer-seller imbalance — which was already quite extreme — higher still in August.
As the figure above shows, there were nearly 60% more sellers than buyers last month, a dramatic increase from July’s record-high north of 52%.
If that estimate’s even close to right, buyers have the most leverage since whatever these figures would’ve looked like had the data been available post-subprime collapse.
At the risk of exaggerating, an all-cash buyer in a market like Nashville could conceivably secure the economic equivalent of a 20% discount to original list, inclusive of price cuts, concessions, transaction cost credits and inspection-related leverage. Depending, obviously, on the property and the seller’s circumstances.
The figure below shows you the buyer and seller counts from the same Redfin series.
As you can see from the orange dot, the widening gap was driven in August by a 4% jump in listings, which were the highest in half a dozen years. The number of buyers was more or less unchanged from July’s record low.
Other housing data out this month showed builder sentiment remained severely depressed in September, while an uptick in single-family starts in government data covering August belied a drop in permits and the fewest completions since February of 2019.
“With sellers piling into the market and demand falling flat, today’s house hunters can afford to be choosy,” one of Redfin’s economists told Dana Anderson. “Even during a time when housing costs are elevated, the surplus of sellers over buyers makes it a good time to be a house hunter.”
The only question is: Who’s coming with me to Nashville? They’ve got a Louis, a Gucci, a Christian Louboutin, a D&G, a Saint Laurent, two professional sports teams and, as of last year, a trio of Michelin starred restaurants.
I envy you, H, for your ability to conduct lifestyle arbitrage — though not for the rough road that led you there, or for your tendency to weltschmerz and self-isolation.
Nah, no NBA team in Nashville.
An issue for me as well, though I’ve been tempted after a couple of trips there…
With sellers mostly unwilling to come down in price, and buyers unable to afford higher mortgage payments, a sort of artificial price floor has materialized in the housing market, resulting in a large surplus of unsold homes. Econ 101 teaches us that sellers should now lower their prices, homes should become more affordable, and we should eventually achieve a new market equilibrium, but that really hasn’t happened throughout most of the country. Why not?
The explanation we have been offered is that sellers (mostly Baby Boomers) lack the incentive to lower prices, mostly because they have (1st or 2nd) homes that are already paid-off, or they managed to lock-in low mortgage rates a few years ago. Why are they selling then? If “sellers” are just toying with selling, hoping to cash-in (or out?) at a high price, that clearly isn’t working for most of them, hence the large surplus.
Inflation and higher interest rates may be with us for some time now, as a faltering Trump has no real plans to fix any of this. But we would likely have to see jobs roll over first — or a portfolio altering correction in the stock market — before more sellers would likely feel “incentivized” to sell. Nashville — and a handful of other places where building activity has been higher recently — are perhaps “the tip of the spear,” as the market finally begins to turn. Prices are already coming down in several regions of the country, but homes could be getting even more affordable soon if two wars, an oil crisis, inflation, and higher interest rates finally manage to break something. (I myself envision things moving slowly at first, then all-at-once.) In the meantime, keep an eye on those (somewhat suspicious?) jobs and foreclosure numbers.
Speaking from personal experience and chats with other geezers: if you are speaking of boomers looking to sell second or third homes, what you said makes sense. (Though, rising homeowner insurances and property tax rates may alter this?)
But for the seller of a primary residence to downsize a bit, where do you move and.at WHAT PRICE? Sometimes the options aren’t all that attractive.
A most valid point. My wife and I sold our home of some 20-years about two-years ago for nearly three-times what we originally paid for it. In order to pocket most of that, we had to downsize and move two counties away. (We also moved to a 55-and-older community in order to eliminate competition for a smaller home from first-time buyers.) So a part of the bottleneck must also be retirees hoping to sell, but unable to profitably downsize in an overpriced market. My wife and I searched extensively before making our decision — which was not an easy one. Even if the market were to decline, I don’t see that equation improving much, as your buying price would be declining at the same time as your selling price, leaving you SNAFU all over again. What to do, what to do?
I declined the ask to move to Nashville a few years back. Great place to visit with work but country music gets old real quick and I only like some of my food fried. They’d also had another school shouting so I figured that no responsible parent in Europe should take that trade. I remember at the time the housing market there was going absolute bananas and even senior managers were struggling to afford. Guess their purchases must be underwater now.
Add in the fact that Tennessee has zero income tax, and that move is compelling. Would you consider an adjunct teaching position at Vanderbilt (they’d be lucky to have you and I am guessing that in a very short timeframe, there would be a very long waiting list to get into your class)? Could be a great opportunity for you to find your next chapter.
I am looking at other alternatives, further west of my current state but still in the mountains, if my current state votes to replace a flat tax (4.4%) with a graduated tax. Even though I would not immediately be impacted by higher rates- that mentality (which might lead to lowering income thresholds for higher rates in the future) is something I want to avoid. Plus, I like to shake it off….I mean up (guessing you aren’t a Swiftie). 🙂
One of my best trips ever was to Nashville. Perhaps the craziest thing about it was it was a business trip. PJM had a conference there, and my boss announced he was going and brought a few of us along. One of his favorite musician, Pat Green, was going to be performing there and he (the boss) didn’t want to miss it.
We went to the conference, checked in, got our name tags, and never went back.
The Country Music Hall of Fame was surprisingly interesting. Now would be a good time to mention that I don’t really like country music. The HoF was fascinating though, as museums tend to be.
The first night, we just went bar hopping to places we could walk from our hotel. Every bar had live music. That’s just a thing in Nashville. And it was good. Everywhere. Out of bars, we walked back to the hotel, and we got there just as a limo was pulling up to disgorge some passengers.
Drunk and full of piss & vinegar, I hopped into the limo uninvited and shouted to my coworkers to jump on in. They… were skeptical. The driver came over and gave me a dirty look, so I handed him a Benjamin and said, “Take us somewhere cool!” He shrugged, took the bill, and my coworkers piled in.
He drove us to Coyote Ugly. It’s overrated, but the bartenders were hot. My boss paid for me to do a “body shot” off one of the women who worked there. Also overrated, but tequila’s tequila.
The next night was the Pat Green performance. Green was actually performing at a charity event at some ginormous saloon (probably seated close to 500). Thanks to the bossman, we had premium seats up in the loft. There were 4 performers: Barns Courtney (the real headliner for those who don’t know country), Green, some dude whose name I forget, and Brian Vander Ark, the former lead singer of the Verve Pipe, who was launching a solo career. They each took turns performing solo, then sat down together and jammed for the finale. It was amazing, and again, I’m not a big country music fan. Seeing stars like Courtney, Green, and Ark just sitting on a stool with a guitar performing whatever they wanted was just perfect.
After Ark had finished his set, someone in the audience yelled out for “Freshmen” (The Verve Pipe’s one hit wonder). Ark obliged, but he put down his guitar and sang it acapella. It was haunting. You could have heard a pin drop.
Afterwards, Green came up to say, “Hi,” to my boss. Turns out they knew each other from back in the day (boss would later hire him to play for his wife’s 40th birthday party). Green told us what bar they were heading to afterwards, which is how we wound up at a tiny dive bar in the outskirts of Nashville after midnight listening to some of country’s greatest talents just jamming on a tiny stage in the corner.
Magical.
My brain is playing tricks on me. I was just listening to a Barnes Courtney song (Glitter & Gold is a banger). He wasn’t the headliner. It was Dierks Bentley.