Nashville’s rental landscape has undergone substantial changes following years of double-digit growth, with the influx of new apartments contributing to a softening market.
Nashville has experienced substantial changes in its rental landscape following years of double-digit growth. The city is one of the leaders of the national apartment boom, with the fifth-highest proportion of units currently under construction, according to a study conducted by Matthews Real Estate Investment Service.
Joel Sanders, Founder and CEO of Apartment Insiders, stated:
“This past year, there have been a record number of apartments hit the rental market, I think probably more than Nashville has ever seen”.
The influx of new apartments has contributed to a softening market, with more apartments available than people, causing rents to drop.
“Right now, there are 34,000 apartment units under construction. I don’t believe we are going to be able to fill those all in 2024. I believe it will take until at least 2025 to fill all those apartments.” Sanders mentioned.
For that reason, it has also become increasingly common to see apartment complexes using special deals to compete for renters, such as multiple months rent-free.
Rental Market Predictions in 2024
“Going into 2024, there’s going to be even more apartments hit the rental market…you can just get a nice apartment for a decent price right now,” Sanders added.
These are good news for renters, but how does it affect the rental industry?
As a result, certain developers are adopting a wait-and-see approach, as the calculations for constructing new apartments no longer align as favorably as they did a few years ago, primarily due to elevated interest rates.
Furthermore, alternative financial products offer investors a more attractive return on investment. However, there is anticipation that if interest rates decrease in 2024, a shift could occur in the opposite direction.
“In real estate, everything works in a cycle. If interest rates go down, then you are going to see an uptick in multifamily development activity, whether it’s planning deals or starting them.”