Decreasing rental demand could ease housing inventory

Friday, January 26, 2018, Vol. 42, No. 4

Once the city thawed, out-of-town buyers from all directions awakened and descended upon Nashville’s scant inventory.

Houses were swarmed with buyers making showing appointments as difficult to arrange as dinner reservations. Based on conversations with open house visitors, many are learning the wonders of Nashville and migrating to the area to see for themselves.

From all accounts, Nashville does not disappoint. Newcomers love it here. Unlike those who have resided here for years, they have no past to compare to today’s traffic situation. Many in search of a city have no issues with Nashville traffic.

Perhaps it is the threat of hurricanes in Florida, but many seniors are flocking to the area.

Their inhabitation is balanced by a like number of single millennials. Neither group is overly concerned with public education. For them, the two areas that many feel are Nashville’s most glaring weaknesses do not exist.

The most aggravating feature of the region is that there is little inventory. As has been noted, real estate sales for the Greater Nashville area are setting records yet showing modest growth.

But the numbers could be insane if there were houses and condos available for purchase.

There may be a solution on the horizon.

In late 2008, the city joined the rest of the country in the Great Recession. As Nashville Chamber president Ralph Schulz understandably loves to proclaim, Nashville was one of the last into the Recession and one of the first to begin to recover.

It was a recovery that eclipsed the prior condition.

During the period that the city evolved from a fractured, suffering city to an “It” city, investors scooped up properties in record numbers.

With the Airbnb craze, money was falling like manna from the sky into investors’ pockets.

Much of the city’s prosperity was due to the sudden proliferation of apartment buildings, with cranes crowding the skyline.

Most banks and other lenders had decided that there would be no more loans for condominiums, but it seemed any developer that could fog a mirror could revive funding for apartments.

With the success of the Music City Center, private money began to flow into the development of hotels. Now in the eighth year of the post-recession economy, things are changing.

Apartments are beginning to have vacancies with many offering two months free rent to new residents or two months free rent to residents that refer new residents. And don’t forget the free Apple television.

With non-owner occupant Airbnbs in peril, there are investors who will not realize the return they need on their properties.

Weep not for them. They had their fun while it lasted.

Investors with older homes that are long-term rentals are finding the competing apartment incentives are causing their rents to decrease, often to the point that it is not feasible to retain the properties.

Most bought at bargain-basket prices and have prospered during the fiscal “It”-ness.

Even with rental income falling, the overall price of the properties has increased by immense proportions.

Look for these properties to begin to flow into the marketplace.

This influx will not affect prices negatively, but will help fill the void that has been plaguing the market for the past several years.

As these homes that were former rentals drop in, buyers should beware. The owner investors have never inhabited the houses and have no idea of the shortcomings that the dwellings may have.

Most of these owners respond only to complaints, and many renters would not feel compelled to report drainage issues that may cause structural damage.

In the cases of synthetic stucco, neither renter nor owner would be aware of slight cracks in the caulking allowing leaks that provide moisture to the subterranean termites that begin to shim up the framing, finding fine dining and nourishment along the way.

Even when EIFS houses are inspected for moisture, the damage may not be evident as the wood that has made its way into the belly of beasts will not register as moist for it no longer exists.

Often plumbing loosens from its joints and raw sewage is dumped into the unsuspecting crawl space below.

This can go on for years with the renter unaware that each time the garbage disposal runs or the commodes are flushed that the sewers are none the worse for wear, as the sewage never finds its way to the sewer.

If waste does not hit the sewer, is it, in fact sewage?

Often roofs leak, but the water never makes its way into the living quarters, choosing to pool in the attic and grow its own crop of mold.

And crawl spaces throughout the land are teeming with dry rot.

Richard Courtney is a licensed real estate broker with Christianson, Patterson, Courtney and Associates and can be reached at