As the supply of affordable homes dries up and more expensive homes sit unsold, many wonder if the city’s frenzied growth has inflated prices to an unsustainable level. Lacy Atkins / The Tennessean
This year’s headlines maintained the fever pitch: “Nashville ranked nation's hottest single-family housing market,” “Nashville’s housing market ranked No. 1 by Zillow,” “Should you invest in Nashville's red-hot housing market?”
 
The region's soaring values — up more than 34 percent over four years — are causing many to wonder: Is Nashville’s housing market in a bubble that’s about to burst?
A few signs are feeding their anxiety. During recent months, some Nashville neighborhoods have seen a distinct slowdown. Sales prices have dropped, the time it takes to sell a home has climbed, and the number of homes sold has slipped, compared to the same months in 2016. Hardest hit have been expensive neighborhoods and those in the urban core flooded with new infill development.
But the correction hasn’t been felt across the region. In less expensive areas like Donelson and parts of Lebanon and Murfreesboro, prices are still climbing by double-digits compared to the previous year, and homes are selling quickly.
While pockets are cooling down, experts don’t expect a sharp, widespread decline in home values similar to the last housing bust in 2008-09. A bubble, by definition, would have to burst.
Experts say the strong regional economy should sustain a healthy residential market in the foreseeable future. Unemployment is at record low levels and average wages are increasing. People continue to move here from across the country, often willing to spend more than the historical Middle Tennessee buyer.
“It’s really hard to think of scenario that exists where there is a bubble in Nashville,” said Nela Richardson, the chief economist for the national real estate company Redfin. “You might see some price elevation that makes it unaffordable to some people locally, but it doesn’t mean those prices are unsustainable."
Nonetheless, the greater Nashville metro area has cooled slightly in 2017 compared to the previous three years.

Houses selling more slowly 

One key indicator is the “days on market,” or the number of days a home takes to sell after it was listed. The faster the sales time, the hotter the market. For 39 consecutive months until October 2016, the median days on market in the Nashville metro area dropped compared to the same month a year earlier, according to sales data provided by Redfin. Since then, the number of days has increased in five of the past 13 months, compared to the same months in 2016.
“A lot of people got used to that rate of growth and now that it’s more normal, people have more fear,” said Robby Stone, an agent with Village Real Estate. “That’s not something we should be scared of. Buyers should be able to take their time.”
Stone's company has been trying to sell a new house in East Nashville for more than a year, a pace he admits "sounds terrible." His client, Aerial Development Group, tore down a tiny $165,000 house in Shelby Hills and built a four-bedroom navy blue house will all the latest design trends. Village Real Estate listed it for $649,000. The house hasn’t moved.