It is 2015, nearly eight years since the beginning of the end of the nationwide housing bubble that grew in the mid 2000’s. Different parts of the country were impacted more severely than others, and some areas still haven’t recovered completely. Meanwhile, enough time has passed that a few cities such as Austin, Miami, San Francisco, and Los Angeles are experiencing rapid price increases and heavy demand. Are the real estate prices in some cities becoming overvalued again? What does a housing bubble look like? And how can you tell if you are in the middle of one? It seems like it would be easily recognizable, but history has told us otherwise. Investopedia smartly defines a housing bubble as:
A run-up in housing prices fueled by demand, speculation and the belief that recent history is an infallible forecast of the future. Housing bubbles usually start with an increase in demand (a shift to the right in the demand curve), in the face of limited supply which takes a relatively long period of time to replenish and increase. Speculators enter the market, believing that profits can be made through short-term buying and selling. This further drives demand. At some point, demand decreases (a shift to the left in the demand curve), or stagnates at the same time supply increases, resulting in a sharp drop in prices – and the bubble bursts.
The featured house of the week is 1709 Tyne Boulevard Nashville, TN 37215. It is a three bedroom, three and a half bathroom modern style dwelling that was built in 1989. The listing agent, Barbara Moutenot with Village Real Estate Services, says the house has a, “flowing floorplan with spacious rooms and soaring ceilings, truly one of a kind.” Situated on 5.2 acres of wooded land in the Forest Hills neighborhood, the property’s list price is $1,850,000. It has over 4600 square feet of living area and a two car garage. Ms. Moutenot says that it has, “stunning views of downtown and nature.” The winding driveway turns off of Tyne Blvd. and leads up to the home, perched on a hill where downtown Nashville is visible about eight miles away.
Nashville is a nice place to live. More people are figuring that out and moving here every year. But just because Nashville is the “It City” doesn’t mean that everything is perfect, so here are the top ten new year’s resolutions for beloved Music City.
10. More mixed-use development. Nashville needs more neighborhood commercial uses and live/work units. Traffic is becoming more of an issue throughout the city and strategic zoning will help solve traffic problems as much as anything. There are four different Mixed Use zoning designations that have varying levels of “intensity,” but they all allow for a combination of residential, retail, and office uses. When CL (commercial limited) zoning is applied to a property, it allows retail, office, restaurant, and other consumer service uses. Imagine walking to the corner store for a gallon of milk instead of dealing with the drive that includes two left turns and a prolonged search for a parking space (Green Hills Kroger) before even getting in the door of the shopping center grocery store.
9. Lower property tax rates. Nashville has benefited from a tremendous amount of infill development over the past few years. Because the existing infrastructure is already in place, the city accounts gain from a larger tax base, without the same expenses of new development on the fringes of the county. Also the assessed values for properties in nearly all neighborhoods will be higher from the rapid appreciation of the past two years. Rates can be lowered and the total taxes collected can still be the same or greater. This is a similar concept to the Laffer Curve. If rates aren’t lowered and the property taxes rise, some families will move to neighboring counties, or out of the area altogether. Higher taxes also typically cause rents to increase, as the tax burden often gets passed on to the tenants, who may be forced to move as well. Low property taxes will keep the city open to more economically diverse residents, and widen the tax base with more growth.
8. Fix the caving in walkway at Radnor Lake. I haven’t met anyone that doesn’t like Radnor Lake State Natural Area. Most Nashvillians see it as a treasure, but the walkway that used to be Otter Creek Road has been deteriorating and getting worse every year. Now the ankle-spraining cracked pavement seems to be sinking in toward the lake. I know it is a State Park and therefore should receive funding from the state. But if the Metro Council and Mayor Karl Dean can easily approve the $18 million dollar Gulch-Sobro pedestrian bridge, then surely they can toss a couple million from the Capital Improvement Budget toward one of the best green spaces in the city.
The featured house this week is 5854 Fredricksburg Drive, Nashville, TN 37215. View the full MLS listing here, and additional photos and a video tour here. I’ll go ahead and disclose that this is a property that I own, as my family enjoyed many great memories in the seven years we lived here. But now this modern retreat is fully renovated and ready for new owners. It was designed by a local architect in 1969, and construction was completed in 1971. My family purchased it from the original owners in 2007. It had been meticulously maintained and retained all originality, right down to the avacado cooktop and range hood.