Jul 19, 2023 - Real Estate

"Golden handcuffs" pinch Nashville housing supply

Data: Redfin; Chart: Alice Feng/Axios Visuals

Sixty percent of homeowners with mortgages in Tennessee had a rate at or below 4% as of late last year, per Redfin data shared with Axios.

  • That's locking homeowners in place and leaving buyers with fewer homes to choose from.

Why it matters: Mortgage holders are experiencing the "golden handcuffs" phenomenon, Axios' Brianna Crane reports.

  • They might have a great rate now, but likely can't move without spending a lot more cash, explains Redfin chief economist Daryl Fairweather.

By the numbers: In the Nashville metro area, buying a median-priced home in 2021, which came in at $376,990, at a 3% rate would correspond to monthly mortgage payments of $1,815, per Redfin.

  • At 6.4% — the average U.S. rate in May — a home at the same price would have an estimated monthly payment of $2,441 per month.

State of play: This dynamic is pinching inventory in Nashville. Although new construction has driven modest gains, inventory still remains well below 2019 levels.

  • "Interest rates continue to drive the market for both buyers and sellers," Kevin Wilson, president-elect of Greater Nashville Realtors, tells Axios.
  • "Because most homeowners either bought or refinanced with rates below 4%, they have less incentive to put their home on the market."
  • Wilson ties interest rates with strong sales numbers for condos, saying some buyers are skewing toward lower-cost options to make up for the rate hikes.

Zoom out: It's not just a local issue. Nine in 10 U.S. homeowners secured mortgage rates below 6% as of late 2022, per the new Redfin report. Meanwhile, mortgage rates have swung between 6% and 7% nationally in recent months.


Get more local stories in your inbox with Axios Nashville.


Support local journalism by becoming a member.

Learn more

More Nashville stories

No stories could be found


Get a free daily digest of the most important news in your backyard with Axios Nashville.


Support local journalism by becoming a member.

Learn more