A glut of new apartments is softening the rental market
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An influx of new apartment construction is helping to create a more hospitable market for Nashville renters.
Why it matters: Tenants have more options as the metro area's supply of apartments continues to grow while many residents struggle to buy a home.
- Many property owners have responded by tamping down rent hikes that had become commonplace in recent years.
- Meanwhile, luxury apartment complexes are rolling out new bargains.
Driving the news: As we reported last month, Nashville is one of the cities leading a national apartment boom. The metro area's vacancy rate for rental properties has ticked up as more and more new options have come online.
- According to an analysis from Matthews Real Estate Investment Services, the vacancy rate for rental properties passed 10% in the second quarter of this year, higher than it's been in 20 years.
- The firm predicted the vacancy rate could continue to grow through the rest of the year.
What they're saying: Tara DeSelms, a local realtor who also owns a property management company, tells Axios that successful property owners have had to pull back on rent prices.
- "It's simple supply and demand," she says. "The supply is increased, which will naturally cause the market to soften."
State of play: Big apartment complexes are using special deals to compete for renters.
- The Tennessean recently reported that it's become increasingly common to see large apartment buildings offer multiple months rent-free.
- "This is absolutely the most concessionary environment I've ever seen," Joel Sanders, CEO of Apartment Insiders, said in a similar report from the Nashville Business Journal.
- "Whenever we would previously see some concessions being offered, three months free would pop up every now and then. So now I'm saying it's a regular thing we see, and that's somewhat unusual. I expect that to continue into 2024."
Yes, but: There are signs that housing vacancies in Nashville are lower than the rest of the country.
- The overall vacancy rate for housing units in the Nashville area was about 6.5%, according to a LendingTree analysis of 2022 census data. That's below the average for the country's 50 biggest metropolitan areas.
- Rentals accounted for the largest share of those vacancies. But DeSelms says Nashville's lower-than-average placement in that ranking suggests the market remains relatively stable.