NASHVILLE, Tenn. (WKRN) — If you’re looking for a place to live, you probably think renting is cheaper than buying a house. But a study shows that might not be true in Nashville.
Research from Clever, a real estate data company, found that renting is cheaper than buying a home in most major US markets. Nashville was one of seven cities where rent price increases outpaced house price gains.
Since 2000, rent prices in Nashville have increased 256%, compared to home value prices, which have increased 179%.
For tenants moving to Nashville, apartment locators like Joel Sanders see customers reeling from sticker shock daily.
“People sometimes have budgets close to $2,000 these days, and often they could have afforded a bedroom [apartment] and had a choice of a room,” said Sanders, who is the president and CEO of Apartment Insiders. “Now it’s starting to get more limited, and these people want to find a roommate so they can get nearly $3,000 two-bedrooms in Nashville.”
What was once a mortgage payment doesn’t even reduce it when it comes to the cost of rents in Nashville these days.
“People who are able to afford a mortgage payment of $2,300, right now once you include taxes and insurance, and look at what your buying options are in Nashville, because the rates of ‘interest has recently increased quite a bit, you don’t have a lot of options,’ Sanders said.
As a result, the American dream of owning a home takes a back seat. This also creates a new problem.
“So these people are pushed into the rental market and they can afford a $2,300 apartment, and when there’s this high-quality demand there, that’s one of the issues that makes drive up rental rates,” Sanders explained.
Clever Real Estate researchers found that over the past two decades, Nashville has seen the highest rent increases of any major market they’ve studied.
“It’s just unsustainable. The increase in the cost of living and wages and salaries does not increase with this cost of living. It’s just more expensive to afford the simple financial conveniences that previous generations were able to afford,” said Danetha Doe, economist at Clever Real Estate.
Both Doe and Sanders pointed out that wages are not keeping up with this rise in rents or the historic inflation the United States is currently experiencing. Research by Clever Real Estate found that rent prices in the United States are rising four times faster than salaries.
“I would say I’m deeply concerned,” Doe said. “It means the money they bring in doesn’t go as far as it used to, whether it’s to cover groceries, rent, paying their mortgage, transportation. We all know that prices have also increased. And it becomes difficult for families and individuals who are just trying to make ends meet.
Doe added that people no longer have money to spend on extras, which is impacting quality of life.
For tenants moving to Nashville, Sanders said many had to choose between location, amenities and whether to split their rent with a roommate. He said renters were willing to drive to places like Columbia, Clarksville and Ashland City to find more affordable housing.
Sanders hopes rents will stabilize based on the number of apartments currently under construction, but he said it was too early to tell.
For more information on the Clever Real Estate study, click here.