Is Tennessee The Next Housing Market To Drop?

The US housing market is off to a slow start at the beginning of the spring selling season, as highlighted in our most recent note, "Goldman's Housing Heat Map Shows a Tepid Start to the Selling Season."

Nick Gerli, CEO and founder of real estate analytics firm Reventure Consulting, has highlighted for many months very alarming figures of soaring housing supply in several US housing markets, including Florida and Texas. 

Gerli has now focused on the Tennessee housing market, asking: "Is Tennessee the next market to drop?"

Is Tennessee the next market to drop?

Active listings now up to 25,000 across the state.

Highest level of inventory since 2017.

Watch out in Nashville, Knoxville and Memphis, where supply has spiked most. pic.twitter.com/MQU9Kt6lOm

— Nick Gerli (@nickgerli1) March 9, 2025

Gerli wrote:

"Inventory is spiking in Tennessee due to a slowdown in buyer demand mixed with a large pipeline of builder inventory. Like most Sun Belt markets, prices in Tennessee skyrocketed during the pandemic (+56%) and locals are now priced out." 

He touched on affordability woes plaguing buyers.

2) The typical mortgage payment for a homebuyer in Tennessee is now 35% of the state's median household income.

You can see there is no historical precedent for affordability being that bad.

The long-term average Mtg Payment / Income ratio is 21%. pic.twitter.com/SHtLxfDzVz

— Nick Gerli (@nickgerli1) March 9, 2025

The housing expert believes rising inventory should lead to a "modest correction in the market"... 

4) But those growth figures could turn into contraction as 2025 progresses due to the inventory build up.

There is typically a 6-12 month lag between when inventory increases and when it shows up in the YoY price figures.

— Nick Gerli (@nickgerli1) March 9, 2025

Supply in Nashville has topped 2010 levels. 

5) Nashville is a market that is on my watch list.

We're now flirting w/ the highest supply on record in Nashville going back to the mid-2010s. pic.twitter.com/w5MPSazfaU

— Nick Gerli (@nickgerli1) March 9, 2025

And Knoxville.

6) Knoxville is also gaining.

Inventory here is up to highest level since 2019, after remaining low for a long-time after pandemic. pic.twitter.com/nCU19cTD74

— Nick Gerli (@nickgerli1) March 9, 2025

Nashville's housing market was one of those red-hot markets during the Covid era. However, the party ended with interest rate spikes in 2022.

The 30-year mortgage rate still trends around 7%. 

Jeff Checko, the relocation director with The Ashton Real Estate Group of RE/MAX Advantage, recently provided insight into the Nashville housing market to local outlet WKRN, stating that normalization will continue through the spring selling season.

"We saw signs of things returning to a typical seasonal market this year, with interest rates getting back into the sixes and the mid-sixes, and then it was kind of one step forward, one step back, one step forward, one step back again," Checko said, adding, "We're hoping that we get something kind of normal for the first time in about half a decade."

The question for Nashville real estate is whether the soaring housing supply will lead to normalization or a more pronounced downturn, as Gerli asked.