Nashville Multifamily Market Report
Widening Affordability Gap Provides Impetus for Construction;
Lower Tiers Tighten in Outer Metro
Mortgage rates skyrocket, initiating rental development. The relative affordability of apartments has reached a record in Nashville, urging a growing number of developers to bet on future rental demand gains. The difference between the metro's average monthly mortgage payment on a median priced home compared to the mean rent obligation reached an all-time high of $1,320 in the second quarter, doubling since the end of 2020. Many households will delay homebuying amid high mortgage rates, prices and inflation. At the same time, rentals offer greater flexibility via short-term leases and are often in better locations than entry-level homes. This is encouraging historic apartment development, with Central and North Nashville as the primary focal points after recording the largest Class A vacancy contractions in recent quarters. Many young professionals favor these areas, supporting tight conditions that should allow operators to comfortably lift rates as projects finalize.