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Moving to Music City: Should You Rent or Buy a House in Nashville? [Spec Clip]

Updated: Jul 22


Come for the music! Stay for the market!


Business is booming in Tennessee’s capital. While Nashville is still a renowned tourist destination, the city has grown into an entertainment, healthcare, and tech hub. In fact, Nashville’s economy was ranked 8th Best-Performing in 2021 due to its thriving job market and dynamic startup scene.


If your next stage is Music City, the first question is:

Should you rent or buy a house in Nashville?

This question is so critical it deserves a closer look. The wrong choice could cost you thousands over time. To help you make the wisest choice, let’s break the question down:


In this article, we’ll cover:


Your Situation

Assuming you want to make the best financial decision possible, we’ll focus on what you should do.


But your preferences matter, too!


Your Lifestyle

Why are you considering whether to rent or buy? A new job? A new relationship? Just exploring Nashville, or is Music City a lifelong dream?


Buying a home and selling too soon could cost more than if you had rented all along. Renting is more flexible, even if buying is realistic. Homeownership, however, provides the opportunity to put down roots and bloom where you’re planted.


Your Finances

Your credit score and income will matter to landlords and lenders. Although there is no standard for renting, you’ll need a score of 620+ to qualify for most conventional mortgages.


Monthly mortgage payments may be more affordable...but you’ll need good-to-excellent credit and a down payment of 20% or more to get the lowest payment. Insurance and taxes are usually included in monthly payments, too.


Benefits of Renting

When people claim renting wastes money, they’re assuming you’d otherwise be making lower payments while investing in the home you own.


But renting’s affordability and convenience may be a better use of your money now.


Affordability

Renting may seem more expensive when comparing monthly payments.


However, that simple comparison overlooks ongoing costs of ownership, such as maintenance, repairs, and renovations. You’ve already spent tens of thousands on the down payment and closing costs. Then, when you’re ready to sell, you’ll pay realtors’ commissions and more closing costs.


Convenience

Owners know how unpredictable and expensive maintenance costs can be. If you’d rather repairs were someone else's problem, though, renting offers that convenience.


Another convenience is the ease of finding a rental. The process is usually quicker because the stakes are lower.


Benefits of Buying

Homeownership requires not only investing your time and money, but also your life, every single day. You don’t wake up each morning in your stock portfolio, after all.


But rather than dread that embedded commitment, homeowners embrace it! They also appreciate the predictability of a mortgage and the opportunity to build equity.


Predictability

While owning does have substantial hidden and unexpected costs, the reality is most are few and far between.


Monthly, you can anticipate a predictable mortgage payment. Although changes in insurance and property taxes can increase your payment, they usually come with advanced notice and are not subject to landlords’ whims.


Equity

Of course, the benefit most on owners’ minds is home equity. You can think of equity as the eventual return on your investment.


The appreciation of your home’s value is likely, but not guaranteed. All investments involve risk. Still, risk tends to lessen over time.


The Housing Market

Like much of the US, the Nashville housing market is so hot right now you may fear missing out, paying even more in the future.


But if you’re not well-informed, getting in on the action could be getting in over your head.


Demand for Homes

Millennials are looking for their first homes and retiring boomers are looking to downsize, competing for similar homes in the same markets while trying to take advantage of historically low interest rates.


Increasing demand, major corporations are relocating to Nashville, bringing plenty of potential homebuyers with them.


Housing Supply

High demand alone, however, wouldn’t account for this market. Housing inventory is low compared to both current demand and previous years’ supply due to pandemic-related shortages, local zoning laws, and ironically, owners’ apprehensions about becoming buyers again.


The seller’s market in Nashville has pressured buyers to do anything to be competitive--including offering over listing price, waiving contingencies, and giving sellers more time to move out.


First-time buyers can still play ball in this market, but you’ll really have to step up to the plate to get the home you want.


To stack your team, you can find an experienced real estate agent near you through Celador.com, the web’s most trusted realtor referral service.

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