Brian Copeland
The tornadoes that tore through Tennessee this week, including neighborhoods in and around downtown Nashville, claimed at least 22 lives, ripped through scores of homes and businesses, and damaged many, many more.
The unexpected storms were devastating by any measure. As people come to grips with the considerable human toll, real estate experts are just beginning to think about the longer-term impact on one of America’s hottest real estate markets.
After all, home prices in the ‘it’ city of the South—a favorite of country music lovers, bachelorettes, and techie hipsters alike—have been on an explosively wild ride in recent years. And the tornadoes devastated some of Nashville’s more desirable neighborhoods. At least 45 buildings downtown are no longer standing, and many others sustained substantial, possibly catastrophic, damage.
“The areas it hit were extremely hot real estate markets with thriving community districts and were densely populated with homeowners,” says real estate broker Brian Copeland of Doorbell Real Estate. Nonetheless, Copeland voices the consensus of most real estate experts: “But I just can’t imagine it affecting the real estate values.”
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Indeed, the twister may wind up giving local property values a boost, some say.
In the short term, unaffected areas could see home values edge up, as folks look for temporary housing. Over the long term, prices could also rise if neighborhoods are rebuilt better than before.
Home prices in Nashville’s metro area peaked in 2017. Since then, they’ve come down—but just a little. The dip is likely due to all the new construction that’s been rising at a breakneck pace, easing the housing shortage as more out-of-towners settle in Nashville. (The median list price in the metro area, which includes the city and surrounding suburbs, was $369,000 in January, according to the most recent realtor.com® data.)
Disaster effect: Tornadoes aren’t as bad as hurricanes
Those prices aren’t likely to fall much.
“Tornadoes probably have the least impact on home prices of all disasters: earthquakes, floods, hurricanes, wildfires, mudslides,” says Chuck Watson, director of research and development at Enki Holdings. The Savannah, GA–based data and analytics firm looks at economic impacts from natural and human-made disasters.
Twisters are “much more random,” Watson says. It’s not like moving a few miles inland in a coastal community if you’re worried about hurricanes. There’s no telling where a tornado will strike.
“Where are you going to go?” Watson continues. “If you move 50 miles from Nashville, you still have the same tornado risk as you do in downtown Nashville.”
Still, this isn’t the first time Nashville’s seen tornadoes. In 1998, a twister pummeled many of the same downtown neighborhoods that were terrorized again this week. Some of these communities were also battered by terrible flooding in 2010.
“Obviously, we bounced back quite nicely,” says Copeland. “Nashville will be fine. We’ve proven this over and over again.”
And while it’s rare that tornadoes strike big cities, they do happen, says Daniel Betten, principal research scientist at CoreLogic, a real estate data firm. The one that traveled through Dallas in October may have caused $2 billion in damages.
“It does happen at least once a year that a major city is impacted,” says Betten.
Surviving Nashville’s deadly tornadoes
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The tornadoes went through neighborhoods in and around downtown Nashville, such as the up-and-coming Buchanan Arts District. Last year, folks could find a home in need of renovation there for $280,000, says Copeland. This year, they’re more likely to be spending $420,000 for new construction.
Upper-middle-class Germantown and the East End were also devastated as was more working- and middle-class Rosebank on the east side of the city. Suburbs such as Mt. Juliet were also affected.
Anna Altic, 45, was asleep in Rosebank when a tornado warning on her phone woke her up just before 1 a.m. early Tuesday. The real estate broker hurried to get her 16-year-old daughter and 12-year-old son out of bed. They huddled in a hallway, Altic lying on top of them. Within just a few minutes, a tornado struck.
“It was like a train sound, and the house was moving. You could feel this intense pressure,” says Altic, a real estate broker at Parks Realty. “I was so focused on keeping my kids calm and telling them, ‘It’s OK, it’s OK.'”
Her carport was ripped apart and hurled onto her roof. One of her cars was tossed into the other one. The HVAC system was ripped off her house.
“The roof is going to need to be replaced,” she says. “[But] my house is still habitable. Most of my neighbors, most of their roofs and walls were blown in.”
“I still have a house, and I’m still here,” says Altic. Some of the members of her community were trapped in their homes. Others, she believes, didn’t survive.
Why Nashville’s real estate prices could rise in the wake of the tornadoes
Jason Kempin/Getty Images
Homes that were damaged will probably be deeply discounted—especially if the new owners need to do costly work like putting in a new roof or a foundation, says national real estate appraiser Orell Anderson of Strategic Property Analytics. Buyers may ask for a 10% price cut in addition to deducting the cost of the repairs.
Properties that were destroyed, of course, will be sold for whatever the land is worth. And that’s when the investors are likely to swoop in. If they or the original homeowners put up nicer, newer homes in place of the older ones that are destroyed, that can give neighborhoods a boost.
“Values can actually go up depending on what they’re replaced with,” says Enki’s Watson. He’s seen duplexes and apartment complexes rise in the place of single-family homes in some communities after disasters. “If it’s a hot market [like this] … it can actually push values up.”
Plus, the city has also been growing by leaps and bounds—which may help to cushion it after a disaster like this. Displaced residents are likely to find refuge, temporary or otherwise, in some of the new residences going up all over town. That supply of homes is likely to keep prices from spiking too high as folks look for housing.
“We’ve seen a ton of new construction, almost a comical amount,” says real estate agent Robby Stone. Out-of-towners often remark on the “overwhelming amount of cranes and construction.”
He and other real estate professionals aren’t terribly worried about prices falling.
“This is just kind of a fluke,” says Altic. “Nashville [will] just continue to be a vibrant city.”
The post What Nashville’s Tragic Tornadoes Could Mean for Its Real Estate Market appeared first on Real Estate News & Insights | realtor.com®.
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